Arbitration Reform in India- but still a risky area (1)
Recent amendments to the dispute resolution regime in India aim to provide foreign parties with a more efficient process. The Arbitration and Conciliation (Amendment) Act, 2015 (Amended Arbitration Act) and the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (Commercial Courts Act) were enacted by the Indian Parliament and formally published on 1 January 2016.
Concerns remain regarding the novel and untested provisions (such as new time limits) which are aimed at increasing the efficiency of arbitrations seated in India, but which may inadvertently have the effect of increasing recourse to the courts (eg applications for extensions), and consequentially increase the risk of delay.
The Amended Arbitration Act will not apply to on-going proceedings, unless the parties otherwise agree. It remains to be seen how these reforms will operate in practice. Therefore our recommendation remains that for high value contracts in particular, it is preferable for foreign parties to refer disputes to arbitration outside India, rather than rely on the domestic dispute resolution process.
Note: Regulation prohibits foreign law firms from practising Indian law or from having our own office in India. Our India Group is made up of some 100 partners and associates who have a long track record of working on India-related matters. We have played a leading role advising international and Indian clients on international aspects of many high-profile deals and disputes in recent years. Our excellent working relationships with the leading Indian law firms allows us to provide a seamless and full range of legal services to clients.