Arbitration law in India

According to the law firm Chambers and Partners Indian companies tend to readily agree with international arbitration clauses because either party wants to be subjected to a foreign court. The first Indian 1996 arbitration law was adopted for the first time in 2015 and came into effect in January 2016.  The main changes in the regulation relate to a very robust regime on independence and impartiality of arbitrators and the efficiency of arbitration processes. The amendments also make a clear distinction between purely domestic arbitration involving Indian parties (‘Domestic Arbitration’), arbitration having an international element but seated in India (‘International Arbitration’), and arbitrations seated outside of India (‘Foreign Arbitration’). In the new regulation it is clarified that an arbitration would be a domestic arbitration even if one of the parties to the arbitration has its central business and management outside India, but has a liaison or branch office in India. The provisions of the regulations are normally not applicable to foreign arbitration, except where specifically provided. The most common choice of parties in India was recently up to ad hoc arbitration because there was a lack of institutional capacity, according to the law firm Chambers and Partners. In the last few years however, there has been an increase in Indian businesses opting for an institutional arbitration clause in their agreements. Taking the new regulation into account, this trend is expected to be more widely adopted. Traditionally, the London Court of International Arbitration (LCIA) and the International Chamber of Commerce (ICC) took account for all institutional arbitration cases involving at least one Indian party. More recently also the Singapore International Arbitration Centre (SIAC) has a significant share of cases in its portfolio. This is most likely because of the proximity of Singapore to India. Amongst Indian institutions, the recently established LCIA (India) and the Indian Council of Arbitration (ICA) started by the Federation of Indian Chambers of Commerce and Industry (FICCI) are two purely domestic institutes that have seen considerable growth in their case-load, especially in disputes where the government is involved.

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