Emerging trends in arbitration in India

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The Indian judicial system is advancing progressively in the field of arbitration. In the last three years, India has seen a growth of nearly 200% in the number of disputes that have been referred to arbitration.

Arbitration disputes in India have been rampant in the construction and infrastructure, and oil and gas sectors. This is primarily due to the nature of these businesses and exigencies attached in running the business. Financial sector disputes are reported at an increasing rate in areas including private equity, joint ventures and mergers and acquisitions.

In light of the above, we conducted research on arbitration in India, held discussions with eminent professionals in the domain and invited them to share their views and experiences on various topics, which were broadly categorized under the following themes:

  • Arbitration clause
  • Independence of arbitrators
  • Changes in the legislative environment
  • Importance of technology in arbitration
  • Importance of evidence
  • Third-party funding and costs of proceedings

Industry specific disputes by SIAC

EY - Industry specific disputes by SIAC

Arbitration clause

  • The arbitration clause constitutes almost 95% of agreements between parties.
  • Inclusion of the arbitration clause in a contract is high in the construction and infrastructure, and oil and gas sectors.

Independence of arbitrators

  • Our study indicates that there is a need to lay down explicit provisions for checking the independence and impartiality of arbitrators.
  • Provisions for filing disclosure reports prior to arbitration proceedings are essential.
  • An arbitrator appointed by the same party more than three times should be required to provide a detailed disclosure in this regard.
  • Technical experts, including accountants, engineers, architects, scientists, doctors, etc., are increasingly being considered indispensable by arbitral tribunals in matters requiring expertise and technical know-how.

Changes in the legislative environment

An award passed by an arbitral tribunal takes considerable time (around two to three years) to be enforced by Indian courts. However, with the reduction of court intervention in foreign seated arbitrations recently, it is anticipated that awards will be enforced proactively and at a faster pace.

Importance of technology in arbitration

  • With the aid of technology, heavy documentation can be segregated and indexed properly, thereby saving valuable time and effort.
  • It can be made easily accessible to disputing parties across countries.
  • The use of e-Discovery, financial modeling tools, data management systems, etc., in arbitration is expected to make the process time and cost effective.
  • A mechanism developed for Online Dispute Resolution (ODR) may result in a viable and cost-effective dispute-resolution system.

Importance of evidence

  • An effective mechanism, implemented for effective fast-track arbitrations with reasonable time limits, and adhered to by parties would result in time-bound resolution of disputes.
  • Arbitration institutes such as SIAC provides for rules with regard to expedited procedures and emergency arbitrator.
  • If the matter is crucial, an emergency arbitrator is appointed within one business day by SIAC, emergency arbitrator must establish a schedule for considering the application for emergency relief within two business days of his appointment.

Third-party funding and costs of proceedings

  • Third-party funding is still in its nascent stage in India and its impact needs to be examined. The Indian Arbitration statute does not make explicit provisions relating to cost allocation of arbitration proceedings.
  • It is believed that the arbitration scenario in India will take a stride in a positive direction through implementation of cost and time-effective measures.