Settling for less?

Arbitration has gained traction as a means of avoiding India’s overburdened courts. Despite its appeal, results may not always match expectations

Nish Shetty explains

In April 2009 the London Court of International Arbitration (LCIA) became the first international arbitration institution to set up shop in India. This move by the LCIA coincided with a surge in the number of cases being referred to international arbitration at the LCIA and other leading institutions, including the Singapore International Arbitration Centre and the International Chamber of Commerce. The surge is in no small part due to the increased level of cross-border commercial activity in the past decade.

The Indian court system is even busier. Recent statistics suggest that almost 56,000 cases were pending before the Indian Supreme Court at the end of 2009. The number of pending cases in high courts and district courts exceeds 11 million. The huge volume of pending cases causes long delays. As a result, most international investors see international arbitration as a more efficient method for resolving commercial disputes with Indian parties.

The potential efficiencies associated with arbitration may well be attractive. However, companies doing business in India, or with Indian counterparties, should also consider issues such as enforceability and cost when choosing between international arbitration and litigation in India’s courts.

Nish Shetty is the head of South East Asia International Arbitration and Dispute Resolution at Clifford Chance in Singapore.