As India increasingly becomes a major economic power, it will undoubtedly see more and more foreign direct investment and interest from foreign companies, with the knock-on potential for disputes. Given the nature of the relationships involved, for example a foreign partner and a local company, and the scale and importance of many projects in India, final resolution of these disputes in a speedy and efficient manner is going to be key.

There is widespread agreement that the court system is inefficient, too slow and simply cannot cope with new cases given the huge backlog already present. Some cases may take as long as 20 years to be resolved, with companies and individuals often inheriting them from the original parties. The only real alternative to the courts is arbitration, which has been growing in importance and popularity in India over the past few years.

Against this backdrop, the London Court of International Arbitration's (LCIA) launch in April of this year in Delhi was timely. It was attended by a full house of delegates and a high profile dignitary list, which included the Minister for Law and Justice, the Chief Justice and the British High Commissioner. The LCIA has many factors which will work in its favour: a genuine desire by businesses, the legal community and increasingly government to make India a more arbitration–friendly jurisdiction; the LCIA's experiences and lessons learnt from setting up shop in Dubai; a realistic acknowledgment by the LCIA that it will take some time for a regular flow of cases to emerge; the LCIA's popularity with users of arbitration in India because of its fee structure (which makes costs predictable) and efficient management of the cases; historical links between England and India and the name recognition of the LCIA in India; and finally, the relatively limited impact made by the International Chamber of Commerce, the only other international arbitral institution in India.

Perhaps the biggest factor of all is the one major complaint which many delegates consistently vented at the opening of the LCIA, namely the increasing frustration with ad hoc arbitration in India, currently the most popular form. Examples given included the inexperience of many Indian arbitrators (often retired judges with limited experience of arbitration); parties being too fearful of an unfavourable award if they were to question the fees proposed; and a general lack of case management by the arbitrators. A further factor militating against arbitration in India is the interventionism of local courts.

The LCIA has many factors in its favour, but there may be steps which could be taken to counter these real challenges. For example, the LCIA could give more thought to its fee structure in India, where not many companies can afford its registration fees or the sterling hourly rates in respect of arbitrators' fees. Furthermore, the LCIA could consider offering training programmes for judges, lawyers and the business community to achieve more market penetration.