A survey of in-house counsel and corporate executives revealed that arbitration is the preferred method of dispute resolution over litigation, because of the speed of resolution, confidentiality, cost effectiveness, but it needs to improve further mainly with regards to the time-taken in completion of the process.
The survey conducted by commercial law firm Khaitan & Co revealed that 40% of respondents are satisfied with domestic arbitration as a dispute resolution mechanism whilst 60% of respondents expressed either dissatisfaction or ambivalence, indicating significant scope for improvement in meeting the expectations of parties from the arbitration process.
The survey’s results come ahead of the release of the much-awaited recommendations of the Vishwanathan Committee, which was tasked by the government to review the operation of arbitration laws in India. Last year, the government had set up a 16-member committee headed by former law secretary T.K. Viswanathan, to recommend reforms in the country’s arbitration law, particularly in the Arbitration and Conciliation Act, 1996.
“The government is committed to an effective domestic arbitration system as a critical element of the ease of doing business in India,” Khaitan & Co’s survey said, while adding that systemic changes are expected soon.
The survey results showed that most arbitrations are taking 24 to 36 months to complete instead of 12 months, which is mandated as per the arbitration law. It further says that more than 80% of respondents considered that emergency arbitration measures for urgent or time sensitive issues should be provided for and 40% considered that such emergency arbitration measures should be completed within 30 days.
Moreover, while institutional arbitration is “more favourably” considered by respondents than it has been, over 50% of respondents still intend to use ad hoc arbitration in the future which suggests that the arbitral institutions still have some work to do to win acceptance in India, the survey showed.
Haigreve Khaitan, Partner, Khaitan & Co said that arbitration is an efficient and effective dispute resolution mechanism of critical importance to Indian business, foreign investment in India, the Indian economy, and the rule of law. “Both local and foreign investors embrace effective and efficient dispute resolution in commercial contracts as being fundamental to doing business in India and there is increasing interest with the massive foreign investment.”
To improve the domestic arbitration process, the top suggestions included simplifying award enforcement, specifying consequences for non compliance with time limits, creating specialist arbitration benches, shifting arbitrator appointments from courts to institutions, and restricting appeals. “These recommendations prioritize reducing delays and enhancing efficiency in domestic arbitration,” said the survey. There were more than 110 Respondents to the survey of which about 67% had 10 years or more experience in domestic arbitration, said Khaitan & Co.