Commercial Disputes Conclave 2025 Highlights Arbitration Enforcement Challenges

New Delhi, Sep 25 (KNN) Arbitration in India, once envisioned as a faster, cost-effective alternative to litigation, has increasingly mirrored the very inefficiencies it sought to overcome.

This concern was the focus of a candid debate at the Commercial Disputes Conclave 2025, hosted by ET LegalWorld, where senior general counsels and arbitration experts assessed the system’s shortcomings and possible reforms.

The keynote panel, ‘Arbitration at a Crossroads – Navigating Enforcement, Costs, and Credibility in India’s Commercial Disputes’, moderated by Amit Meharia, Managing Partner, MCO Legals, highlighted how rising costs, procedural delays, and weak enforcement have eroded arbitration’s promise.

Sameer Chugh, General Counsel and Chief Legal Officer, Games 24x7, argued that, “The 1996 Act was a welcome change, but arbitration has only been partially successful. Costs are no different from litigation, and arbitrators — often retired judges — simply replicate courtroom procedures. We are back to square one.”

He noted that hearings often run well beyond statutory deadlines, sometimes extending a year and a half past the two-year cap, primarily due to scheduling conflicts.

“A litigation outcome might take three to three-and-a-half years anyway,” Chugh said. “Where is the real advantage?”

Meharia acknowledged the problem of arbitration replicating litigation culture, citing late hearings and automatic extensions under Section 29A. He called for tighter case management: “Fix the final date of hearing on day one, and work backwards.”

For corporate counsel, unpredictability remains a pressing concern. Prarabdha R. Jaipuriar, General Counsel – Indian Subcontinent, SUEZ, said businesses are left without clarity on costs or timelines.

“Our businesses need certainty of cost, outcome, and timeline,” he noted. “While outcomes can never be guaranteed, I cannot even give reasonable visibility on cost and duration,” he added, pointing out that companies often prefer early settlements over prolonged proceedings.

Handling complex infrastructure disputes, Jaipuriar pointed out how difficult it is to justify repeated hearing delays to CEOs and CFOs. “How do you tell management that a matter listed today could not be heard and is now adjourned by three months? For business leaders, this is incomprehensible.”

Sonal Kumar Singh, Managing Partner, AKS Partners, stressed that effective arbitrator selection and early procedural agreements can help reduce uncertainty.

He urged greater use of institutional arbitration to replace ad hoc models. However, Meharia countered that government-related disputes—comprising 90 percent of cases in India—limit party discretion under Section 11 proceedings. Singh maintained that parties could still stipulate arbitrator qualifications, including excluding retired judges, when approaching the courts.

Enforcement emerged as an even greater bottleneck. Gunita Pahwa, Joint Managing Partner, S&A Law Offices, observed that converting an arbitral award into actual recovery can take four to six years due to multiple appellate stages.

She welcomed innovations such as conditional stays, where the losing party must deposit funds or provide security.

“For clients, receiving even 75 percent of the award against a bank guarantee is a huge relief for cash-flow management,” Pahwa said. However, she cautioned that, despite statutory mandates, challenges often extend well beyond the one-year limit, leaving companies holding what she called ‘paper degrees’.

While Singh pressed for diversifying the pool of arbitrators, Pahwa offered a dose of realism: “In 21 years of practice, I have not seen a single arbitration in India where a client chose a non-judicial arbitrator. Businesses still overwhelmingly prefer retired judges.”

Her observation pointed to arbitration’s cultural inertia, where dependence on judicial figures sustains courtroom-style rigidity. Unless companies adopt alternative approaches, reforms may remain largely theoretical.

(KNN Bureau)