While Prime Minister Narendra Modi has given impetus to making India’s commercial landscape attractive to foreign investors, people from various industries have highlighted the lack of infrastructure to address commercial disputes that has led to a rise in the number of cases pending in courts. This is also affecting the growth of start-ups.
Madhu S., Centre for Public Policy Research (CPPR), said, “Industries appoint retired judges to arbitrate or mediate because of the general acceptance involved. However, in around half of the cases where a matter is resolved, the parties end up going to the court, highlighting the lack of legal finality to the process and the instances of court interference.”
According to a CPPR study on “Findings of Commercial Dispute Resolution Assessment”, supported by the British Deputy High Commission, Chennai, 53% respondents said that there is a shortage of qualified and skilled arbitrators/mediators in India. In 30% of such cases, the opposite parties did not appear or failed to respond to the call for dispute resolution while an unfavorable judgment was a common concern for the parties taking matters before the court.
The Centre, too, has voiced its support for developing better institutional mechanisms for Commercial Dispute Resolution through the Commercial Courts Act and amendment to Arbitration and Conciliation Act considering dispute resolution as part of “Ease of Doing Business” reforms.
The CPPR study states that the total number of commercial disputes pending in High Courts with original jurisdiction is 16,884. With 5,865 pending cases, Madras High Court tops the list. To address the problem of rising pending cases of commercial disputes, commercial courts have started functioning in Delhi, Mumbai, Himachal Pradesh and Gujarat to settle high-value business disputes.
The need for legislative backing for mediation or arbitration agreements or awards has found high support among the industries. Currently, the Arbitration and Conciliation Act, 1996 governs arbitration and conciliation in India. However, mediation is still a court assisted process. The new amendment to the Act has tried to provide more support of Alternative Dispute Resolution (ADR) systems in the country. The CPPR study states that 23% of industries say that lawyers had advised them not to proceed with alternative dispute resolution.
Siddharth Sikdar, legal executive, Quippo, said, “Since we lack a proper framework for , things are still not as easy as they are in developed countries. As of now, a person either chooses to go to court or chooses to arbitrate to resolve their disputes. Arbitration is generally more acceptable because courts prove expensive and take too long compared to arbitration which now has to be finished within a year as per the latest changes in the law.”