Why India is not a good seat for International Arbitration
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Why India is not a good seat for International Arbitration

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India has a good arbitration friendly legislation but it is not recommended as a favourable seat of arbitration because of the possible huge delays of the courts in handling arbitration related ...

India has a good arbitration friendly legislation but it is not recommended as a favourable seat of arbitration because of the possible huge delays of the courts in handling arbitration related litigation. Most of the international arbitrations conducted in Singapore, as per the SIAC Rules come to an end before the end of six months, the time frame specified by SIAC.

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Why India is not a good seat for International Arbitration Why India is not a good seat for International Arbitration Document Transcript

  • Written By: Mr. S. Ravi Shankar Advocate on Record Supreme Court of India Senior Partner – Law Senate Law Firm President - Arbitration Bar of India ARTICLE
  • Good Legislation: Both International and domestic Arbitrations having India as the seat of arbitration are governed by the Indian Arbitration and Conciliation Act, 1996. It is a very arbitration friendly legislation, legislated in the lines of UNCITRAL Model law. The Part 1 of the above said Act governs the domestic arbitrations in India and the International arbitrations having the seat of arbitration in India. Part 2 of the said Act governs the enforcement of International awards in India. Since India also realised the importance of speedy disposal of cases through arbitration and also the difficulties in executing the Court judgments in different countries, to get foreign direct investments, chose to legislate the above said law replacing the earlier Arbitration Act. The said law really reduces the scope for interference by the Courts in India in the Arbitration proceedings and also effectively restricts the grounds of appeal challenging an award. The Law settled by the Supreme Court in favour of the independence of International arbitrations having the seat outside India: The Supreme Court of India is the final Court of Appeal in India. In two of its Judgments in Bhatia International and Venture Global it took a view that Indian Courts have Jurisdiction over the International arbitrations held in foreign countries on the basis of foreign seats of arbitration chosen by the parties. These Judgments created a lot of complications in the International arbitrations involving Indian parties. But later in the year 2012 a constitution Bench of this Court while deciding BALCO case put an end to all the above said confusions and settled the law and held that Indian Courts does not have jurisdiction to interfere in the arbitrations having a foreign seat and also cannot entertain any appeal from those awards. Hence now law in India with regard to International arbitrations is well settled. Huge Pendency of cases in the Indian Courts: Even though the author is an Indian lawyer he does not recommend India as the seat of the International arbitration because even though the Act prescribes minimum interference by courts, due to huge pendency of litigations in-case if one of the parties go to court the
  • arbitration may get delayed for years. Since The Courts in India does not have any power to give preference to arbitration matters in the hearing process they are heard like other criminal and civil cases, which further delays the arbitration. India has very less number of Judges in the world to deal with cases of millions of people. India also has given two appeal provisions in almost all proceedings, which also add to the delays. Hence if a party seeks assistance of the Court for an interim order or for summoning witnesses or even for appointment of arbitrator it may consume a minimum of one year to get concluded. Even though there are directions by the Supreme Court of India and recommendations of law Commission to increase the number of Judges from 10 to 50 per million people, none of the governments are showing any interest in resolving the issue. Handling of Arbitration Appeals by the Courts in India: Once parties decide to make India as the seat of arbitration, Indian Courts are empowered to handle the Appeals under S.34 of the Arbitration and Conciliation Act, 1996. The appeals can be filed in the High Court having original jurisdiction or in the District Courts on the basis of the seat of arbitration. Even though the Act has very much restricted the grounds on which arbitral awards can be challenged, the courts are liberal in admitting the appeals. Once appeal is pending for years the execution of the award cannot be done. Hence India is not a recommended by the author as a seat for International arbitrations. Execution of International Arbitration awards in India: India being a signatory to New York Convention it recognises almost all the international awards passed in the countries who are signatories to the New York convention. Even though India reserves the right to recognise the awards passed from countries which are notified by the government of India. But India has recognised almost all countries which have signed the New York Convention. Recently India recognised China and Hong Kong International arbitration awards also.
  • Why SIAC has become a favourable seat for Indians: In such a situation where even-though India has a good arbitration friendly legislation it is not recommended by the author as a favourable seat of arbitration because of the possible huge delays of the courts in handling arbitration related litigation. But when the seat is chosen as Singapore, the arbitration related litigations are governed by Singapore laws and Singapore Courts are very fast in handling arbitration related litigation including appeals and hence most of the international arbitrations conducted in Singapore as per the SIAC Rules come to an end before the end of six months, the time frame specified by SIAC. S Ravi Shankar Advocate on Record Supreme Court of India The author S. Ravi Shankar is a lawyer practising in the Supreme Court of India, handling International arbitration matters, Senior Partner of Lawsenate law firm and also the President of Arbitration Bar of India. He can be contacted ravi@lawsenate.com