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Concerning that arbitration not litigant's first choice: Justice Sanjiv Khanna

New Delhi, Mar 10 (PTI) Supreme Court judge Justice Sanjiv Khanna on Sunday said it was concerning that arbitration was not the first choice of any litigant in India and parties still preferred litigation and adjudication in courts.

New Delhi, Mar 10 (PTI) Supreme Court judge Justice Sanjiv Khanna on Sunday said it was concerning that arbitration was not the first choice of any litigant in India and parties still preferred litigation and adjudication in courts.

The top court judge, who was speaking at the closing ceremony of Delhi Arbitration Weekend (DAW) in the Delhi High Court, emphasised that the system has to evolve if 'we have to look 10 years ahead and want the country to become the preferred seat for arbitration'.

DAW, the flagship event of Delhi International Arbitration Centre (DIAC), was attended by experts and dignitaries from across the country and the globe.

Union Law Minister Arjun Ram Meghwal, Attorney General of India R Venkataramani and Arbitrator and Mediator of Duxton Hill Chambers V K Rajah SC also spoke at the ceremony in the presence of sitting and former judges and members of the Bar.

Justice Khanna is in line to become the Chief Justice of India (CJI) after the retirement of present CJI D Y Chandrachud in November.

Justice Khanna said the legislature has been proactive in bringing changes in the arbitration law to make it in sync with the international standards but the number of cases being referred to arbitration showed a bleak picture.

'When we come to the data with regard to the number of cases being referred to institutionalised arbitration, the picture is again very bleak. In 2023, about 1,16,453 civil cases were instituted in civil courts in Delhi, while 4,243 suits were instituted in the Delhi High Court,' he said.

As against this, 7,358 cases were referred to arbitration to the Delhi High Court arbitration centre in 2023. This means the Delhi High Court arbitration centre dealt with only six to seven per cent of the matters compared to the civil litigation, the top court judge said.

'It is a matter of concern. Arbitration is not the first choice of any litigant in India. Otherwise everybody when they come to the court will move an application or joint applications (saying) please refer our dispute to arbitration. It is very rarely happening... The fact of the matter is parties prefer litigation and adjudication to arbitration,' he said.

Justice Khanna shared that during his tenure as a judge of the Delhi High Court, he did not receive any application in a pending civil matter by the parties for sending the matter to arbitration.

He stated that possibly the matters referred to ad-hoc arbitration, i.e. those that are held outside any institutional framework like that of DIAC, would be two times the number of institutional arbitrations.

Justice Khanna said the system has to be evolved in DIAC by merging mediation and arbitration in order to give the parties the right to choose their preferred mechanism.

'I feel we have to now evolve a system and jurisprudence in Delhi International Arbitration Centre by merging mediation and arbitration to ensure that the parties do not lose their right to decide for themselves,' he stated.

'How do we do it? We cannot have the same person acting as a mediator and arbitrator. It has to be two separate persons, that is what the UNCITRAL (United Nations Commission on International Trade Law) model also recommends. We have to evolve and get into all this in case we have to look 10 years ahead and want India to be the preferred seat for arbitration. We can do it. It is possible. Only thing is we have to focus on it and execute it,' he said.

Justice Khanna also looked into data with respect to the relatively long time taken for enforcement of contracts in India and said it has to be rectified and checked.

'World bank data notes that enforcement of contracts in India takes about 1445 days at the cost of 31% of the claim. In comparison, the average duration in South Asian countries is 1101 days which is almost 2/3 of the time taken in India.

When it comes to OECD countries, time taken is 589 days which is one third of the time taken in India. It is a matter of concern for all of us. This has to be rectified and checked,' shared the top court judge. PTI ADS SMN

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