Frivolous litigation, lack of contract enforcement major hurdles to India becoming arbitration hub: Justice Navin Chawla

Frivolous litigation and lack of contract enforcement are major obstacles to India becoming a preferred destination for arbitration, Justice Navin Chawla of Delhi High said..Justice Chawla said that there is concept of compensation or costs for frivolous litigation and that would be a roadblock to arbitration. “In India, the biggest problem is the number of frivolous litigation and the reason for that is that we do not have a compensatory or exemplary costs concept… Until and unless that concept comes up and a party is compensated for the frivolous litigation, we will not move ahead. That's my personal view,” he said.Besides, India ranks as one of the worst countries when it comes to enforcement of contract enforcement and in such a situation making it a global hub for arbitration is a very difficult task, the judge added.“With the opening of the Indian economy and foreign investment coming in, it is not proper that all these arbitrations are still being held in London or Singapore or France. We must make sure that arbitration comes to India. Everyone has a role to play. We have a legislation that is the Arbitration and Conciliation Act, we have courts which have, as far as award enforcement and upholding of awards is concerned, have started not to interfere at all,” he said. .Justice Chawla was speaking at a discussion on the topic “Obstacle to India’s Emergency as a Global Hub for Arbitration'' organized by the Nani Palkhivala Arbitration Centre and the University of Chicago Delhi Centre as part of the Delhi Arbitration Week (DAW 2024). Former Delhi High Court judge, Justice Jayant Nath, Mahesh Rai, Director, Drew & Napier LLC, Amar Gupta, Partner, JSA Advocates and Solicitors and Payal Chawla, Founder, Juscontractus were also part of the discussion..Senior Advocate Arvind Datar was also present at the event. He asked panelists whether the entry of foreign law firms in India will aid the arbitration process.Mahesh Rai said that it is a good step as many foreign clients bring their own lawyers and if India wants those foreign companies to choose it as the destination for arbitration, then those law firms must be allowed here.“This will also allow cross-border pollination of talent and ideas… The pie is big enough,” he added.On the issue of third-party arbitration funding, Amar Gupta said that it is a noble idea and there is a moral justification for it too.“I think it is immoral to deny relief to a party because it is not able to afford the cost of arbitration… But to what extent the gates should be opened? It is something to be deliberated. Regulation is necessary. It should not become exploitative,” Gupta stressed.