GIFT City: Expert Panel Calls For A New Framework For Dispute Resolution At The IFSC

(MENAFN- Live Mint) An expert panel set up for drafting rules for an international arbitration centre at GIFT City has sought changes to arbitration and mediation laws to ensure swifter out-of-court dispute resolution in the country's first International financial Services Centre (IFSC).

The panel has recommended a time limit of 21 days for filing an appeal against an arbitral award to avoid a backlog of cases. The Arbitration and Conciliation Act allows a window of 90 days for an appeal against an arbitral award.

Besides, the panel said appeals against an arbitral award to the Supreme Court should only be made via a Special Leave Petition (SLP).

"If this reform were implemented, parties would find it difficult to keep filing appeals under an SLP, and the matter would not be stuck in courts," said Sidharth Kapoor, public policy and legal strategy manager, Presolv360, an online dispute resolution firm.

Kapoor said such reforms should be implemented at the national level as expediting dispute resolution would improve the ease of doing business in the country.“Such reforms must be implemented at the national level and not be limited to certain special economic zone or business districts. Laws to speed up dispute resolution are generally implemented across the country, like in the UK or Singapore, which are hubs of arbitration.”

The International Financial Services Centre Authority fomed the committee to draft rules and guidelines to set up an Alternative Dispute Resolution Centre or ADRC in GIFT City in May 2023.

The panel, led by former chairperson of the Insolvency and Bankruptcy Board of India M.S. Sahoo, has proposed that arbitrations seated at GIFT City should be considered as“international commercial arbitration” to encourage more foreign companies to invest in India. It has sought an amendment in arbitration laws to include the proposal.

The panel also proposed explicit changes in the Arbitration and Conciliation Act to allow parties-Indian or foreign-to opt for GIFT City or any other IFSC as the seat of the arbitration.

"This suggestion intends to push for India's IFSCs to be arbitration centres for foreign companies. This can promote the idea that two foreign companies may consider India's IFSCs as the seat of arbitration," said Shreyashi Kashyap, an arbitration lawyer practicing at the Delhi high court and a member of the Young International Arbitration and Mediation Center, Hyderabad.

A separate bench in the Gujarat high court should be created to deal with issues arising out of the GIFT City ADRC, said the panel, adding that this should be followed by the creation of a separate high court to deal with IFSC-related issues in the country.

"While the creation of a separate high court bench is a welcome proposal, the creation of an entirely new high court for these proceedings would only increase litigation between the state high court and the special high court. This may ultimately slow down the dispute resolution process," Kapoor said.

The committee discussed the implementation of a system of grading arbitrators, and all members, except chairperson Sahoo, disapproved of it.

India's arbitration and mediation laws require alternative dispute resolution professionals to have a threshold level of competence and conduct. They provide for a mechanism to allow individuals, who meet the threshold level of conduct and competence, to become mediators or arbitrators to provide dispute resolution services and disallow them when they fail to do so, Sahoo noted in the panel's report.

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