Hiroo Advani: Unarbitrary arbitrationsHiroo Advani: Unarbitrary arbitrations Advani & Co managing partner Hiroo Advani, and partners heading the arbitration practices at Juris Corp, DH Law Associates, Amarchand Mangaldas, J Sagar Associates (JSA), Economic Laws Practice (ELP) and Nishith Desai Associates (NDA), have formed the Indian Arbitration Forum (IAF) – a body that aims to “encourage best practices” and exclude the judiciary from arbitrating Indian disputes.

Advani who will preside over the IAF said: “Most of the judges arbitrating disputes in India right now charge by the day. In Bombay they have started this obnoxious practice where they hold a [arbitration] session in the morning and one in the evening and charge for two days. In Delhi they hold a session in the evening, sit for one or two hours, get tired and disappear.

“We have not seen this anywhere else but India. The corporate community is fed up. They need cheaper and faster resolution.”

Former MMTC general counsel and Indian Corporate Counsel Association’s founding president Ashok Sharma, Juris Corp senior partner Mustafa Motiwala, DH Law Associates managing partner Nusrat Hassan, Amarchand Mangaldas Delhi partner Pallavi Shroff, J Sagar Associates Bangalore partner Pramod Nair, Economic Laws Practice partner Vikram Nankani and Nishith Desai Associates partner Vyapak Desai are vice presidents of the body.

Advani told Legally India that the idea of IAF first came into existence last year and the body was finally registered this month as a company limited by guarantee after a four month long online registration process and after “smaller [arbitration] associations” in Bangalore and Bombay combined themselves with the IAF.

After receiving an “overwhelming response” for membership, IAF’s executive committee is now in the process of filtering the list of members to 25 or 30, he said. The membership currently costs between Rs 2,000 to Rs 20,000 for Indian nationals annually depending on their number of years and designation in the profession.

In a covering letter explaining the body’s objective Advani stated: “All of us are singularly unhappy at the way arbitrations are run in India especially when you compare them to international arbitrations. IAF does not propose to be an institution to administer arbitrations but merely an association of prominent arbitration lawyers to encourage ‘Best Practices’.”

“We also recommend fees for arbitrators based on value of the claim and this ensures that arbitrators do not have any incentives in prolonging the hearings,” he added in the letter.

While the IAF’s statement of purpose lists it an objective of the body to “liaise with the Government of India to introduce reforms in the Arbitration and Conciliation Act, 1996,” Advani said that in the current pre-election period they will lobby more with the judges than with the government in setting up a more affordable fee structure for Indian arbitrations.

“The [Indian Council of Arbitration] has recommended very high fee and the [London Court of International Arbitration] charges on an hourly basis, so that does not leave people with the feeling of how it is going to cost at the end of the day,” he commented.

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Recommend! +29 Objection! -3 ultimate hypocrisy 2013-09-04 18:11  interesting  top rated
This is the ultimate hypocrisy. If clients get frustrated to pay for arbitrators; they certainly get frustrated to pay astronomical legal fees. So IAF wants to regulate fees of arbitrators; but will they do the same for themselves; for the senior lawyers (Salve, Singhvi, Sundaram) representing the clients; for the law firms (AMSS, AZB, Advani) charging crores in legal fees and showing 4 associate billing hours. This is nothing but to project themselves as the "prominent" arbitration practitioners of India and get more clients for themselves.
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Recommend! +0 Objection! -0 Sunrise 2013-09-04 21:48
I agree with you. I suggest ;
1. The fees should be based on time and not the value .
2. Fix the procedure, in the ordinary course the first sitting of the arbitrators happens only after the pleadings are complete . Exception only where interim relief is required .
3. Admission denial by affidavit .
4 . The matter should be over in 4 sittings.
5. No adjournments and option for substitute arbitrators in case the original arbitrator is not available .
6. Lawyers fees should also be fixed .
7 The fess of the arbitrator should not be more than two times the daily salary of a sitting Judge of the Supreme Court .
8. Fees of the lawyer should not be more than three times the daily salary of a sitting Supreme Court Judge.
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Recommend! +2 Objection! -0 2 practical cents 2013-09-05 14:26
It may not be possible to conclude a matter in 4 sittings, owing to the time practically necessary to examine witnesses, even if arbitrators come prepared with a thorough study of pleadings, etc. Even expedited arbitrations under global institutional rules involve hearings of a day/ 2 sittings even if there are only a couple of witnesses!

