Cultural Considerations in Advocacy: India

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The use of alternative dispute resolution mechanisms predates modern India, finds reference in ancient Indian texts and has always enjoyed widespread adoption in rural India (in both formal and informal settings). The adoption of arbitration, in particular, has witnessed a consistent and sharp rise in the recent past, favoured by corporates for the resolution of commercial disputes confidentially and, hopefully, swiftly.

The current Indian arbitration system is governed and regulated by the Arbitration and Conciliation Act of 1996 (the 1996 Act), together with the various amendments, which derives its basis from the 1985 United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration of 1985 and the UNCITRAL Arbitration Rules of 1976. The 1996 Act was criticised for certain flaws in its design, contributing to procedural ambiguity and promotion of the role and intervention of the Indian courts in arbitrations in India.

In 2015, India’s ranking of 174th out of 189 economies for contract enforcement highlighted the need for change to its dispute resolution framework.[2] To encourage economic activity and investment, it became necessary to improve the speed of enforcement of contracts, ease the recovery of monetary claims and adequate and fair compensation, and reduce the burden on Indian courts.[3] The amendments to the 1996 Act – in 2015, 2019 and, more recently, in 2021 – sought to address some of these concerns, particularly the long delays in completion of arbitral proceedings, and bring the rules and practice closer to international standards.

The growth in commercial and investment disputes also prompted a growth in the use and acceptance of experts and expert evidence globally, particularly in larger value disputes. This has been influenced by both an increase in the complexity of commercial transactions and valuation issues (in part influenced by heightened economic and political volatility as well as disruption from innovation and growth in global trade and cross-border investments) and a greater need for well-substantiated, independent assessment of economic damages in disputes. India is no different; in my own experience, while the use of independent experts was largely absent prior to 2013/2014, it is progressively becoming customary for larger value claims.

Notwithstanding the growth in arbitration and use of expert evidence and higher alignment of Indian and global practice over time, there remain wide and important differences between (written and oral) advocacy and evidence styles and standards in arbitrations in India and those practised elsewhere in the world. This chapter discusses some of these differences and how they might be influenced by diverse cultural and social considerations, as well as the experience of professionals and decision makers (including counsel and arbitrators) that, in turn, shape practices in each jurisdiction. Unlike other commentary on this subject, this chapter is particularly guided by the experience of its author, who primarily acts as a damages and valuation expert in arbitration and litigation matters within India, as well as globally. In that regard, the chapter examines this subject from a different lens with the benefit of the author’s exposure to the expert witness process in different parts of the world.

Procedural

Litigation in India is recognised as a time-consuming, costly process that is often unable to offer confidentiality that can be critical in commercial transactions and related disputes. As a result, arbitration has developed as a preferred mechanism for resolution of commercial disputes in the country. The preferred form is ad hoc arbitration, which requires parties to make their own arrangements; for example, in relation to the selection of arbitration rules, procedures and administrative support.[4] The attractiveness of ad hoc arbitration stems from this very flexibility (of choice and party autonomy) – Indian parties have historically been unwilling to give up any control with regard to these matters.

Cultural considerations – some examples

Despite globalisation and standardisation, adjusting for cultural differences remains one of the challenges when practising international arbitration. As an example, whereas German, Austrian and Swiss German arbitration practitioners are used to considering the possibility of having arbitrators assist the parties in reaching a settlement (for instance, by providing their non-binding views), practitioners from the United States and the United Kingdom, as well as India, do not feel comfortable with such an approach. Another example is the appointment of experts by the arbitral tribunal. Arbitration practitioners from civil law countries are used to this practice, whereas arbitration practitioners from common law countries always expect the appointment of experts by the parties as a fundamental right. The wrong approach is to take for granted that our own expectations and practices are universal.

