The Indian government is working to breathe new life into the India International Arbitration Centre (IIAC), a statutory body established in 2019. This revival effort involves incentivizing various parties to opt for arbitration at the New Delhi institution, with the goal of significantly increasing its caseload.
Two government officials, speaking anonymously, revealed that the IIAC, the only arbitration institution directly funded by the Union government, is on the cusp of a new chapter. Following amendments to arbitration rules for micro, small, and medium enterprises (MSMEs) in June, the IIAC is focusing on specializing in international maritime arbitration.
Hemant Gupta, the chairperson of the IIAC and a retired Supreme Court judge, explained that a new arbitration center in Mumbai will be established as a branch of the IIAC rather than a separate entity. Both the incentives for MSMEs and the focus on maritime arbitration are strategic moves aimed at promoting institutional arbitration within India.
The push for institutional arbitration has roots that go back to the turn of the millennium, with the establishment of the International Centre for Alternative Dispute Resolution (ICADR) and the passage of the Arbitration and Conciliation Act in 1995 and 1996. ICADR played a pivotal role in promoting institutional arbitration, however, it faced challenges with a weak caseload, indicating a gap in India’s embrace of this method for dispute resolution.
An expert committee report led by retired Supreme Court judge B.N. Srikrishna in 2017 highlighted the issue, noting that the ICADR’s caseload paled in comparison to international institutions like the Singapore International Arbitration Centre (SIAC), the London Court for International Arbitration (LCIA), and the International Chamber of Commerce (ICC) Court. This led to the government’s decision to establish the New Delhi International Arbitration Centre, later renamed the IIAC, in 2019.
The issue of a weak caseload, however, persists. Currently, the IIAC is handling around 15 ongoing institutional arbitrations, a number that Mr. Gupta acknowledged is low.
In June, the government introduced new rules for arbitration involving MSMEs, offering them discounted access to the IIAC’s services. These rules include a provision for no filing fees, minimal arbitrator fees, and minimal administration fees for MSMEs. Additionally, the rules provide for fast-track arbitration, with cases concluding within six months from the date the arbitrators are chosen by the parties. A fee waiver is also available for MSMEs seeking legal aid.
The IIAC has also decided to focus on maritime arbitration, mirroring the strategy used to attract MSMEs. This decision aligns with the global trend of increasing demand for maritime arbitration, particularly international maritime arbitration, as the shipping industry thrives due to rising international trade.
The revival of the IIAC is crucial as India aims to transition from a culture of ad hoc arbitration to institutional arbitration, a move recommended by various expert panels and law commission reports. This aligns with the central government’s ambition to establish India as a global arbitration hub.
Arjun Ram Meghwal, the Law and Justice Minister, recently stated that the government is in the process of formulating new rules under the Arbitration Act. The law ministry has also sought data on the state’s arbitration matters from all other ministries, demonstrating its commitment to enhancing India’s arbitration framework.
The IIAC relies on annual grants from the central government, ranging from 3-4 crore rupees. Approximately half of this budget is allocated for salaries of permanent employees. Notably, other institutional arbitration centers in the country are either privately operated or managed by high courts. For instance, the Delhi International Arbitration Centre is operated by the Delhi High Court.
