Arbitral institutions still have work to do to win acceptance in India: Khaitan & Co survey

Khaitan & Co recently conducted a survey titled Current Trends in Domestic Arbitration in India, in which the firm sought responses from experienced users of domestic arbitration in India, of whom around 65% were in-house counsel. .The survey results highlight a divide between the expectations of parties and the present reality of the arbitration process..Speaking on the survey, Khaitan Partner Haigreve Khaitan said in a press release,“Arbitration is an efficient and effective dispute resolution mechanism of critical importance to Indian business, foreign investment in India, the Indian economy, and the rule of law. Both local and foreign investors embrace effective and efficient dispute resolution in commercial contracts as being fundamental to doing business in India and there is increasing interest with the massive foreign investment. We believe that it was timely to do a survey on domestic arbitration in India because it is practically relevant to many Indians and their businesses as well as foreign investors doing business in India.”.The Khaitan & Co survey focused on the experience of parties to arbitration proceedings, rather than advocates, lawyers or other experts involved in domestic arbitration in India so that the survey results would reflect the perspective of the primary users of the system..Here are the key findings of the survey:Arbitration is the preferred method of dispute resolution over litigation because of the speed of resolution, confidentiality and cost-effectiveness40% of respondents confirmed that they are satisfied with domestic arbitration as a dispute resolution mechanism, whilst 60% of respondents expressed either dissatisfaction or ambivalence.66% of respondents said that the mandatory time limits in the arbitration process, imposed through the 2015 amendments to the Arbitration Act, are not being adhered to.Most arbitration is taking 24 to 36 months to complete, instead of 12 months, which is what parties expect.59% of respondents considered that arbitration should be completed within 12 months.A large majority of respondents intend to use domestic arbitration in the future for both small disputes (75%) and large disputes (85%).More than 80% of respondents considered that emergency arbitration measures for urgent or time sensitive issues should be provided for and 40% considered that such emergency arbitration measures should be completed within 30 days. Despite significant efforts to promote institutional arbitration, ad hoc arbitration remains popular with almost half of survey respondents.Whilst institutional arbitration is more favourably considered by respondents than it has been, over 50% of respondents still intend to use ad hoc arbitration in the future which suggests that arbitral institutions still have some work to do to win acceptance in India.Simplification of award enforcement, penal consequences for non-compliance with time limits, and special court benches to deal exclusively with arbitration-related matters were the most favoured measures for improvement in the domestic arbitration process. .The report acknowledges the efforts of the Indian government in improving the system for domestic arbitration in India.As late as last year, in recognition that further reform is required, the government established an expert committee (Vishwanathan Committee) with wide terms of reference to review the operation of arbitration laws in India and further systemic changes are expected soon, it says.The release of the survey coincides with release of the recommendations of the Vishwanathan Committee, which were recently submitted to the Indian government.