– Pierre-Yves Gunter, Gunter Arbitration Ltd

While this flexibility may at first be perceived as an advantage, it has resulted in the practice of arbitration closely following the litigation system – the very reason for the move towards arbitration as a dispute resolution mechanism. This means parties are often unable to agree on procedural aspects; inevitably borrow known (but sometimes archaic) practices or rules from their experience in litigation matters; seek regular intervention of the courts to resolve disagreements between the parties or as a guerrilla tactic; or request multiple extensions of time, which are often generously granted by arbitral tribunals. Additionally, although the 2015 amendments to introduce strict timelines for the completion of arbitration proceedings were well intentioned, the actual execution seems to vary, with inconsistent views on the applicability and interpretation of amended timelines, and parties often nudged to seek extensions where necessary. Further, parties remain reluctant to appoint arbitrators other than retired judges, which further reinforces a litigation-style arbitration practice and can create concerns about impartiality and independence. This is at odds with the author’s international experience where current or past law firm partners and barristers with significant commercial acumen are routinely appointed as arbitrators. The overall result is, unsurprisingly, significant delays – and higher costs – in the resolution of commercial disputes. For example, a 2013 PwC study [5] found that 77 per cent of respondents[6] in India acknowledged that it regularly took between one and three years from the commencement of proceedings for an award to be passed.

The lack of a robust arbitral institution has also contributed to the limited development of a strong arbitration regime in the country. As a result, some of the procedural aspects that are explained and laid out clearly in rules promulgated by arbitral institutions are often not available or adopted in ad hoc arbitration in India. Procedural timetables are often not set in advance (for example, during the first procedural hearing) and often kept (too) flexible (and uncertain). In the absence of formal direction or generally accepted guidelines, pleadings are often lengthy, repetitive and written in court-like formats without following the memorial system, which means pleadings (such as statements of claim and defence) are not accompanied with (fact or expert) witness and documentary evidence. Instead, this evidence is presented at a later stage, leading to further prolonged proceedings. In fact, the sequential exchange of pleadings and evidence appears to incentivise claims to be inadequately particularised and seldom properly quantified or supported; this practice is accepted by tribunals in India, with parties allowed to significantly expand their position and introduce new documents later in the process. The decision to appoint experts, if at all, is also left to a (much) later stage and often introduced outside the formal procedural timetable agreed between the parties.[7] This is partly because the use of experts remains low, with the understanding of their work limited and, in fact, often overlooked (or even dismissed) by tribunals.

As a final point, few domestic arbitrations in India seek to incorporate soft laws or guidelines (such as International Bar Association guidelines or Chartered Institute of Arbitrators protocols) formally or informally in the arbitral process, which could help improve the overall experience and quality of the arbitration and help align with global best practices. While this partly may be on account of limited experience or awareness of local counsel and parties (and arbitrators) with these resources and guidelines, it is also due to the general comfort and familiarity with court litigation procedures and practices that are then adopted in arbitration matters.

Expert witnesses

Use of expert witnesses in calculating damages

Experts are individuals with certain knowledge or a particular skill set, gained through experience or education, or both. In an arbitration, experts are generally called upon to give their opinion on issues falling within their areas of expertise. These opinions may be of assistance to the tribunals as these matters usually fall outside the professional domain of the arbitrators, but are nonetheless necessary to be considered for resolving the dispute.[8]

Use of expert evidence, including in the field of damages assessment, has increased over recent years, in the background of increasing complexity and size of claims. Opinion from damages or quantum experts may be sought for:

  • valuing a business or shareholding in a business;
  • valuing intellectual property assets or rights;
  • analysing cash flow projections;
  • performing lost profit calculations in the context of breach of contract disputes; or
  • performing quantum analysis in relation to a construction project.

Understanding and deciphering expert evidence can be difficult, particularly as it often involves technical and complex topics. Therefore, it requires experts who are not only technically knowledgeable but also able to communicate their analyses and findings clearly and in plain language. Similarly, it requires patience and interest from counsel and tribunals to review the evidence carefully.

