India Inc leans towards domestic arbitration for dispute resolution over lengthy litigations

India Inc. intends to use domestic arbitration more in future for the resolution of both small and large disputes, a survey conducted with about 110 respondents including general counsels and promoters of companies showed.

The survey by law firm Khaitan & Co shared exclusively with ET, showed that companies will use domestic arbitration for both small disputes (75%) and large disputes (85%) over any other dispute resolution mechanism.

Interestingly, most respondents preferred to appoint either a retired judge or an industry expert as an arbitrator (55.86%), followed by counsels (33.33%), law firm partners (25.33%) and non-lawyers (3.06%).

The findings become relevant at a time when case pendency is increasing in the courts. As per the National Judicial Data Grid (NJDG), all the courts have a combined over 44 million pending cases. This includes 6.183 million in 25 high courts and over 79,750 cases in the Supreme Court.

Haigreve Khaitan, senior partner, Khaitan & Co, said arbitration is an efficient and effective dispute resolution mechanism critical to Indian business, foreign investment in India, the Indian economy, and the rule of law.

According to the survey, over 80% of the respondents considered that emergency arbitration measures for urgent or time-sensitive issues should be provided for, and 40% considered that this should be completed within 30 days.“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,” said Khaitan.“We believed that it was timely to survey domestic arbitration in India because it is practically more relevant to more Indians and their businesses as well as foreign investors doing business in India,” he added.

In arbitration, the disputing parties try to resolve their conflict behind closed doors, which helps the parties to maintain confidentiality. Also, the arbitral tribunal passes the award, which is enforceable in courts.

“Outside India, we have seen diversity in terms of partners of law firms or counsels also regularly being appointed as arbitrators,” said Sanjeev K Kapoor, partner of dispute resolution at Khaitan & Co. “Someone from a specific technical background and even gender is a kind of diversity which makes arbitration to be a more inclusive and efficient process and will help the ecosystem to become more robust.”

Since most such disputes are related to contractual obligations between parties, the survey indicated that over 92% of respondents agree that there should be more diversity in the selection of arbitral panels. Similarly, over 75% of respondents said that there should be more non-legal experts appointed to the arbitral panels.

Kingshuk Banerjee, partner, in dispute resolution at Khaitan & Co. said in certain hyper-technical disputes, may help to have technical experts as panel members in the arbitration tribunal. A technical expert is particularly useful when the dispute is squarely technical and factual as opposed to one involving complex questions of law or interpretation issues.”