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Fast-track arbitration can help attract FDI: Sarosh Zaiwalla

Interview with Senior Partner, Zaiwalla & Co Solicitors

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London-based Sarosh Zaiwalla, Senior Partner, Zaiwalla & Co Solicitors, was the first Asian to set up an Indian law firm in the United Kingdom in 1982. Touted in London’s legal circles as a celebrity lawyer, Zaiwalla’s client list over the last 30 years includes the Indian High Commission in London, several governments including those of India, China, Hong Kong, Russia. His firm has represented personalities like Dalai Lama, the Bachchans (in the Bofors case), Sonia Gandhi (for stopping an Italian film-maker from making a movie on her), and (for a libel suit against author Katherine Frank), and Benazir Bhutto. In a recent visit to India, Zaiwalla walks down the memory lane with Sudipto Dey, sharing his angst on how India missed out on an opportunity to be a centre for arbitration in Asia. Edited excerpts:

How difficult was it to set up the first Asian law firm in UK by an Indian in the early 1980s?
In the early 80’s it was very difficult. It was the age of what is known as Paki bashing. All Asians — including Indians — were referred to as Pakis, and we were all scared about it. But as they say if you can’t join them, you have to beat them. And you have to beat them by playing by the rules. Not by being aggressive. When they see what a person is capable of, his honesty and integrity, they respect you. I insisted on keeping my own name (of the firm). And that has been one of the secrets of my success. Many Indian law firms have Anglicized their names. But most people know me as an Indian. What the West respects most is a person who is proud of his or her country of origin. When I came to UK, most Asians used to practice in the suburbs dealing with criminal law or immigration. I decided to stay in city of London.

In fact the hurdles in those early years were mostly mental. I found that the English race has a conscience. Even Mahatma Gandhi — knowing how Englishmen would react —appealed to their conscience and did not go to them with guns. If you are honest and straight they support you — of course they would take their time to get to know you. One of the greatest supports I have received is from the locals.

Most Indian and MNC companies in India choose either Singapore or London for their arbitration proceedings. Is India missing out on an opportunity to be an international hub for arbitration?
Arbitration is a growth industry. And arbitration in India should now have reached its peak as India as a country attracts FDI. But Indian arbitration has not caught on. The international perception is Indian arbitration is not fair, and there is monopoly of the judges who scratch each other’s back. And that some of them are corrupt. It is a perception — true or false I don’t know. India and Delhi has lost out on the opportunity to be an international centre for arbitration for Asia. India was one of the first countries in 80’s to start a centre for arbitration in Delhi. If a small country like Singapore or a city like London could build a reputation, why could India not have done it? The advantage of London as a centre for arbitration is that the commercial court keeps a hawk eye on arbitrators on the way they behave. There is a one chance of appealing against the award. And that too is not a long procedure taking just three to four weeks. In Singapore you cannot appeal against the award.

Arbitration has to be through mutual consensus. The Indian system needs to do an honest introspection.

Can a robust arbitration system help de-clog the Indian judiciary from the backlog of cases?
You need both, arbitrators of high standard, and mediation. A quick arbitration in England can give a decision within a week. If you are to bring in more FDI you need fast track arbitration. If India has to develop as an international centre it has to be different from Singapore and London. Apart from the laws you have to encourage internal self-regulation among the arbitrators. If one is corrupt, then others will not deal with him. That is the way it is done in London or Singapore. It will give an enormous fillip to FDI flow.

The Vodafone taxation issue has agitated minds of looking to do business in India. Did you find it impacting perception of India as an investment destination?
It sent a very bad signal that in India the government is not respectful of the law. The judgement enhanced the reputation of freedom of Indian judiciary but what happened latter through the government’s action did not enhance India’s reputation as a country with stable approach.

We need to be practical with our feet on the ground. The government needs to take corrective action to give confidence to foreign investors. For instance there is a prohibition against foreign law firms to come in. Why should there be any prohibition? Why should they be forced to go to an Indian firm? An investor would like to have confidence that they can go to their own people for law. Just like many Indian investors when they come to London, they come to me as they know I can understand Indian system better. For any investor to have advice on law by their own people in a country where there is a rule of law is very important.

How serious is the issue of money laundering through the banking channels?
I support action of all governments to clean up money laundering. In fact I wrote to Tony Blair, who once worked with me, saying the greatest service you can do for developing economies is to work to let Western banks refuse corrupt money. A lot of the corrupt money goes to European and American banks. If they stop accepting it, it will to some extent help to root out corruption. I support strict regulation against money laundering. For instance, if today somebody comes to England to invest it is my duty to check if the money is clean. If the money is not clean the services of my firm are not available.

Indian banks too must do that – ask for the source, has taxes being paid on it. But there has to be a will to do it.

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