India is making good progress in its mission to become a major world economy. In the context of its legal system, and arbitration in particular, India has suffered bad press in the past for a variety of reasons. This year, India appears, on balance, to be moving ahead in the context of arbitration. This article highlights some of the key developments this year.

April of this year saw the launch of the London Court of International Arbitration (LCIA) in Delhi, one of a number of recent developments in India which is making it a more attractive jurisdiction for arbitration (see Legal update, LCIA launch in India). The opening was a jubilant affair with members of the business and legal communities from within and outside of India in attendance.

Arbitration has been growing in importance and popularity in India during recent years and it is hoped that institutions like the LCIA and the ICC will continue to raise the profile of arbitration as an attractive alternative to litigation. This is particularly important given the widespread dissatisfaction with both ad hoc arbitration and the court system in which there is a considerable backlog of pending court cases and where disputes may take in excess of 20 years to resolve.

Despite the excitement surrounding the LCIA launch, observers note that it comes at a time when there have been several controversial judgments by the courts which have cast doubt on India as a safe jurisdiction for arbitration. The success of arbitration in India, ad hoc or institutional, will depend in no small part on the ability of parties who have elected to resolve their disputes by arbitration in fact being able to do so in the face of interventionist attempts by the local courts.

Alongside the LCIA's launch in Delhi, in September, the Law Minister, Veerappa Moily made a number of encouraging, although perhaps somewhat over-ambitious, comments at a conference on legal reform, when he announced plans to establish specialised high-value commercial courts in the larger cities, and to encourage moves towards transforming India into an international arbitration hub akin to Singapore and Hong Kong.

In November, the London Chartered Institute of Arbitrators set up its India chapter in Delhi in an effort to promote alternative dispute resolution in India. This followed hot on the heels of the Delhi High Court establishing an arbitration centre the same month which, according to reports, already has three cases referred to it by the Delhi High Court.

There have, in recent times, been a number of controversial arbitration-related decisions of the superior Indian courts. The well publicised Supreme Court case of Venture Global Engineering v Satyam Computer Services in 2008 was perceived by many to be a major setback in the country's move towards establishing itself as a major world centre for arbitration. In that case, the Indian Supreme Court declared that, notwithstanding the apparent clear wording of the Indian Arbitration and Conciliation Act 1996, Part I of the Act applied to foreign arbitrations, meaning that the Indian courts were empowered to remove arbitrators and to set aside foreign arbitration awards. The ruling raised significant concerns amongst the arbitration community, casting doubt on India’s commitment to international arbitration as a viable method of dispute resolution.

In April 2009 the Supreme Court’s decision in the case of Citation Infowares v Equinox Corporation was another example of the Court's interventionist approach, when it granted an application to appoint a former chief justice of India as the sole arbitrator in respect of a dispute arising under an agreement governed by Californian law. The parties had agreed that disputes arising under the agreement would be referred to arbitration, but the seat of the arbitration and the procedural law governing the arbitration had not been agreed.

More recently, however, in Indian Oil Corporation Ltd & Ors. (appellant) v M/s Raja Transport Pvt. Ltd (Respondent) the Supreme Court refused to interfere with an arbitration agreement on the basis that the parties had entered into it with full knowledge and comprehension as to what they were agreeing (see Legal update, Supreme Court refuses to appoint a different arbitrator from the one agreed by the parties).

At the time of writing, the Bombay High Court had just released (but not published) its ruling in the case of Petition no.1526/1995 between law firms Ashurst, Chadbourne & Park and White & Case on the one hand and the Lawyers Collective on the other. The court decided that the practice of all law by the three foreign law firms in India fell within the scope of the Advocates Act 1961. The judgment relates to a specific case commenced 14 years ago and relates to the interpretation of very specific provisions of Indian statute. Therefore, one hopes that it should not be a blow to liberalisation of the Indian legal market. We will be providing a more detailed analysis of this decision in the January edition of the PLC Arbitration multi-jurisdictional email.

To sum up, although India has a long way to progress before it can compete with the more developed centres for international arbitration, it is taking some steps in the right direction and there appears to be the political will to back this up.