Arbitration centre in city pushes to be among global best

On the 20th floor of Express Towers at Nariman Point, experts work round the clock to take India’s financial capital a step closer to becoming a global financial centre: they resolve commercial disputes that arise from doing business with global players, also called ‘international arbitration’.

The Mumbai Centre for International Arbitration (MCIA) is the only place in India which offers the infrastructure to resolve such disputes in an 18-month time frame.

The centre, inaugurated on October 8, 2016, has administered four domestic and one international case through institutional arbitration. It appoints arbitrators who understand the nuances of a case and provide confidentiality to disputing parties.

This method of resolving disputes is gaining traction, for many reasons. A Maharashtra government policy in 2016, says, “Institutional arbitration has clear advantages. It provides qualified arbitrators empanelled with the institution, and the rules and procedure of the arbitral proceedings are determined by the institution. The institution provides administrative support in the form of Secretariat and staff. It mostly saves parties the huge cost of fees, which may be predetermined, as per the nature of dispute and services of the arbitrators.”

Arbitration, says Madhukeshwar Desai, CEO of MCIA, “has become a preferred mode of dispute resolution internationally,” because commercial transactions are getting very complex. “There is a need for experts and technology to come together.”

Why institutional arbitration?

There are two types of arbitration, says S. Mahaligam, director of the Nani Palkivala Arbitration Centre: ad hoc and institutional. Ad hoc arbitrations, he says, replicate court processes and result in delay. Whereas institutional arbitration, says B.N. Srikrishna, retired Justice of the Supreme Court, is “the right step in the right direction.”

Naveen Raju, legal head of Mahindra and Mahindra, also says institutional arbitration is preferred to ad hoc arbitration. “In the past two years, we have introduced institutional arbitration as our preferred mode of dispute resolution in standardised contracts and use the MCIA as the administering institution. We have experienced shortcomings of ad hoc arbitrations and believe that institutional arbitration is a better alternative in relation to time, cost and efficiency in administration of disputes. We rarely face resistance from our business partners in agreeing to using MCIA.”

In 2017, the Supreme Court “referred an arbitration case to the Arbitration Centre at Mumbai to appoint an arbitrator for arbitration.” In 2018, the Bombay High Court also “directed that arbitration shall be conducted under the MCIA.”

The Maharashtra government’s policy says all government contracts executed on behalf of the governor, the State and other government corporations and bodies, “shall have a recommended standard institutional arbitration clause, where the commercial value of the contract is ₹5 crore and above, to go to recognised Indian arbitration institutes like MCIA.”

In all the agreements concerning the Metro and Monorail in the city, for instance, there is an MCIA clause that requires the parties need to go into arbitration in case of a dispute.

‘Truly global’

The centre is unique in many ways. For one, the government supports it, but does not control it, “just like other international arbitration centres in London, Hong Kong, Singapore and Paris,” says Mr. Desai.

What gives it a global character is that out of the 18 members, nine are international arbitration practitioners.

Retired Bombay High Court judge F.I. Rebello, says what sets it apart from the other institutions is that it has its own managing committee. “Prominent names in arbitration from Singapore, Hong Kong, England and all across the world are here. That is a big asset in the field.”

Also, unlike other arbitration centres, MCIA does not have a published list of arbitrators. “We run training programmes for arbitrators along with the Chartered Institution of Arbitrators to get them to certify and qualify as many arbitrators as they can,” says Mr. Desai.

How it works

All commercial cases except those related to tax and intellectual property are arbitrable in India.

Under the MCIA rules, the applicant needs to submit an application before the centre stating they are going in for dispute resolution, and the arbitrator accordingly decides a date. Arguments are made on both sides, and following cross-examination, an award (order) is passed.

There is a schedule of fees and a fee calculator on the centre’s website. Based on the claim and counter-claim, the institution decides on the cost of the arbitration, which is the cost of the arbitrator and that of the centre. “To put into perspective, we charge 35% of the cost as compared to SIAC, the Singapore arbitration centre. So if you pay the Singapore centre Rs. 100 for a claim of Rs. 10,000, MCIA will charge Rs. 35,” says Mr. Desai.

He also talks about a separate wing called ‘Young MCIA’, an independent body under the MCIA, wherein 800 young people from across the world will hold events every month, nationally and internationally. “There is also a questionnaire to qualify them as young MCIA members.”

The MCIA conducts international roadshows every year along with one law firm that is with them and one expert. “There is an ecosystem in India that makes it a preferred destination for arbitration,” says Mr. Desai.

The challenge

The concept of institutional arbitration may be appealing to most, but as with most things in India, it is yet to catch on.

Neeti Sachdeva, Registrar and Secretary General of MCIA, says one of the biggest challenges in the Indian market is the acceptability of institutional arbitration. “A lot of firms are still oblivious to how institutional arbitration works. People are slowly opening up to non lawyers and non judges as their arbitrators, but it’s gradual.”

MCIA too has some distance to cover.

“They have infrastructure but personnel, money and competence are required and it will take some time,” says Mr. Srikrishna “They will require a trained bar dedicated to arbitration. That will change with time. The centre is in the infant stage.”

Mr. Srikrishna gives it another five years before it comes up to the level of those in Singapore or Dubai.

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Printable version | Sep 24, 2021 12:50:20 PM |

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