India Modernizes Its Arbitration System: U.S. Companies Should Consider Arbitration Clauses In Indian Commercial Contracts

This piece was co-authored by:
Sherbir Panag, Partner at the Law Offices of Panag & Babu in New Delhi, India.
Aanchal Basur, Partner at the Law Offices of Panag & Babu in New Delhi, India.

The Indian court system has gained an unfortunate reputation for being notoriously slow, cumbersome, unpredictable, and unreliable, which makes solving commercial disputes in India a challenging ordeal. India ranks near the bottom in the World Bank's rankings of contract enforcement; it takes an average of over 1,400 days — more than three years — for a dispute to finally see the light of day, and in a typical case, 40% of a claim's value is eroded by litigation expenses. The Law Commission of India, in its 245th Report, noted that the problem of delay in the Indian judicial structure "is not only enormous but also complex" and explained that it would require an overhaul of the judicial system to ensure that problems of delay and pendency are adequately addressed.¹