Expert evidence usually takes the form of detailed expert reports that contain the expert’s principal conclusions and supporting analyses and calculations. These are submitted in the course of the arbitration proceedings. Experts may then be asked to present their evidence at the hearing, be subject to cross-examination by the opposing counsel and be required to answer any questions that the tribunal may ask.

Parties in India have often relied on witness evidence from their own employees (of finance, accounting and operations departments) in the computation of damages. The presumption is that these witnesses possess intricate knowledge about the business and are qualified in the industry in which the company operates. Additionally, these employees may have been involved in, or might be aware of, the matter in dispute in some detail and conversant with the facts at hand. From the company’s perspective, use of internal employees saves costs and limits the possibility of leakage of confidential or sensitive information – both relating to the case and the wider business – outside the firm. In other cases, boutique chartered accountant or cost accountant firms – which are often well known to the instructing party – are appointed in a narrow capacity to complement the initial work performed by the claimant or respondent party. For example, accounting firms might be introduced as expert witnesses to verify amounts claimed by reference to accounting records produced by parties in the course of the arbitration.

The above practice is commonplace and has generally been allowed to flourish – in large part because of the general lack of awareness of the role of experts and limited use of experts in litigation matters historically.[9] But there are five immediate concerns with this practice.

  • First, the witnesses are not independent of the instructing party and, in the case of accounting firms, could have wider relationships with the parties involved in the arbitration (such as being their statutory auditors or tax consultants).
  • Second, the work is often performed without any independent research or analysis to properly substantiate claimed losses. Additionally, key assumptions and inputs (such as projections) are often not properly critiqued and are generally simply adopted based on management representations or instructions.
  • Third, subject matter experts or skill specialists (such as valuers or economists) are often not engaged, with, instead, a bias towards appointing chartered accountants that may not otherwise possess the relevant skills or expertise to answer the questions pertinent in a dispute (for example, valuation of shares in a private company or of intellectual property rights).
  • Fourth, reports produced by these ‘experts’ are presented in a form similar to fact witness statements, with significant help from counsel, and are usually insufficiently sourced and not properly structured. This limits the usefulness of the reports to other readers and makes the work difficult to review.
  • Finally, predictably, the appointed witness is not well-versed with arbitration procedure or the scrutiny of cross-examination.

Engagement of professional, experienced expert witnesses and qualified firms that principally focus on providing expert witness services in contentious matters has historically been low. However, as an example, the role of a financial expert educated in the arts and science of valuation might be significant when claims are not straightforward; for instance, when they relate to loss of future profits or value of a shareholding in a private company.

The use of professional experts and reliance on this evidence is commonplace in international arbitration. This also means tribunals in these matters are well versed on valuation and corporate finance principles and regularly have to deal with difficult valuation questions in commercial and investment disputes. Over time, this has increased the quality of the final quantum or damages award and afforded the wider arbitration community some transparency on how tribunals have dealt with expert evidence and damages and valuation questions in disputes.

On the other hand, tribunals in India are not particularly familiar with this type of evidence and therefore remain reluctant to award damages (for example, based on future lost profits) or deal with difficult valuation problems. This is, in some manner, a circular problem: the evidence put forward by parties has not always been supported by proper, well-articulated expert evidence; consequently, the evidence that tribunals have had to rely on to award damages has been limited to this less sophisticated analysis. The lack of familiarity with commonly used and accepted valuation methods (for example, of counsel and tribunals) makes it an uphill task to substantiate less-straightforward claims. For example, one of the most commonly applied valuation approaches, the discounted cash flow analysis, is routinely used in lost profit and valuation-oriented claims in international arbitration. However, many Indian tribunals consider this approach to be speculative and instead prefer to award damages based on costs incurred by the party under a contract or in a business, which is often an inadequate measure of loss for the injured party.

