New Delhi: It was meant to bring targeted reforms in the arbitration landscape in India, become a flagship institution for quick solutions to international and domestic corporate disputes. But three years after it became fully operational, the India International Arbitration Centre (IIAC) has concluded only 20 arbitration matters, with only one that involved a public sector undertaking (PSU).
Sources in the IIAC told ThePrint that the institution is facing an uphill battle not just convincing private entities to opt for it, it has found almost no takers among PSUs as well as MSMEs, the two entities it was meant to service.
Sources said the IIAC, under the leadership of its present chairman Justice Hemant Gupta, held several rounds of deliberations with PSUs, the central ministry overseeing the MSME sector and corporate law firms with an agenda to push the centre’s credibility as a reliable, independent and robust institution in the field of arbitration. The idea was to promote institutional arbitration as an effective alternative grievance redressal mechanism.
Rules were framed to provide quick resolution to commercial disputes and a stellar panel of arbitrators was picked to attract both international as well as domestic commercial entities. “The rules lay down strict timelines for each step involved in an arbitration process and this was done to convince the parties to prefer the institution for arbitration, instead of opting for ad-hoc arbitrations that have tendency to get dragged, just like any other court litigation,” said one of the sources quoted above.
To attract MSMEs, the Centre also introduced a translation tool in their filing process. This was done so that the MSMEs did not waste time in getting their documents translated, in case they were not in English.
While PSUs and MSMEs evinced no interest, corporate law firms have shown their reluctance to opt for the Centre for arbitration. This is because they see the institution as an extension of the government and since most private companies arbitrate with PSUs or government bodies, they are not convinced the Centre would be impartial, another source said.
“During our meetings with corporate law firms, who represent international companies in India, we attempted to clarify that the institution is an independent forum, even though it is backed by a statute. They were told that the process to remove its chairman is similar to the one that is followed to oust a sitting Supreme Court judge. We may be backed by Parliamentary legislation, but our functioning is independent,” the source said.
Judiciary’s continued preference to mark arbitrations to ad-hoc arbitrators is another reason the Centre has failed to generate work for itself. Unlike the Delhi International Arbitration Centre (DIAC), which is affiliated to the Delhi High Court, the IIAC has not received any arbitration assignment through judicial orders.
“DIAC is attached to the Delhi High Court and the judges mark cases to it regularly. On the other hand, IIAC has not got any work either from the HC or the Supreme Court,” the source added.
In 2019, the Modi government approved promulgation of an Ordinance for establishing the New Delhi International Arbitration Centre (NDIAC) for the purpose of creating an independent and autonomous regime for institutionalised arbitration.
Three years later, in 2022, the government framed rules, renamed it IIAC and appointed Justice Gupta as its chairman for three years, besides naming senior Supreme Court advocate Anant Vijay Palli and Ganesh Chandru, partner at Dua Associates, as part-time members.
The objective of IIAC was to bring targeted reforms to develop itself as a flagship institution for conducting international and domestic arbitration; provide facilities and administrative assistance for conciliation mediation and arbitral proceedings; maintain panels of accredited arbitrators, conciliators and mediators both at national and international level or specialists such as surveyors and investigators; and provide cost effective and timely services for the conduct of arbitrations and conciliations at domestic and international levels.
“The benefits of institutionalised arbitration will accrue to the government and its agency and to the parties to a dispute. This shall be to the advantage of the public and the public institutions in terms of quality of expertise and costs incurred and will facilitate India becoming a hub for institutional arbitration,” read the press release issued in 2019 when the Ordinance was cleared.
(Edited by Viny Mishra)