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India Amending Arbitration Laws to Attract International Business

Wednesday, February, 18, 2015

India has set a plan in motion to revise its laws governing arbitration in a bid to create a friendlier environment for international investment. The proposed revisions would set time limits for court cases and simplifying court rules and procedures; the moves are designed to dispel the widely-held impression that Indian court cases and arbitrations are very slow, which makes investors think twice before risking their funds in the country, fearing they will be tied up for years in the case of a dispute.


In fact, India’s international business reputation is very poor. The World Bank sets India at 186th out of 189 countries in terms of contract enforcement. Part of this low ranking is directly tied to the billions of dollars frozen in slow-moving litigation every year.


In addition to a revision of the arbitration laws, the Indian government also plans to create bespoke commercial courts in order to offer businesses a fast and efficient venue in which to resolve their disputes. There are also proposals to make it more difficult for courts to overrule arbitration decisions in order to increase confidence in the process.


The government initially planned to accomplish much of this via executive order, but was convinced that would only lead to opposition, and so has changed tact and sought a legislated solution.


It is estimated that disputes involving Indian companies worth more than $64 billion are currently being determined outside of India. The government would very like to lure those sums back into the country.