MCIA recognised by the Supreme Court of India as an appointing institution

As previously reported here and here, the Mumbai Centre for International Arbitration (MCIA) was launched in October 2016, to promote institutional arbitration in India. The MCIA has been established as a joint initiative between the government of Maharashtra in India and the domestic and international business and legal communities.

In a first, of hopefully many pro-arbitration moves, we understand that the Supreme Court of India has invoked section 11 of the amended Indian Arbitration and Conciliation Act, 2015 (the Amended Act) and instructed the MCIA to appoint an arbitrator in an international dispute between Sun Pharmaceutical Industries Ltd (Indian company) and Falma Organics Limited (Nigerian company). This decision marks the first time that an Indian court has invoked section 11 of the Amended Act to designate an institution to assist with the appointment of an arbitrator.

As previously reported here, the Indian Arbitration and Conciliation Act 1996 (the Act) was amended in 2015 with a view to streamline and modernize the arbitration landscape in India, especially to reduce the time taken in completion of arbitrations in India. One of the factors contributing to delays in arbitration in India was the time taken by the courts to appoint arbitrators when approached under section 11 of Act. Under this section, the Supreme Court of India or the various High Courts (or any person or institution designated by such courts) may appoint an arbitrator at the request of a party provided that the parties have been unable to agree on an arbitrator within thirty days from the receipt of a request by one party from the other. This process often took several years given the backlog and endemic delays in the Indian courts. By allowing the Indian courts (as compared to only the Chief Justice of the Supreme Court or various High Courts before) to appoint any person or institution as an appointing authority for arbitrators, it ensures that speedier decisions are made regarding arbitrator appointment. This is supported by the provision under the Amended Act that an application for the appointment of an arbitrator under section 11 aimed to be disposed of within 60 days from the date of service of notice.

Arbitration continues to grow India, and recent judicial pronouncements are generally viewed as being pro-arbitration. For a round-up of recent developments, please see our recent e-bulletin here.

This order by the Apex Court in India bodes well for arbitration in the country, which has historically suffered from a lack of credible arbitral institutions and has always been skewed towards adhoc arbitration rather than institutional arbitration. The support shown by the Supreme Court in recognizing the MCIA as an appointing institution lends credibility to the relatively new institution and will hopefully encourage both domestic and foreign users to use the facilities and rules of the MCIA in their commercial arrangements.

For further information, please contact Nick Peacock, Partner, Donny Surtani, Partner, Kritika Venugopal, Senior Associate, or your usual Herbert Smith Freehills contact.