It won't be possible to engage eminent counsels, who are preferred sine qua non for commercial disputes, for three times the daily salary of a sitting Supreme Court Judge!

Instead of being over-creative, a simpler solution would be institutional rules which control timelines as strictly as may be practically feasible. At the end of the day, fees are not the problem - the timelines are the real issue.
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Recommend! +0 Objection! -0 hahaha 2013-09-21 13:41
these got to be the most hilarious and un-realistic expectation from a fellow lawyer to the arbitration practise.
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Recommend! +3 Objection! -0 Reality check 2013-09-05 16:51
How is 4 associate billings unjust? Big ticket litigations need 3 to 4 associates / senior associates and foreign law firms also involve 3 to 4 lawyers. First, there are voluminous documents to review. Second, there is a lot of drafting. Third, there is research and conferences. Fourth, preparing the witnesses and planning their examination. Fifth, the pre-arbitration procedural conferences handled by the firms. Sixth, the hearing stage during which counsel needs a couple of lawyers' assistance, if not more. Last, but not the least, there is significant logistical and administrative work and running around to do; not to mention the subsequent enforcement and appeal. Further, an associate may leave a firm during the course of the matter from notice to enforcement.

As much as one may want to criticize legal fees, it isn't fair to make these kind of comments without considering the ground realities. Remember, the more senior supervising lawyer(s) usually bill lesser hours. Good lawyers have never been cheap and neither is legal education that may cost up to 60 lakhs today, including LLM. This apart, one needs to bear in mind that legal fees do not bother corporates as much as the time impact, and consequent commercial impact, caused primarily by delays.
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Recommend! +0 Objection! -0 Correction 2013-09-05 19:34
I think he meant 4 hours of associate billing in the matter and the rest being partner billing to justify the high cost, not that 4 associates worked on the matter. Still, an exaggerated statement obviously.
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Recommend! +0 Objection! -0 1 Partner, 3 Associates 2013-09-05 20:05
Leave the team composition aside, the issue is about billing ultimately. Clients often now opt for a capped fee model with payment on reaching a pre-agreed milestone, usually a stage in the arbitration (eg. filing of statement of claim). That is something for the Client to negotiate with the law firm. This is a matter of choice. Believe me Clients negotiate hard and engage even smaller chambers when they feel the price is not reasonable.

What requires a deeper look is how retired judges are appointed in ad-hoc arbitrations. Quite often it is after a Section 11 petition is filed in the High Court. Often such an Arbitrator may not even named in the Petition or the Agreement. This is beyond the control of either party. Quite simply the parties find a complete stranger as an arbitrator which may carry with itself the benefit of impartiality. However, it also carries the burden of absence of genuine comfort inasmuch the Arbitrator may set his own fees or after commencing arbitrations hold multiple hearings or give dates for hearing after several months. Believe me quite often the travel arrangements and the menu choices (5 Star Arbitrations) are more of a concern that provisions of the Contract Act.

Given this it is wrong to have a list of preferred practices for Arbitration? Sure it is marketing for these firms and even self serving, however I do not think it is bad for arbitration in India by itself.
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Recommend! +0 Objection! -0 Unlikely 2013-09-06 14:09
Nobody bills 4 hours on any matter! :)
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Recommend! +4 Objection! -0 Guest 2013-09-04 18:55
While this seems to be good effort to smoothen the terrain of arbitration practice in India, I am unsure if this will succeed unless we actually find good arbitrators.

Having been part of various arbitration proceedings presided over by former judges, advocates, technical experts et al I have bitterly learned that arbitration as process in India can only achieve its purpose if the arbitrators behave themselves. It may not always be about fee being charged by the arbitrators but the manner in which they conduct themselves and the arbitration proceedings.
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Recommend! +7 Objection! -1 Dazed and Confused 2013-09-04 20:56  interesting
SIAC tried to head off the Shroffs by letting them set up SIAC India, but that apparently didn't work.

This seems a smart strategy to get arbitration business for disputes that must be conducted in India. And the retired judges are really the worst arbitrators one could imagine.

Notice also that the membership seems to exclude international arbitrators, and at least exclude foreign counsel who would otherwise be allowed in arbitrations.

