Plea to change arbitration rules

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By Staff Reporter
  • Published 28.04.14

Supreme Court judges and other legal experts have called for a change in arbitration rules to allow lawyers from abroad to take part in the process.

Arbitration is a method of resolution of disputes outside court. It is mostly used to resolve commercial cases.

While 90 per cent of commercial disputes are settled through arbitration in developed countries, the corresponding figure in India is less than five per cent, though Indian-run companies are only second globally in terms of being involved in arbitration.

The trend in India of avoiding arbitration is not only affecting the economy but also burdening the already stretched judiciary, experts opined at a seminar on “Arbitration in India: The Way Forward” on Saturday.

The seminar was organised by the Indian Council of Arbitration, with support from the Indian Chamber of Commerce and the Federation of Indian Chambers of Commerce and Industry.

“We need to open up. Let’s come up with a comprehensive act (and become) an arbitration-friendly nation and judiciary,” Justice S.S. Nijjar of the Supreme Court said.

The judge, also former chief justice of Calcutta High Court, told Metro on the sidelines of the seminar that India needs to “liberalise” the arbitration process and allow foreign lawyers to participate in it.

The Law Commission of India has recently started the process of modifying the Arbitration and Conciliation Act that came into force in 1996.

“It is natural that foreign companies will depend on foreign lawyers. If we want the arbitration process to become popular in India, we need to provide a level playing field to foreign lawyers. This will improve the legal system in India,” said retired Supreme Court judge Asok Kumar Ganguly, a guest at the programme.

Both speakers agreed that India should not shut out foreign lawyers from arbitration at a time it is following a liberal economic policies.

Lawyer N.G. Khaitan, the chairman of the Indian Council of Arbitration, too rooted for opening India’s arbitration process. He also stressed that arbitration should be institutionalised, time-bound and cost-effective to succeed. “Surveys show that in India 91 per cent companies prefer arbitration to litigation. Still arbitration in India has not prospered much because of the unusually high cost involved, lack of timely resolution and absence of encouragement for institutional arbitration,” said Khaitan.

The legal expert quoted from a 2009 Supreme Court order that reads “...the cost of arbitration becomes very high in many cases where retired judge(s) are arbitrators”.

Khaitan said that “with support from judiciary, India can become a hub of arbitration”. Now, many arbitration cases involving India are settled in Singapore or the UK.

Another Supreme Court judge, P.C. Ghosh, supported institutional arbitration and asked parties and lawyers to take the initiative.