Indian judicial system witnessing pro-arbitration trend: EY report

In last 3 years, India has seen 200% growth in number of disputes that have been referred to arbitration

Indian judicial system is increasingly turning to arbitration and has seen a considerable rise in institutional arbitration. In the last three years, India has seen a growth of nearly 200% in the number of disputes that have been referred to arbitration. Traditionally, adhoc arbitration has been the preferred choice of dispute resolution in India and it still remains. The entry of professional institutes in the market has brought in efficient structure, competence, world-class facilities, credibility, quality services and effective case management. This has resulted in the growing popularity of institutional arbitration in India.

 

This is according to a report on released by EY, called 'Emerging trends in arbitration in India’. The report aims to study the current scenario of arbitration and understand the developing trends in the domain. 

 

Arpinder Singh, Partner & India Leader – Fraud Investigation and Dispute Services, EY says, “We have seen a rapid increase in the number of commercial disputes and clear preference of parties towards arbitration over traditional court litigation for resolution. Since our last study in 2011, arbitration in India has witnessed rapid transformation and is becoming more sophisticated.”

 

The research findings are based on the responses of leading legal practitioners and prominent users of arbitration in India and abroad. Here are some more insights from the report - 

 

Independence of arbitrators
 

Appointment of an independent arbitrator, unbiased to either party, is crucial to successful arbitration. The report indicates that there is a need to lay down explicit provisions for checking the independence and impartiality of arbitrators. An arbitrator appointed by the same party more than three times is required to provide a detailed disclosure in this regard.

 

Growing need for expert witness
 

The need for experts’ reports before passing an arbitral award is gradually growing due to the increasing sophistication and complexity of matters referred to arbitration. The report states that expert witness report provides concrete supporting evidence with regard to issues in arbitral proceedings and helps an arbitral tribunal deliver an arbitral award in all fairness. EY research reveals that leading Indian practitioners are of the view that the need for financial experts is going to increase in arbitral proceedings.

 

“There have been significant developments in the field of arbitration in India. The arbitration scenario in India will take a positive stride through implementation of cost- and time-effective solutions with streamlining of certain provisions of the law. Given the current scenario, we anticipate that the positive trend of resolving international disputes through arbitration will gain further momentum in India at a rapid pace” says Singh.

 

Hot tubbing – gaining popularity
 

EY study reveals that leading Indian practitioners are of the view that the need for financial experts is going to increase in arbitral proceedings. Hot tubbing is widely gaining recognition and importance over the old-school method of cross examination. The process enables lawyers and arbitrators to question experts in the presence of other specialists and challenge each other's evidence, and thereby simplifies complex trials and saves valuable time.

 

According to leading practitioners, the controversial practice of hot tubbing, although present in India, is practically negligible at the moment. This practice is viewed as desirable for increasing the efficacy of domestic arbitration

 

Growing importance of technology in arbitration
 

The scope of technology in arbitration is significant in view of cost and time it can save. Various effective IT tools like e-Discovery, financial modeling tools and data management systems can make arbitration more accessible eliminating geographical, economical and time constraints. However, EY research shows that the use of technology in arbitration is minimal and is not being exploited to its fullest potential. e-Discovery is a growing trend in commercial arbitration proceedings, especially when parties seek significant discovery. Likewise, financial models help in quantifying damages and analyses.