Why India?
India’s rapid economic growth and its emergence as the world’s next growth engine, has had the effect of highlighting the need to have best-of-class dispute resolution procedures located within India. With the mainstream Indian judicial system saddled with a backlog of c 31 million cases, arbitration and other forms of ADR are increasingly being looked upon as viable alternatives to litigating in a court of law. The USP of resolving disputes through arbitration is its relative speed, cost effectiveness, and confidentiality. However, these virtues are facing a considerable strain in India today. Anecdotal evidence suggests that up to 95% of arbitration in India is of the ad-hoc variety, characterized by the lack of predetermined procedural rules, coupled with the absence of institutional administration, and resulting in protracted and expensive proceedings.
Although there seems to be a general acceptance of the virtues of administered arbitration over ad-hoc arbitration, the key to winning parties over to institutional arbitration is to provide credible, efficient and cost effective institutional alternatives within India itself. This is where institutions like LCIA India should play a pivotal role in popularising the concept of institutional arbitration. These factors, coupled with a vibrant and dynamic legal profession, a judiciary of outstanding ability and reputation, the common law heritage and the use of the English language are other factors which saw India being chosen as the venue for the first independent office of the LCIA outside of London.
Right Time?
For the first time in decades, there is an air of expectancy in arbitration circles in India, and a heightened sense of urgency to find a solution to the problems facing arbitration in India. The introduction in parliament of a law which seeks to create commercial divisions in the various High Courts, the establishment of the Delhi High Court Arbitration Centre (DAC) and the current proposals of the Ministry of Law to amend the Arbitration and Conciliation Act, are manifestations of the positive steps being initiated by the government and judiciary to reform the law and practice of arbitration in India. iven this background, it is hoped that the launch of LCIA India will add traction to the reforms that are underway.
LCIA India
The institution operates under a three tier structure, comprising the company, the Arbitration Court and the Secretariat. As a company, LCIA India is a not-for-profit entilty, incorporated under the Indian Companies Act. Its board of directors comprises of well known Indian and international arbitration practitioners. The board does not play an active role in the administration of cases, being primarily concerned with the operation and development of the business and with its compliance with applicable company law. The LCIA Court of Arbitration serves as the arbitration court for LCIA India, its main role being to appoint tribunals, decide challenges to arbitrators and to control the costs of arbitration.
The LCIA Court is a multi-national, multi-lingual and multi-racial body counting Fali Nariman and Dushyant Dave among its illustrious former members and with India represented today by Zia Mody (Managing Partner, AZB & Partners), and Darius Khambata (Additional Solicitor General of India). The LCIA India Secretariat is based at the World Trade Tower, in the Connaught Place area of New Delhi. The Secretariat, headed by its Registrar, is responsible for the day-to-day administration of disputes referred to LCIA India. Services provided by the secretariat are, of course, purely administrative in nature, and the secretariat renders no legal services or advice.
The LCIA India Arbitration Rules
In April 2010, at a conference held at the Taj Mahal Palace & Towers in Mumbai, LCIA India launched its arbitration rules. These Rules are to a very large extent based on the LCIA’s own tried and tested arbitration rules, but with changes incorporated to reflect the interface with the Indian Arbitration & Conciliation Act, the practice of arbitration in India and the various judicial decisions of the Supreme Court of India. The rules came into force from 17 April 2010, and are accessible on the LCIA India website (www.lcia-india.org).
The philosophical keystone to the Rules is Article 14, which places corresponding duties on parties and tribunals to ensure proceedings are conducted fairly, efficiently and expeditiously. The Rules include a number of new provisions aimed at expediting proceedings, which provisions may provide a prototype for future rules to be published by the LCIA. These new provisions include an express requirement that all prospective arbitrators confirm their ability to devote sufficient time to ensure the expeditious conduct of the arbitration Further, Article 28.4(b), a new provision, provides that the Tribunal may take into account the conduct and cooperation, or non-cooperation, of the parties during the arbitration when determining the allocation of costs.
Article 10 of the Rules gives the power to the LCIA Court to revoke an arbitrators’ appointment in the event the arbitrator “does not conduct or participate in the arbitration proceedings with reasonable diligence, avoiding unnecessary delay or expense”. The LCIA India Rules, although directed at parties doing business in and through India, are essentially an international set of rules, which are suitable for operation under any system of law and can be used in any seat or venue throughout the world. Unlike the LCIA Rules, which provide for London as a default seat, the LCIA India Rules do not provide for a default seat. In the absence of parties’ agreement of a seat, the seat would be determined by the LCIA Court, taking into account interalia parties’ proposals. LCIA India has also produced a set of “Notes for Arbitrators” (also available on its website), to provide guidance to arbitrators conducting arbitrations under its Rules, on issues relating to independence, impartiality, confidentiality and the management of time and costs.
Other ADR services
Besides administering arbitrations under its own rules, LCIA India will, with party agreement, administer arbitrations under the UNCITRAL rules or other ad hoc procedures. LCIA India will also administer mediations under the LCIA India Mediation Rules, and will extend its administrative services to expert determinations, adjudications and other alternatives to arbitration and mediation.
Education & Training
Besides administering arbitrations, the institution will also look to effectively spread the word on international arbitration techniques and to contribute to introducing international best practices in India with a programme of symposia, conferences and other training initiatives. It is hoped that these initiatives will aid in creating a larger pool of arbitrators available locally.
In the meantime, and almost coinciding with the launch of the LCIA India rules, the Indian Ministry of Law released a Consultation Paper on proposed amendments to the 1996 Arbitration & Conciliation Act. As a part of the consultative process, LCIA India joined hands with the Ministry and with ICADR to organise a conference in Mumbai in August 2010, to discuss the proposed amendments to the Act. Attended by more than 180 delegates, the conference was inaugurated by Dr Veerappa Moily, the Union Law Minister, and saw participation from Supreme Court and High Court judges, leading members of the bar and corporate counsel. The conference was organised as a part of a series of consultative conferences held in various Indian cities..
Opportunity for Indian lawyers
Once a steady stream of cases comes to be referred to LCIA India, it is hoped that there will be greater opportunity for Indian lawyers and law firms to represent clients in administered international arbitrations..
The Future…
Within a month of the launch of its arbitration rules, LCIA India received its first case. Although, it would take a few years for a steady stream of cases to be referred to LCIA India, the institution’s initial success will be judged on whether new commercial contracts are drafted to include clauses specifying LCIA India as the preferred arbitral institution, as to which, the feedback has been positive. Not long ago, given the inefficiencies in the practice and procedure of arbitration in India, many Indian corporates contemplated removing arbitration clauses from their contracts. However, with the government serious about reform, and a judiciary taking significant steps to be and to be seen as arbitration friendly, India seems to be on the path to becoming a more arbitration friendly jurisdiction, and in due course emerge as an important arbitration destination.
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