International Arbitration in India - a new dawn?

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This article was produced by Nabarro LLP, which joined CMS on 1 May 2017.

Summary and implications

As the Mumbai Centre for International Arbitration (MCIA) hosts its launch conference on 8 October 2016 to huge fanfare, with a number of luminary speakers, the global legal community will watch carefully to assess the impact. Aiming to be India’s premier forum for commercial dispute resolution, the MCIA launched on 15 June 2016 with its rules coming into effect on that date. It is India’s first dedicated arbitration centre and only time will tell whether the organisation will succeed in attracting parties to arbitrate in India, away from their favoured hub in Singapore.

India as a forum to resolve disputes

Commercial arbitration is popular in India, with a significant increase in both domestic and international arbitration over the last 10 years. Foreign-seated arbitration has traditionally been the favoured choice: In 2015 Indian parties submitted the highest number of disputes at the Singapore International Arbitration Centre (SIAC). Historically, the arbitration process in India has been challenging with delay and local court involvement. It is widely accepted that ad hoc arbitrations have been far from satisfactory. However, the Arbitration and Conciliation (Amendment) Act 2015 seeks to restrain judicial intervention in arbitration and expedite the process with a 12-month time limit from reference to award, a further six-month extension by consent and then only with court approval. This change in the legislative framework creates the backdrop for the launch of the MCIA.

MCIA – Council

The MCIA is a non-profit organisation which, while enjoying support from the Government of Maharashtra, maintains its independence from both the government and the private sector. It comprises 17 arbitration practitioners, lawyers and counsel. The Council includes former Court of Appeal judge, Sir Bernard Rix and the former President of the ICC International Court of Arbitration, John Beechey, reflecting its international outlook. The full list of Council members is available here.

MCIA – Secretariat

Neeti Sachdeva has been appointed as the full-time registrar alongside Madhukeshwar Desai as the CEO to make up the MCIA Secretariat. Mr Desai was formerly in practice at PXV Law Partners while Ms Sachdeva adds her experience from Trilegal and Economic Laws Practice, as well as having been the First Deputy Registrar for LCIA India. For now, the MCIA is keeping overheads to a minimum, claiming the team of case handlers will increase along with the MCIA’s popularity.

MCIA – Rules and fees

The MCIA rules were drafted by a committee of arbitration specialists, from both the domestic and international markets, and they aim to draw upon the latest innovations in international arbitration. The rules provide for emergency arbitrators to determine urgent applications for interim relief and include mechanisms to speed up the arbitration process, such as a time limit of 90 days for the tribunal to submit draft awards to the Registrar, following which the final award must be rendered within 30 days.

The MCIA rules also provide an upfront fee schedule, which defines an upper limit for arbitrators’ fees as well as the administrative fee. The fee structure is intentionally competitive: cheaper than the international institutional arbitration bodies with administration fees capped at just under £100,000 and the top of the arbitrators’ fee scale at around £130,000.

A new door opens

The MCIA is located at Nariman Point with facilities including seven hearing rooms, multiple break-out rooms, transcription services (a sparse commodity in India) and an arbitrators’ lounge. Based in the heart of India’s financial capital and following the closure of the LCIA India office, with the support of eminent figures, modern, innovative rules and attractive fees, the MCIA should be well placed to arbitrate Indian claims. Will it be a credible alternative to both domestic and international forums?

The general consensus amongst Indian lawyers appears to be that, whilst it is a step in the right direction, the MCIA will fail without support from both the government and courts. The courts will play a key role in respect of challenges to awards and at enforcement stage. Some lawyers have openly remarked that the road-test period will be lengthy and it might be years before they could comfortably recommend arbitrating in India to their clients. There will undoubtedly be close scrutiny, but India has little to lose and much to gain.

Nabarro Partner Sukhi Kaler will be attending the MCIA launch conference.