The business proposition for these law firms is clear. The ethical aspects of this are murkier - how can these law firms have a business interest in a forum and then arbitrate before it? And determine who may appear?
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Recommend! +9 Objection! -1 - 2013-09-04 21:52  interesting
The problem mentioned is very real. And the comments seem to suggest that attempts to solve the problem are to be condemned because: (a) other bigger problems exist; (b) people who are trying to solve the problem are guilty of something else; (c) attempts to solve the problem are guided by ulterior motives.

Thats like saying that the X foundation should not feed the hungry in XYZ country because, ABC country has a bigger water crisis and X foundation made the money being spent by selling overpriced software.

Whats the problem people. Judges conducting arbitration like they used to conduct their courts - for huge fee, is the real problem.

Why do foreigners avoid indian arbitration like plague? Courts are slow, agreed but why cant Indian arbitration be faster.

This seems to be a good attempt, provided they are able to achieve the stated objectives (as is the case for any attempt).

For people with problems with a particular firm or person, please go and rant somewhere else. It would be good to see some serious discussion on the state of arbitration in India and the impact of this new initiative.
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Recommend! +4 Objection! -1 Dazed and Confused 2013-09-05 06:56
Few would dispute that using retired judges as arbitrators is not a legitimate problem.

Their shortcoming is not in the fees but in their calcified approach to the process. Their fees are minor compared to the cost of their sloth. It's a great move to try and bust up their racket, where they use their credentials as a substitute for actual acumen in the process. Arbitration is not a "fast track" court but a different animal entirely. The ex judges don't get it.

However, the impartiality of the forum is always a concern, particularly when you move to arbitration. So it is perfectly reasonable to ask whether a forum promoted by a few law firms can provide that sort of neutral forum. Since some of the firms mentioned here are ferocious promoters of their monopoly rights, the question is even more relevant.
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Recommend! +5 Objection! -2 Old Lawyer 2013-09-05 10:53
Brokers Inc...

Our great country rewards brokers more than any one else, in most areas of work.

I have known 'great' law-firm partners simply confess (in private) that they do Not (and Need Not) know the law - that aspect accounts for only about 20% of a legal practice.

And here they are trying to institutionalize conflict of interest. Only we can charge crazy fees, No one else.

Nice.

How about arbitrators charging 50% of the simple average of hourly fees charged by the "Managing Partners" of these Firms?

This is not to say that most retired Judges have not spun a super-scam of conducting arbitrations in India. The problems are real. This solution is anything but.

I don't see any Government pushing for efficiency in the justice delivery machinery - in its dysfunctionality lies the massive arbitrage opportunity which has made India the proverbial "Poor Country with Rich Citizens".
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Recommend! +2 Objection! -4 Lavin Hirani 2013-09-05 14:24
Congrats...Brilliant Initiative... Finally... Only Hiroo could have done this!
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Recommend! +0 Objection! -0 sk 2013-09-06 12:20
Kian, some time back you had written about the grand plans of AMSS to set up two arbitration centres with exotic names (www.legallyindia.com/201202162581/Law-firms/amarchand-to-set-up-intl-arbitration-centre-to-bring-disputes-back-to-india-after-7-year-gestation). What happened to those centers? Have they winded up or did they not start even?!
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Recommend! +0 Objection! -0 The Arbitrator 2013-09-06 14:16
Would not call it a 'brilliant' initiative. Just another way of channelising some extra money in the kitty. It also sounds good when one says I have set up a reliable meachnism to offer a forum and services for resolution of disputes.
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Recommend! +2 Objection! -0 Vyaapak 2013-09-09 16:38
Too funny.... Vyapak Desai...
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Recommend! +0 Objection! -0 crooked dot 2013-09-10 11:12
the pot calling the kettle black !
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Recommend! +0 Objection! -0 Vineet 2013-09-13 11:20
Truly, this is an example of just how bureaucratic Indians are. Why not set the terms at the stage of appointment? Do we really need an association to perform this simple task?
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Recommend! +1 Objection! -1 Critic 2013-09-13 11:22
Think the issue is not really about fee rates but about best practices. If a senior counsel is really expensive but makes his rate clear per hearing, its up to the client to decide whether he wants to pay it or not.

That's totally different from a per hearing or per day charge of an arbitrator where the arbitrator allows things to drag on and increases the fees thereby. Of course, the counsel could do the same thing, no denying that. What they are doing is fulfilling a huge huge need. Wish them luck and hope it works out.
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