Interview with Madhukeshwar Desai: MCIA seeks to be appointing authority for arbitrators

The new not-for-profit arbitration centre in Mumbai offers cheaper options to companies for conducting their arbitration disputes under international best arbitration rules.

Written by Khushboo Narayan | Mumbai | Published:October 15, 2016 1:16 am
Madhukeshwar Desai, Mumbai Centre for International Arbitration, MCIA, Arbitration act, bombay high court, indian express interview, mumbai, mumbai news, India news MCIA CEO Madhukeshwar Desai at his office in Mumbai. (Source: Express Photo by Nirmal Harindran)

The Mumbai Centre for International Arbitration (MCIA), the country’s first such centre, will approach the Bombay High Court to request to become the appointing authority for arbitrators under Section 11 of the Arbitration Act, in disputes that come before the High Court, said Madhukeshwar Desai, chief executive officer of MCIA.

“We have spoken to some senior lawyers and are planning to make a presentation before the High Court judges,” said Desai. Under arbitration norms, courts are allowed to depute an institution as an appointing authority of arbitrators. MCIA was launched on October 8, as a step towards establishing the city as an international financial centre. At present, most global business disputes involving Indians land in Singapore or London arbitration centres. The total outflow of funds to resolve such cases, complete with logistics and other related expenditure, works out to around $5 billion, sources said.

The new not-for-profit arbitration centre in Mumbai, according to Desai, offers cheaper options to companies for conducting their arbitration disputes under international best arbitration rules. The MCIA also offers ‘tuned for arbitration’ premises. For instance, a 600 sq ft. fully equipped hi-tech, secure hearing room will cost Rs 30,000 for a day, almost one and a half times less than the rates of business rooms of prominent hotels in India.

“The costs to arbitrate under the MCIA are quite competitive and certainly more cost effective than the foreign institutional rules,” said Cyril Shroff, managing partner of law firm Cyril Amarchand Mangaldas, who is also on the council of MCIA.

MCIA that allows parties to conduct ad hoc arbitration and arbitration by other institutions in its premises has already been approached by at least two parties for conducting arbitration proceedings this month.

In the next one year the MCAI will roll out its Young MCIA programme to get younger arbitral practitioners from different jurisdictions to understand the rules and benefits of MCIA and market it, said Desai. The arbitration centre is also planning to rope in senior arbitration practitioners in smaller cities of India to use the MCIA rules to educate the local business and legal community about the advantages of the centre.

So far, India has hardly been a preferred seat for settling disputes through arbitration due to lack of credible arbitral institution, excessive judicial intervention, absence of a dedicated arbitration bar and lack of clarity on concept of public policy in the country. According to a study conducted by the Singapore International Arbitration Centre, almost 30 per cent of the disputes it hears annually relate to matters involving Indian businesses. Also, the number of disputes it settled between 2001 and 2013-14 has shown a ten-fold increase.

“With the amendments to the Indian Arbitration Act and establishment of arbitration institutions like MCIA, India will have greater chances to be considered as a hub and would replace other traditional seats for International Commercial Arbitration in near future,” said Tejas Karia, partner at Shardul Amarchand Mangaldas & Co.

But some lawyers feel that the government needs to evolve a culture of arbitration in the country to reduce pendency in courts.

“The government is India’s largest litigator and it needs to have a definitive national litigation policy that duly recognises and respects the arbitration process. In this regard, the government of Maharashtra’s statement that it would ask state-owned entities and firms to incorporate clauses in contracts worth more than Rs 5 crore submitting disputes arising out of such contracts to the MCIA, is very encouraging,” said Rajendra Barot senior partner at law firm AZB & Partners.

khushboonarayan@expressindia.com
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