Ushering a new era in Indian arbitration?

In April 2009, LCIA India was established, as the first independent overseas office of the
London Court of International Arbitration. Ajay Thomas, Registrar of LCIA India, explores
the importance and implications for users of arbitration in India and beyond.

With a history dating back to 1892, the LCIA is one of the longest established arbitral
institutions, and also one of the most modern and forward looking. Its international
credentials are reflected in the nationalities of the parties referring their disputes to the
LCIA, of whom typically more than 80% are not of UK nationality.

With the centre of gravity of world trade shifting to Asia, it was natural that the LCIA
should „look east‟ as it contemplated the future direction of international commercial
arbitration. In 2008, the LCIA entered into a joint venture with the Dubai International
Financial Centre (DIFC) to establish the DIFC‐LCIA Arbitration Centre in Dubai. And, with
the launch of LCIA India in 2009, the LCIA became the first international arbitral
institution to set up an independent office in the sub continent.

Drawing upon the experience and expertise of one of the world‟s leading arbitral
institutions, LCIA India offers parties doing business in and through India, all the services
offered by the LCIA in the UK, and with the same care to ensure the expeditious, cost
effective and totally neutral administration of arbitration and other forms of ADR
conducted under its auspices.

Why India?

India‟s rapid economic growth and its emergence as the world‟s next growth engine,
has had the effect of highlighting the need to have best-of-class dispute resolution
procedures located within India. With the mainstream Indian judicial system saddled
with a backlog of c 31 million cases, arbitration and other forms of ADR are increasingly
being looked upon as viable alternatives to litigating in a court of law.

The USP of resolving disputes through arbitration is its relative speed, cost effectiveness,
and confidentiality. However, these virtues are facing a considerable strain in India
today. Anecdotal evidence suggests that up to 95% of arbitration in India is of the ad-
hoc variety, characterized by the lack of predetermined procedural rules, coupled with
the absence of institutional administration, and resulting in protracted and expensive
proceedings.

Although there seems to be a general acceptance of the virtues of administered

arbitration over ad-hoc arbitration, the key to winning parties over to institutional

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arbitration is to provide credible, efficient and cost effective institutional alternatives
within India itself. This is where institutions like LCIA India should play a pivotal role in
popularising the concept of institutional arbitration.

These factors, coupled with a vibrant and dynamic legal profession, a judiciary of
outstanding ability and reputation, the common law heritage and the use of the English
language are other factors which saw India being chosen as the venue for the first
independent office of the LCIA outside of London.

Right Time?

For the first time in decades, there is an air of expectancy in arbitration circles in India,
and a heightened sense of urgency to find a solution to the problems facing arbitration
in India.

The introduction in parliament of a law which seeks to create commercial divisions in

the various High Courts, the establishment of the Delhi High Court Arbitration Centre
(DAC) and the current proposals of the Ministry of Law to amend the Arbitration and
Conciliation Act, are manifestations of the positive steps being initiated by the
government and judiciary to reform the law and practice of arbitration in India.

Given this background, it is hoped that the launch of LCIA India will add traction to the
reforms that are underway.

LCIA India

The institution operates under a three tier structure, comprising the company, the
Arbitration Court and the Secretariat.

As a company, LCIA India is a not-for-profit entilty, incorporated under the Indian

Companies Act. Its board of directors comprises of well known Indian and international
arbitration practitioners. The board does not play an active role in the administration of
cases, being primarily concerned with the operation and development of the business
and with its compliance with applicable company law

The LCIA Court of Arbitration serves as the arbitration court for LCIA India, its main role
being to appoint tribunals, decide challenges to arbitrators and to control the costs of
arbitration.

The LCIA Court is a multi-national, multi-lingual and multi-racial body counting Fali
Nariman and Dushyant Dave among its illustrious former members and with India
represented today by Zia Mody (Managing Partner, AZB & Partners), and Darius
Khambata (Additional Solicitor General of India).

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The LCIA India Secretariat is based at the World Trade Tower, in the Connaught Place
area of New Delhi. The Secretariat, headed by its Registrar, is responsible for the day-to-
day administration of disputes referred to LCIA India. Services provided by the
secretariat are, of course, purely administrative in nature, and the secretariat renders no
legal services or advice.

