A superstructure on a solid base is essential to make India an ‘arbitration hub’ and promote ease of doing business. This will ensure durability and longevity, and who knows it may just open doors to ‘arbitration tourism’ as well.
What does it really take to emerge as a ‘hub’? For starters, a conducive, vibrant and commercial ecosystem and environment which facilitates ease of doing business. The government’s recent initiative and push for the New Delhi International Arbitration Centre Bill, 2019, to make India an ‘arbitration hub’ has to be seen in the larger and overall context, and not as a one-off measure. Take Singapore, the ideal benchmark, as an example. Singapore attracts a vast majority of its international commercial disputes of Indian vintage and connection. It has become the lead destination for dispute resolution as there was a clear vision and steady determination. This made Singapore the ‘seat’ of arbitration and a preferred venue. Such international best practices must be followed and a good ‘copy cat’ in the Indian context is essential, which, like a magnet, would attract users and stakeholders.
Realising the unrealised dream of making India an ‘arbitration hub’ requires a holistic or 360-degree approach and comes with an ‘arbitration dharma’, i.e. its own set of cardinal rules and guiding principles:
First Dharma: A pro-arbitration culture backed by the trio
While there has been a sea change in the way arbitration is viewed today, we still require a proactive and supportive approach to arbitration. Courts particularly need to take a pragmatic approach towards ‘minimum intervention and maximum execution’, which will respect the arbitral process and honour arbitral awards.
The legislature had amended the Arbitration Act in 2015 and set timelines to increase the pace of arbitration, and make it more time-bound, result-oriented and disciplined. However, India requires gigantic measures to emerge as a ‘hub’. For example, in Singapore, the legislature has been quick to undo any conflicting or anti-arbitration decisions within months, sending out its pro-arbitration message loud and clear. This brings in certainty, predictability and stability, which is the essential bedrock for a ‘hub’.
The government has echoed the same sentiment, and has given the need for making India an ‘arbitration hub’ and promoting ease of doing business the stature of a national priority.
Therefore, it is fundamental that the trio (judiciary, legislature and the government) creates the right turf and on-field conditions, much like cricket, for achieving its dream of becoming an ‘arbitration hub’. This will send out the right message to the investor community that there is a strong, effective and time-bound dispute redressal process.
Second Dharma: Sanctity of contracts
Respecting the sanctity of contracts and honouring awards are vital to emerge as an ‘arbitration hub’. The mindset has to be one of compliance—follow the contract and honour it, rather than finding ways to bypass/defeat it. This will also push India up on the ease of doing business rankings, so clearly it’s a win-win.
However, an effective dispute redressal mechanism is not enough. It is equally important to reduce the number of artificial disputes. Numerous times needless disputes, particularly by PSUs, are pushed to arbitration where the arbitrator simply has to direct the parties to adhere to the terms of the contract. Therefore, a mindset that is geared towards upholding sanctity of contracts and the arbitral process and nipping it in the bud are critical for India to realise its arbitration dream.
Third Dharma: Independent and expert arbitrators
For arbitration to truly flourish, what is needed are neutral, independent and domain/sectoral experts who are qualified and competent to rule on the subject matter of the dispute. This would bring in much-needed commercial certainty, uphold the sanctity of the award/contract, and enhance the quality of decision-making.
Fourth Dharma: Effective enforcement of awards involving public bodies
Courts are highly cautious in enforcing awards against the government as they are swayed by unfounded nationalism and emotion. What is required is a no-nonsense approach and a mindset tuned towards compliance, adherence and enforcement. The answer lies in creating a culture of finality of arbitral awards so that a winner can get a touch-and-feel of the fruits of victory. The award has to be as good as an ATM, providing instant money and enforcement, or else the winner loses it all. This will inspire confidence and create a vibrant arbitration culture for resolving commercial disputes.
A step in the right direction
Undoubtedly, the tone has been set right and a step in the right direction has been taken. However, much more spadework has to be done for India to hold the ‘arbitration trophy’ and become a Singapore- or London-esque hub. It needs to be borne in mind that you don’t become a ‘hub’ of arbitration overnight. The catalyst has to be government initiative, judicial and legislative support, and, above all, a conducive commercial mindset and environment. What we need is a well-thought-out road map to establish a credible and trustworthy institutional framework. Once the script is in place, a robust institutional framework will automatically trigger/take off. So let’s follow the recipe and get all the ingredients right in order to ensure that it leaves a good taste in the mouth.
For the system of arbitration to work efficiently and effectively within a specified time period requires a real and meaningful ‘charcha’ (brainstorming) amongst institutions, the government, users, practitioners and stakeholders. The turf and field have to be fully ready for institutional arbitration to take off, much like the Indian cricket team at the ongoing World Cup has to up its game to win on English pitches. What we need is enough ‘match preparedness’ to win back the cup.
A superstructure on a solid base is essential to meet the objective of making India an ‘arbitration hub’ and promote ease of doing business. This will ensure durability and longevity, which will serve India’s interests well, and who knows it may just open doors to ‘arbitration tourism’.
(The author is a senior advocate, Supreme Court of India, and arbitration counsel)