Arbitration as an Alternative to Litigation in India

In India, the judicial system is often slow, making arbitration a preferred method for resolving commercial disputes quickly. Arbitration offers a streamlined process and finality, reducing legal costs and business disruptions.

Supreme Court Judgment in 'Gayatri Balasamy vs ISG Novasoft Technologies'

• The Supreme Court ruled that supervisory courts have limited powers to modify arbitral awards.
• Under Article 142, the apex court can modify awards for complete justice.
• This judgment may lead to increased judicial intervention in arbitration, weakening its finality.

Judicial and Government Actions Affecting Arbitration

• The Supreme Court's curative jurisdiction was invoked to set aside a ₹7,600 crore award against DMRC, causing uncertainty in arbitration outcomes.
• The Government of India's draft Arbitration and Conciliation (Amendment) Bill 2024 proposes expanding grounds to set aside international arbitration awards to include 'patent illegality.'
• An office memorandum was issued restricting arbitration in government contracts over ₹10 crore, signaling a lack of confidence in arbitration.

Consequences of Recent Moves

• These moves blur the line between litigation and arbitration, discouraging its use.
• They threaten the gains made in arbitration reform since 2015.
• India risks increasing legal uncertainty, higher transaction costs, and discouraging foreign investment without a robust arbitration framework.

In conclusion, while arbitration has been a vital tool for resolving commercial disputes in India, recent judicial and governmental actions threaten its effectiveness, potentially impacting the economic environment negatively.