The LCIA India Arbitration Rules

In April 2010, at a conference held at the Taj Mahal Palace & Towers in Mumbai, LCIA
India launched its arbitration rules. These Rules are to a very large extent based on the
LCIA‟s own tried and tested arbitration rules, but with changes incorporated to reflect
the interface with the Indian Arbitration & Conciliation Act, the practice of arbitration in
India and the various judicial decisions of the Supreme Court of India. The rules came
into force from 17 April 2010, and are accessible on the LCIA India website (www.lcia-
india.org).

The philosophical keystone to the Rules is Article 14, which places corresponding duties
on parties and tribunals to ensure proceedings are conducted fairly, efficiently and
expeditiously.

The Rules include a number of new provisions aimed at expediting proceedings, which
provisions may provide a prototype for future rules to be published by the LCIA. These
new provisions include an express requirement that all prospective arbitrators confirm
their ability to devote sufficient time to ensure the expeditious conduct of the
arbitration Further, Article 28.4(b), a new provision, provides that the Tribunal may take
into account the conduct and cooperation, or non-cooperation, of the parties during
the arbitration when determining the allocation of costs.

Article 10 of the Rules gives the power to the LCIA Court to revoke an arbitrators‟
appointment in the event the arbitrator “does not conduct or participate in the
arbitration proceedings with reasonable diligence, avoiding unnecessary delay or
expense”.

The LCIA India Rules, although directed at parties doing business in and through India,
are essentially an international set of rules, which are suitable for operation under any
system of law and can be used in any seat or venue throughout the world. Unlike the
LCIA Rules, which provide for London as a default seat, the LCIA India Rules do not
provide for a default seat. In the absence of parties‟ agreement of a seat, the seat
would be determined by the LCIA Court, taking into account interalia parties‟
proposals.

LCIA India has also produced a set of “Notes for Arbitrators” (also available on its
website), to provide guidance to arbitrators conducting arbitrations under its Rules, on

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issues relating to independence, impartiality, confidentiality and the management of
time and costs.

Other ADR services

Besides administering arbitrations under its own rules, LCIA India will, with party
agreement, administer arbitrations under the UNCITRAL rules or other ad hoc
procedures. LCIA India will also administer mediations under the LCIA India Mediation
Rules, and will extend its administrative services to expert determinations, adjudications
and other alternatives to arbitration and mediation.

Education & Training

Besides administering arbitrations, the institution will also look to effectively spread the
word on international arbitration techniques and to contribute to introducing
international best practices in India with a programme of symposia, conferences and
other training initiatives. It is hoped that these initiatives will aid in creating a larger pool
of arbitrators available locally.

In the meantime, and almost coinciding with the launch of the LCIA India rules, the
Indian Ministry of Law released a Consultation Paper on proposed amendments to the
1996 Arbitration & Conciliation Act. As a part of the consultative process, LCIA India
joined hands with the Ministry and with ICADR to organise a conference in Mumbai in
August 2010, to discuss the proposed amendments to the Act.

Attended by more than 180 delegates, the conference was inaugurated by Dr

Veerappa Moily, the Union Law Minister, and saw participation from Supreme Court
and High Court judges, leading members of the bar and corporate counsel. The
conference was organised as a part of a series of consultative conferences held in
various Indian cities.

Opportunity for Indian lawyers

Once a steady stream of cases comes to be referred to LCIA India, it is hoped that
there will be greater opportunity for Indian lawyers and law firms to represent clients in
administered international arbitrations.

The Future…

Within a month of the launch of its arbitration rules, LCIA India received its first case.
Although, it would take a few years for a steady stream of cases to be referred to LCIA
India, the institution‟s initial success will be judged on whether new commercial
contracts are drafted to include clauses specifying LCIA India as the preferred arbitral
institution, as to which, the feedback has been positive.

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Not long ago, given the inefficiencies in the practice and procedure of arbitration in
India, many Indian corporates contemplated removing arbitration clauses from their
contracts. However, with the government serious about reform, and a judiciary taking
significant steps to be and to be seen as arbitration friendly, India seems to be on the
path to becoming a more arbitration friendly jurisdiction, and in due course emerge as
an important arbitration destination.

Ajay Thomas is the Registrar of LCIA India and head of its Delhi-based secretariat.

301-A, World Trade Tower

Barakhamba Lane
New Delhi 110 001
India

Tel: +91 11 4536 2222

Fax: +91 11 4536 2299
E: at@lcia-india.org
W: www.lcia-india.org