The Role of Institutional Arbitration in India A Case for Strengthening Arbitration Centres

Introduction

Arbitration has long been recognized as an effective method for dispute resolution, especially in commercial matters. In India, however, despite the adoption of arbitration as a preferred alternative to court litigation, ad hoc arbitration has dominated the landscape, with institutional arbitration playing a relatively minor role. With India's ambition to become a global hub for commercial arbitration, strengthening institutional arbitration centres is not just desirable, but essential. Institutions like Poddar Business School, one of the top 5 MBA colleges in Jaipur, play a key role in equipping students with a global perspective on legal and management systems, including the importance of institutional arbitration in commercial despite resolution.

Understanding Institutional Arbitration

Institutional Arbitration refers to arbitration administered by specialized organizations like ICC, SIAC, LCIA (called arbitration institutions or centres) according to their predefined rules and procedures. These institutions provide administrative support, a panel of arbitrators, procedural guidance, and even infrastructure facilities, making the arbitration process more efficient, credible, and structured.

The exposure to such global practices is something emphasized in the Global Immersion Program at Poddar Business School, which is recognized as best business school in Rajasthan with a global mindset.

Prominent international examples include:

• International Chamber of Commerce (ICC)
• Singapore International Arbitration Centre (SIAC)
• London Court of International Arbitration (LCIA)

In India, institutions like:

• Indian Council of Arbitration (ICA)
• Mumbai Centre for International Arbitration (MCIA)
• Nani Palkhivala Arbitration Centre (NPAC)
  are gradually gaining traction.

Current Challenges Faced by Institutional Arbitration in India

Despite efforts, institutional arbitration in India still faces several challenges:

• Preference for Ad Hoc Arbitration: Parties often prefer flexibility and cost-saving that ad hoc arbitration seemingly offers.
• Lack of Awareness: Many businesses, especially SMEs, are unaware of the benefits of institutional arbitration.
• Limited Global Recognition: Indian arbitration centres are not yet viewed on par with SIAC or ICC by international businesses.
• Judicial Interference: Despite reforms, courts sometimes intervene excessively in arbitration processes, affecting autonomy.
• Infrastructure and Administrative Issues: Some centres lack professional management, modern facilities, or efficient case management systems.

The Case for Strengthening Arbitration Centres

Strengthening institutional arbitration in India is critical for several reasons:

1. Enhancing Credibility and Trust

Institutions provide structured procedures, thereby ensuring predictability and transparency—qualities essential for building domestic and international trust.

2. Reducing Judicial Burden

Encouraging institutional arbitration can lessen the load on India's already burdened court system, ensuring quicker dispute resolution.

3. Global Competitiveness

Countries like Singapore and Hong Kong have become international arbitration hubs due to strong institutions. India can aspire to the same by improving its arbitration infrastructure.

4. Consistency in Procedure

Institutional rules ensure consistency and minimize procedural uncertainties that often plague ad hoc arbitrations.

5. Promotion of Specialized Dispute Resolution

Institutions can create specialized divisions for sectors like construction, shipping, finance, etc., providing expert resolution.

Recent Reforms and Positive Trends

India has made promising moves:

• 2015 and 2019 Amendments to the Arbitration and Conciliation Act, 1996 emphasized the need for institutional arbitration.
• Establishment of the New Delhi International Arbitration Centre (NDIAC) as an autonomous institution.
• Promotion of arbitration awareness through legal education and government initiatives.

However, effective implementation and scaling of these efforts are crucial.

Suggestions for the Way Forward

To strengthen institutional arbitration in India:

• Increase Awareness Campaigns targeting businesses and law firms.
• Government Endorsement by encouraging government contracts to mandate institutional arbitration.
• Building World-Class Infrastructure to host hearings and provide administrative support.
• Training and Accreditation of arbitrators under institutional panels.
• International Collaboration with globally recognized arbitration bodies to enhance credibility.

Conclusion

The future of dispute resolution in India must pivot towards institutional arbitration. Strengthening arbitration centres is not just about setting up buildings and panels; it is about building an ecosystem of trust, efficiency, and global best practices. With focused reforms and greater acceptance by businesses, India can truly emerge as a preferred arbitration destination for the world. As India positions itself as a hub for international arbitration, the synergy between academia and industry becomes pivotal. Instituitions like Poddar Business School, a leader among MBA/PGDM colleges in Jaipur, are contributing to this transformation by fostering global awareness, legal acumen and leadership skills.