An expert panel established to draft rules for an international arbitration center at GIFT City has proposed substantial amendments to India’s arbitration and mediation laws. These changes are designed to streamline the dispute resolution process within the country’s inaugural International Financial Services Centre (IFSC).
The panel, aiming to expedite the resolution of legal disputes, has suggested a 21-day time limit for filing appeals against arbitral awards. This proposed change contrasts with the current 90-day window outlined in the Arbitration and Conciliation Act. Furthermore, the panel advocates that appeals against arbitral awards to the Supreme Court should exclusively be made via a Special Leave Petition (SLP).
Sidharth Kapoor, public policy and legal strategy manager at Presolv360, an online dispute resolution firm, believes that implementing these reforms would significantly impact the appeal process. “If this reform were implemented, parties would find it difficult to keep filing appeals under an SLP, and the matter would not be stuck in courts,” Kapoor stated. He further emphasizes the need for national-level implementation of such reforms, highlighting their potential to enhance the ease of doing business in India. “Such reforms must be implemented at the national level and not be limited to certain special economic zone or business districts. Laws to speed up dispute resolution are generally implemented across the country, like in the UK or Singapore, which are hubs of arbitration.”
The International Financial Services Centre Authority formed the committee in May 2023 to develop rules and guidelines for establishing an Alternative Dispute Resolution Centre (ADRC) in GIFT City.
The panel, headed by former chairperson of the Insolvency and Bankruptcy Board of India M.S. Sahoo, has recommended that arbitrations seated at GIFT City be classified as “international commercial arbitration” to attract greater foreign investment into India. This proposal necessitates an amendment to the existing arbitration laws.
The panel has also proposed explicit changes to the Arbitration and Conciliation Act, allowing parties – both Indian and foreign – to choose GIFT City or any other IFSC as the seat of arbitration. “This suggestion intends to push for India’s IFSCs to be arbitration centres for foreign companies. This can promote the idea that two foreign companies may consider India’s IFSCs as the seat of arbitration,” explained Shreyashi Kashyap, an arbitration lawyer practicing at the Delhi high court and a member of the Young International Arbitration and Mediation Center, Hyderabad.
To handle issues arising from the GIFT City ADRC, the panel recommends the establishment of a separate bench in the Gujarat high court. Furthermore, they advocate for the creation of a separate high court dedicated to addressing IFSC-related matters across the country. However, Kapoor expresses concerns about the potential drawbacks of creating a new high court. “While the creation of a separate high court bench is a welcome proposal, the creation of an entirely new high court for these proceedings would only increase litigation between the state high court and the special high court. This may ultimately slow down the dispute resolution process,” he remarked.
The committee explored the implementation of a grading system for arbitrators but, with the exception of chairperson Sahoo, all members opposed the proposal. Sahoo highlighted in the panel’s report that India’s arbitration and mediation laws mandate a minimum level of competence and conduct for alternative dispute resolution professionals. He further emphasizes that existing mechanisms allow qualified individuals to become mediators or arbitrators, while those failing to meet the standards are barred from offering dispute resolution services. Sahoo drew a parallel with the country’s insolvency rules, which also incorporate a grading mechanism to ensure the competence and conduct of registered insolvency professionals. These rules further outline the process for deregistering professionals who fall short of the established standards.
