What has gone wrong with arbitration?

Sidharth Sharma of Tata argues that it has become a clone of the system it intended to replace

One of India’s greatest jurists, the late Nani Palkhivala, once said: “If I were appointed the dictator of a country, in the short period between my appointment and my assassination, I would definitely impose a law making arbitration compulsory in commercial contracts.”

Alas, the state of commercial arbitration in India today belies Palkhivala’s faith in the practice.

With the enactment of the Arbitration and Conciliation Act, 1996, which replaced a law dating back to 1940, India sought to create an environment in which arbitration would flourish. Yet since then, the practice has lost many of its virtues and has become a clone of the very system it intended to replace. No wonder the World Bank – in its Doing Business Report – ranked India almost at the bottom of the list of 184 countries surveyed for ease of enforcement of commercial contracts.

Sidharth Sharma is in-house counsel with the Tata Group and an alumnus of the National University of Juridical Sciences, Kolkata. The views expressed are his own personal opinions.