GIFT (Gujarat International Finance Tech) City is a planned business district in Gujarat, India’s first International Financial Services Centre (IFSC) under the Special Economic Zone Act 2005. It is being developed and promoted as a global financial services hub with financial incentives and relative regulatory freedom for businesses established there. GIFT is set to launch its own international arbitration centre, for the faster resolution of disputes under international jurisprudence.
The inclusion of a reliable, international dispute resolution facility is often considered an important aspect of establishing a new centre for international business and finance. But whilst the idea of a new international arbitration centre is exciting and makes good commercial sense, it will be important that the centre operates to a high standard of effectiveness so that it can compete with the major arbitration centres around the world and help to attract the kind of investment that GIFT would like to see.
One practical issue that the arbitration centre may face arises from the fact that there is a relatively small pool of recognised specialist international arbitration lawyers in India. Parties therefore tend to appoint arbitrators from a (relatively small) group of retired judges. This can have the result that arbitration is conducted like litigation, with arbitrators allowing procedural rules of Courts to be used. The lack of a substantial specialist arbitration bar not only means that parties are forced to choose from a limited pool of arbitrators, who tend to be expensive and busy, but also that arbitrations sometimes take place outside of court hours and on weekends, increasing resolution times.
To truly establish arbitration as a world class, alternative dispute resolution mechanism in India, it has been suggested that there needs to be greater development of a culture of resorting to arbitrations to resolve disputes and further specialisation amongst lawyers to ensure that arbitrations can be conducted efficiently and effectively.
It will be interesting to see how the new international arbitration centre in GIFT, which seeks to mirror the success of other arbitration centres like the LCIA, will counteract some of these practical issues, not only to keep domestic disputes within the country, but also to attract disputes from other jurisdictions. India has the potential to become a major seat for the resolution of disputes through international arbitration and the arbitration community will, no doubt, watch developments in the country with considerable interest.
If you have any questions on the arbitration process or international arbitration centres, please contact Duncan Bagshaw or Arish Bharucha.
Want to hear more from us? 
