A recent survey conducted by our firm provides valuable insights into the current state of domestic arbitration in India from the perspective of those directly involved, rather than from legal professionals. The survey included over 100 participants, with 65% being in-house counsel.
The survey revealed that most businesses prefer arbitration to traditional litigation due to its faster resolution times, privacy, cost-effectiveness, and efficiency. Speed of resolution emerged as the most crucial factor. However, the findings also highlighted some dissatisfaction, with only 40% of respondents feeling content with the current arbitration mechanism, pointing to a need for further improvements.
One significant issue is adherence to timelines. Despite amendments in 2015 to India's arbitration laws setting mandatory time limits for arbitration, 66% of the respondents reported that these limits are often ignored, with arbitration processes typically extending between two to three years. Furthermore, the majority believe that arbitration should be resolved within a year.
Looking ahead, a large number of respondents plan to continue using arbitration for both minor and significant disputes, with 75% for small disputes and 85% for large disputes. There's also a strong demand for quick emergency arbitration procedures to address urgent issues, with many suggesting that such cases should be resolved within 30 days.
Despite considerable strides in promoting organized arbitration frameworks ("institutional arbitration"), ad hoc arbitration remains widely favoured. This suggests that while institutional arbitration is gaining ground, there remains much to be done to fully establish its credibility and acceptance in India.
For improvement, simplifying the process of enforcing awards, introducing penalties for not adhering to timelines, and establishing special court benches dedicated to arbitration were suggested as favourable measures.
The survey's findings are timely, coinciding with the Viswanathan Committee's report to the government on further reforms needed in domestic arbitration. The Indian government commissioned a comprehensive review of the entire arbitration system last year by this committee as part of its ongoing quest to ensure that India's arbitration system is efficient and effective.
Our survey report offers an extensive analysis of how domestic arbitration is currently viewed and its potential trajectory for enhancement. For those interested in a deeper understanding of the detailed findings and suggestions from our survey, a copy of the report is available at here
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