Commercial courts and mandatory mediation are welcome steps, but it will take a lot more to unclog the legal system, writes K Satish Kumar of Ramco Systems
Doing business in India is a catch 22 situation. On the one hand, there is an enormous business opportunity presented by a young, emerging middle-class population, which is attractive to businesses worldwide.
On the other hand, there is an overburdened legal system that is infamous for indefinite delays, which has made it difficult for foreign and domestic investors to protect their investments in India. Most businesses shudder at the thought of being caught up in a legal dispute in Indian courts.
As was seen in the White Industries Australia Ltd v Union of India case, inordinate delays in the legal process were viewed as a breach of investment treaty obligation by India. The International Chamber of Commerce Arbitral Tribunal upheld White Industries’ claim and said that the government of India had breached its obligation to provide “effective means of asserting claims and enforcing rights”, and awarded a sum of A$4,085,180 (US$2.9 million) together with interest at the rate of 8% per annum from 24 March 1998 until the date of payment. This was a huge blow to the legal system in India.
Disputes in India can also be resolved through litigation, arbitration or mediation. Litigation, through courts and tribunals including the Supreme Court, high courts and subordinate courts, is extremely time-consuming, considering the load of pending cases in these courts. While there are several tribunals such as administrative tribunals, a railway claims tribunal, industrial tribunal, debt recovery tribunal, and real estate tribunal, which were all set up to expedite proceedings in specific litigation areas, the process remains slow.