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Alternate Dispute Resolution Centre in GIFT City will take 4-5 more months to take-off, say officials

Alternate Dispute Resolution Centre in GIFT City will take 4-5 more months to take-off, say officials


Despite an influx of firms into the International Financial Services Centre (IFSC) at GIFT City in Gujarat, the proposed Alternate Dispute Resolution Centre (ADRC) is yet to take off. Awaiting crucial amendments, the proposed centre for adjudicating timely settlement of disputes will take at least five more months to be set up, say officials.

“It is pending an amendment with the Union government. International commercial arbitration has to be declared as a financial service in GIFT City. Until such time, the IFSCA cannot regulate it,” a senior official from the International Financial Services Centres Authority (IFSCA), the unified regulator in GIFT City, told businessline

The Union Budget for 2022-23 had first proposed to set up an International Arbitration Centre in the GIFT City for timely settlement of disputes under international jurisprudence. Thereafter International Financial Services Centres Authority (IFSCA) set the ball rolling by constituting an Expert Committee to draft Institutional Arbitral Rules for the International Arbitration Centre at GIFT IFSC. The expert committee had made its recommendations public in July 2024. “It might take 4-5 months more. The amendments might get introduced in the upcoming budget session of the Parliament,” the IFSCA official added. 

The global market for alternative dispute resolution services is estimated at $14.50 billion by 2030. The move to set up an ADRC aims to reduce India’s outbound Alternative Dispute Resolution expenses and transform it into a thriving global industry, attracting disputants worldwide. The ADRC will also be accompanied by an IFSC International Court that will have powers similar to a High Court and will deal with all ADR matters arising from IFSCs. 

There are over 725 firms that have set up base in GIFT IFSC, as of September 2024, and the numbers have been steadily rising. “Presently companies at GIFT City are encouraged to use Singapore International Arbitration Centre (SIAC) rules, with seat of arbitration at GIFT City,” says Bijal H Chhatrapati, Partner, JSA Advocates & Solicitors. 

“Looking at the profile of GIFT City and its aspirations to emerge as a global financial and IT services hub, setting up of ADRC is imperative and not just a matter of convenience. Providing an independent and neutral avenue for dispute resolution greatly enhances its attractiveness for global players to enter into international financial transactions from GIFT IFSC. JSA assisted GIFT City in forging alliance with the hugely respected SIAC which now has a representative office in GIFT IFSC,” Chhatrapati added.

Monark Gahlot, Partner, Cyril Amarchand Mangaldas, a leading law firm that has set up a base in GIFT City, airs similar views. “Most global financial centres have robust ADR mechanism and for GIFT City to be an attractive destination for global investors, ADRC is a sine qua non, assuring the investors with efficient, effective, and swift resolution of disputes, if any. The Expert Committee for drafting institutional arbitral rules for the proposed International Arbitration Centre at GIFT IFSC has submitted its report in July 2024, providing a roadmap with proposed amendments and draft rules for an effective and competitive ADRC at GIFT IFSC. It remains to be seen how soon the report gets implemented and ADRC becomes operational at GIFT City,” says Gahlot.

The Expert Committee set up by IFSCA had proposed to use four extant legislations, namely, the International Financial Services Centre Authority Act of 2019, the Arbitration and Conciliation Act of 1996, the Mediation Act of 2023, and the Special Economic Zones Act of 2005 — with minimum changes — to develop and support the ADRC at GIFT City. The committee had studied the regulatory and institutional frameworks of well-established institutions such as Singapore International Arbitration Centre (SIAC), Singapore International Commercial Court (SICC), Hong Kong International Arbitration Centre (HKIAC), the London Court of International Arbitration (LCIA), and Dubai International Arbitration Centre (DIAC) among others, for drafting rules of ADRC in GIFT City. 





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