New Dispute Resolution Framework proposed by Expert Panel for GIFT IFSC
OVERVIEW:
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An expert panel set up for drafting rules for an international arbitration centre at GIFT City has sought changes to arbitration and mediation laws to ensure swifter out-of-court dispute resolution in the country’s first IFSC.
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Their responsibilities include outlining the regulatory structure and setting up the legal framework, as well as formulating the rules and procedures for the new dispute resolution center in GIFT City.
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The expert panel has suggested the following recommendations:
ALTERNATIVE DISPUTE RESOLUTION CENTRE (ADRC):
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The panel proposed for setting up of an “autonomous” Alternative Dispute Resolution Centre (ADRC) in Gift City.
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The proposed regulatory updates for the ADRC involve amendments to the IFSCA Act, 2019, Arbitration and Conciliation Act, 1996, the Special Economic Zones Act of 2005 and Mediation Act, 2023.
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Key changes include:
– Allowing parties to choose their governing law.
– Recognizing third-party funding.
– Establishing a dedicated bench for appeals and arbitration applications at IFSC.
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The panel proposed creating a separate bench in the Gujarat High Court to handle issues arising from the GIFT City ADRC.
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The panel recommends that the ADRC be established as a section 8 company (not-for-profit) under the Companies Act, 2013.
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Also, the ADRC’s governance structure will include a Board of Directors responsible for corporate governance and regulatory compliance, an International Advisory Council comprising 10-15 global experts providing strategic guidance, an Executive Council and a Secretariat managing day-to-day operations, headed by a CEO.
IFSC INTERNATIONAL COURT:
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The Committee recommends a three-phase transition of the court system for the ADRC.
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Phase I : In Phase I, immediately with the constitution of ADRC, a bench of the Gujarat High Court shall be designated for matters arising out of the ADRC in the GIFT City. This does not require any statutory change.
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Phase II: In Phase II, a separate High Court shall be established for all IFSCs in India. This High Court shall be named IFSC International Court and shall have all powers of a High Court other than the writ and criminal jurisdiction. This Court shall act as the court of first instance and the court of appeal for all ADR matters arising from IFSCs.
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Phase III: In Phase III, international judges may be allowed to sit in the IFSC International Court.
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Phase II and Phase III may require amendments to the Constitution of India. Countries like Singapore and Dubai have amended their respective constitutions to allow international judges.
PROPOSED CHANGES TO ARBITRATION LAWS:
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One key recommendation is to impose a 21-day time limit for filing an appeal against an arbitral award.
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The Arbitration and Conciliation Act currently allows for a 90-day window for such appeals.
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Reducing this period is intended to prevent backlogs and expedite the dispute resolution process.
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The panel suggested that appeals against an arbitral award to the Supreme Court should be limited to Special Leave Petitions (SLPs).
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This would deter parties from frequently filing appeals, thus preventing cases from being prolonged in the courts.
CONCLUSION:
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The primary objective of these recommendations is to strengthen GIFT City’s position as a leading global financial hub by offering a state-of-the-art dispute resolution mechanism.
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The expert panel’s recommendations for establishing an International Court and an International Arbitration Centre at GIFT City represent a significant advancement in the development of a sophisticated dispute resolution framework.
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By proposing a set of institutional arbitral rules and submitting these recommendations to the IFSCA, the panel aims to bolster GIFT City’s status as a premier global financial hub.