Despite amendments, India far from becoming a global arbitration hub

In recent times, there has been a concerted effort on part of the government to improve the arbitration landscape in India. However, despite these changes, India is still far from becoming a global arbitration hub. A few reasons standout: lack of certainty, poor legislative drafting, a reluctance to keep pace with change and, more recently, the government’s desire to keep control. Let me illustrate with three examples in the context of the 2018 Arbitration Bill:
 
First, those familiar with arbitration jurisprudence will remember the 2015 amendments to the Arbitration Act, which had brought in sweeping reforms. The amended Act was not clear on whether it was prospective or retrospective. The position of law was only recently clarified by the Supreme Court. The 2018 Bill seeks to reverse the position as clarified  by the apex court. The result: Pending the coming into force of the amendments, the position of law applicable to a vast majority of arbitration-related cases in India is now unclear. These constantly moving the goalposts are the very definition of a jurisdiction that is not arbitration friendly. While the 2018 Bill seen in isolation bring in some clarity on this aspect, the fact that it took the legislature more than three years to propose an amendment to an evident error in its previous enactment does not give businesses comfort.

 

Vikas Mahendra, partner, Keystone Partners

Second, the Bill contemplates the creation of an Arbitration Council of India (ACI) with wide ranging powers. The proposed ACI, which is charged with the accreditation of arbitral institutions, will be a government-appointed body. The need for a government-controlled  agency tasked with these functions is questionable and in fact contrary to the recommendations of the High-Level Committee constituted by the Centre under the chairmanship of Justice B N Srikrishna. Further, the Bill, courtesy poor drafting, is presently unclear on the extent to which the ACI will be involved in the accreditation of arbitrators. While it appears that some role is envisaged, it is unclear why such a role is contemplated or necessary. 
 
Third, it is unfortunate that the the Bill fails to take note of and deal with recent trends in international commercial arbitration such as provision for emergency arbitrators and the availability of third-party funding.
 
So, while India has made advances in recent times, there is a long way still to go.
The views expressed are personal