70
respondents comprising Legal Counsels, Legal Heads and other legal personnel of
various companies in India were asked to give their feedback on various
issues. The report reveals that a
staggering 91% companies include arbitration as opposed to litigation to
resolve their future disputes. The top three factors that make arbitration most
desired Dispute Resolution (DR) mechanism are 1. Speed, 2. Flexibility and 3. Confidentiality
The report recognizes that institutional
arbitration is yet to take off in India and most companies (47%) prefer Ad-hoc
arbitration over institutional arbitration (40%). Retired judges of the Supreme
Court and High Courts are the most sought-after arbitrators. Among them also,
there is only a small club of seasoned
arbitrators that the companies choose from.
A
very important finding of the survey is that the “Companies in Indian are yet
to fully appreciate the tactical significance of the seat of arbitration” This,
I believe is very correct because parties and to a large extent even the
arbitrators do not have a clear idea of the distinction between seat/place and
venue of arbitration. With recent case laws, things appear to be improving but
the issue is too important to be pleaded ignorance of.
India
followed by Singapore and England are the most favoured seats of arbitration
and SIAC/IAC followed by ICC and LCIA finish as the top three institutions for
institutional arbitrations. Although,
HKIAC currently has a share of only 3%, I anticipate that this may rise
substantially after Honk Kong was notified by the Government of India as a
reciprocating country under the New York Convention on enforcement of foreign
awards.
Most
of the arbitrations in India took more than three years for the completion and
the most time consuming activity is constitution of the arbitral tribunal.
Unexpectedly,
arbitrators’ fee is among the top three factors that companies attribute to
cost of proceedings. What is surprising is, internationally, arbitrators fee
comprises not more than 10-15 percent of the total cost involved in arbitration
proceedings. The major cost ideally should be attributed to the counsels’ fee
and associated expenses. A report in
2009 by the Commission on Arbitration of the ICC (International Chamber of
Commerce) had found that such costs amounted to an average of 82 percent of the
total arbitration costs.
Although
the future of arbitration is optimistic, companies were dissatisfied up to
three times more with the arbitrations happening in India as opposed to
arbitrations happening in a foreign seat. The report says that “though
India is a preferred choice as a seat of arbitration, however in practice it is
not” The report also suggests that use of expert witness is not very common in
India and nearly half of the companies have never used them in their
arbitrations.
The
report recognizes that “Arbitration remains a preferred dispute resolution
mechanism, despite certain loopholes and shortcomings in the arbitration
environment in India. “
No comments:
Post a Comment