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Declining relative to what it as like pre-2018 ish, but going up relative to Post Covid.
2) More recruitments based on expertise (at least academically and internship wise) in arbitration? Or is litigation still the telling factor?
Arbitration and Litigation are virtually the same, my dude/tte. Most T 1 teams do both. The Arbitration Act is just a procedural code replacing the CPC. You still need to apply the concepts from CPC and Evidence Act in Arbitration. You need to draft and file Pleadings, frame issues, do admission and denial of documents, marking of documents, filing Affidavits in lieu of examination in chief, and do cross-examination. All of these tasks involve the same requirements and skill sets as a traditional litigation.
In Disputes, there is no hyper specialization, unless you do Criminal, IP, Tax or Securities (notice how all of these also involve lis in rem).
3) Does a specialized LLM help if I want to strictly do arbitration in a tier 1?
Sure, but it is not a requirement. Also there are few if any specialized arbitration LLMs. The entire Act is less than a 100 sections for christsakes. You can't build an LLM program around that. A Litigation focused LLM will be just as good.