CORD India: Arbitration Avoidance Reasons Are High Costs, Delays, & Arbitrator Accountability

• High and unpredictable costs, prolonged proceedings, and a lack of arbitrator accountability are the top reasons companies avoid arbitration in India.
• A CORD survey of in-house counsel found that 73% cited costs, 60% cited duration, and 54% cited arbitrator accountability as deterrents.
• Court interference ranked fourth among the reasons for avoiding arbitration, contrary to common perceptions.
• Vikas Mahendra of CORD presented these findings on September 4 in New Delhi during the launch of CORD’s Arbitration Rules 2.0.
• The study highlights the need to address internal systemic issues within arbitration to increase its adoption by Indian companies.

A significant 73 percent of respondents pointed to high arbitration costs India and their unpredictable nature as a major barrier.

A recent study by the Centre for Online Resolution of Disputes (CORD) indicates that the primary reasons companies in India hesitate to embrace arbitration are not related to judicial interference, but rather stem from concerns over financial unpredictability, protracted timelines, and a perceived lack of oversight for arbitrators. Vikas Mahendra, co-founder of CORD, highlighted these findings, challenging a common narrative often heard at international arbitration conferences that attributes avoidance primarily to court intervention.

Mahendra presented the results of an extensive exercise where CORD engaged with in-house counsel to understand their experiences and reservations regarding arbitration. The survey specifically aimed to uncover the underlying `CORD India arbitration avoidance reasons` for companies that either do not use arbitration or limit its application to only certain types of disputes. The insights gathered provide a crucial perspective on the `India arbitration challenges in-house counsel` face, moving beyond anecdotal evidence to data-driven conclusions.

Among the in-house counsel who indicated they would only consider arbitration for a subset of their disputes, the `Vikas Mahendra arbitration survey` revealed clear preferences for the top deterrents. A significant 73 percent of respondents pointed to `high arbitration costs India` and their unpredictable nature as a major barrier. This financial uncertainty often makes companies wary of committing to the process.

Further compounding these `institutional arbitration deterrents`, approximately 60 percent of the surveyed counsel expressed concerns about the long and uncertain duration of arbitration proceedings. This suggests that the promise of a swift resolution, often associated with arbitration, is not consistently met in practice. Additionally, 54 percent cited a distinct `arbitrator accountability India` deficit, indicating a desire for greater transparency and responsibility from those presiding over disputes. Notably, court interference, a frequently discussed issue in global arbitration circles, ranked as the fourth most significant deterrent among these respondents, underscoring its lesser impact compared to the other factors.

These significant findings were unveiled by Vikas Mahendra during an event held in New Delhi on September 4. The occasion marked the official launch of CORD’s Arbitration Rules 2.0, an initiative designed to enhance the framework for dispute resolution. The event, titled 'From Access to Trust: An Evening on Democratising Institutional Arbitration for All Disputes,' took place at the IIC Annexe, bringing together prominent legal figures and industry leaders.

The gathering featured several distinguished speakers, including Supreme Court judge Justice Manmohan, who delivered the keynote address. Former Supreme Court judge Justice AK Sikri provided the inaugural address, while former NITI Aayog CEO Amitabh Kant also shared his perspectives. Mahendra himself moderated a roundtable discussion, further facilitating dialogue on the future of arbitration in India and the practical steps needed to address the identified challenges.

The CORD survey's results offer a critical re-evaluation of the perceived obstacles to arbitration in India. By demonstrating that practical concerns like cost, duration, and arbitrator accountability outweigh fears of judicial overreach, the findings provide a clear roadmap for stakeholders aiming to bolster the efficacy and adoption of alternative dispute resolution mechanisms. This shift in understanding is vital for legal professionals and policymakers alike, as it directs attention to internal systemic improvements rather than external pressures.

Addressing the `high arbitration costs India` and ensuring more predictable timelines could significantly boost corporate confidence in the process. Furthermore, enhancing `arbitrator accountability India` through clearer guidelines and oversight mechanisms would alleviate a key concern for in-house counsel. These insights are crucial for developing strategies that genuinely encourage companies to utilize arbitration more broadly, transforming it into a more trusted and accessible option for resolving commercial disputes across the country.

Lawyers advising clients on dispute resolution in India should prioritize addressing concerns about high costs, prolonged proceedings, and arbitrator accountability, as these are the primary deterrents to arbitration, not court interference. This insight is crucial for effective client counseling and strategy development.

Source: Original reporting via Bar & Bench