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India's Arbitration Law Faces Challenges: Insights by Fali S Nariman

In a significant address during the inaugural session of the United Nations Commission on International Trade Law (UNCITRAL) South Asia Conference, 2023, Senior Advocate Fali S Nariman shed light on the state of India's arbitration law. He described it as being in a "chronic state of animated suspension." The event, held on September 14, provided a platform for discussing critical aspects of the law and its amendments.

Nariman highlighted the evolution of India's Arbitration and Conciliation Act, 1996, which initially aligned with the UNCITRAL model law. However, subsequent amendments led to a departure from this alignment. He noted, "I say this with some regret, with a series of subsequent amendments, made by the Amendment Act of 2016 and the amendment Act of 2019, as well as some court decisions, the 1996 Act went off the rails."

In June 2023, the Government of India formed an expert committee to reassess the provisions of the Arbitration and Conciliation Act 1996. This committee was tasked with advising on potential modifications to the existing law. Despite the committee's report being confidential, pending consideration by the government, Nariman expressed his concern over the current state of arbitration law in India.

Nariman pointed out that India's involvement in International Commercial Arbitration traces back to the 1920s. However, the absence of a structured law led to a disorganized practice until the adoption of the UNCITRAL Model Law. He lamented that various countries, including India, have deviated from the UNCITRAL model while enacting their national laws, resulting in diverse interpretations and applications.

Discussing the challenges faced in International Commercial Arbitration today, Nariman highlighted the issue of challenging the independence and impartiality of arbitrators. He emphasized the need to disclose concrete reasons rather than mere suspicion to prove the lack of impartiality, making it a challenging task under the existing framework.

Another significant challenge outlined by Nariman was achieving a quick and cost-effective resolution of disputes in International Commercial Arbitration. He noted that while swift resolution is essential, it remains difficult to attain without incurring substantial expenses.

In summary, Fali S Nariman's insights shed light on the critical aspects of India's arbitration law and the need for careful reconsideration and alignment with international standards. The challenges posed in the current system necessitate thoughtful amendments for a more efficient and reliable arbitration process in India.