In relation to this, experts, and in particular quantum and valuation experts, when used, are often appointed late in the process. This means their work is limited by the documents made available by their instructing party or those that have been disclosed in the arbitration to date. The belated appointment of experts often results in their requirements not being considered in the document production requests, a rather critical part of the arbitral process and one that is, in the author’s view, often take too lightly. The lack of documents in turn limits the analysis that an expert can perform and the robustness of the conclusions he or she might reach. This then again might affect the ultimate value of the expert evidence to the tribunal.[10] The process would benefit from the early engagement of experts, and it would advantage counsel, in particular, to consult with his or her appointed expert when finalising disclosure requests on relevant expert topics. Experts can assist counsel in identifying the most useful documents and explain their relevance to the questions they have been required to answer in the matter.

Cross-examination of expert witnesses

There are important differences between domestic and international practice. The style, scope and approach to examination of evidence will ultimately depend on the counsel and tribunal involved. In the author’s experience, most cross-examinations in India tend to be well mannered and respectful. Further, tribunals are unlikely to entertain any form of badgering of witnesses or undue aggression. International arbitrations tend to be more mixed in this regard.

However, the style and form of cross-examination is more elaborate in India. Procedural orders are often silent on length (duration) of the hearing and the hours or days over which a particular witness might be cross-examined. For example, cross-examination may last from a few hours to several days spanning multiple months without any proper notice.[11] This is in sharp contrast to international arbitration, where time is allocated early in the process, time limits are strictly enforced and witnesses are seldom cross-examined for more than one day.

Similarly, quantum experts are often (extensively) questioned on matters of law and facts that are not relevant to the expert’s work or that they are not qualified to opine on.[12] In fact, it is entirely possible that the expert is not cross-examined on their actual work or analysis.[13] On the other hand, it is also not uncommon for experts to be cross-examined on the entirety of their report and exhibits, given that there are no real restrictions on time, which can draw the process out. Tribunals seldom interject in the process. Again, this is different from international arbitration, where questions are often focused on the analysis performed by the experts or their instructions.

Another peculiarity of the Indian cross-examination system is in how questions are asked and answers recorded during the hearing. In the absence of live transcription, each question (and related answer) is stated and typed out by a stenographer, providing counsel (and witnesses) ample time to record and correct their question (and answer), as required. Tribunals also often play an active role in this process. While this practice may lengthen the overall process, the process is generally fair and favours the witness, with emphasis placed on the accuracy of the evidence being recorded. Use of other techniques (such as joint expert reports, hot-tubbing or opening presentations) is rather limited in domestic arbitration, given the current state of expert evidence.

Awards issued in ad hoc arbitration often contain limited discussion or analysis of the expert evidence offered in the matter. This makes it difficult – or impossible – to determine how the tribunal approached the evidence and whether it was ultimately useful to the tribunal in reaching their findings.

Social diversity

At times, the overall dispute resolution process is complicated by the vast social diversity within India. The Constitution of India recognises 22 official languages. Often, there are certain official documents and records that are pertinent to the expert’s work that are only available in a regional language. Witness statements and testimonies might also be recorded originally in a regional language before being translated into English. When participating in domestic arbitration, it is important to consider the linguistic and cultural backgrounds of the parties involved and ensure that language barriers are overcome by providing, for example, appropriate interpretation services, and to be sensitive to any cultural nuances that may impact the communication and understanding between the parties. In some cases this can increase the time and costs of the overall process, and access to these facilities and services can increase the overall efficiency of the arbitration proceedings. Parties and tribunals should be conscious of these considerations at the outset and make requisite arrangements ahead of time. Similarly, it is important to be aware of cultural, religious and other sensitivities of different individuals participating in the arbitration process. This may require additional flexibility in the procedures and timetable being agreed upon for the arbitral proceedings.

The influence of social preferences and biases has been well documented in global studies and literature. These predispositions may affect the appointment of counsel, tribunal members and experts, as well as the perception of their credibility, in arbitration in any country. India is no different, and there is ample to be done to further promote diversity in the selection of counsel, tribunals and experts. However, India has witnessed a marked increase in the participation of younger professionals in arbitration and more generally a wider acceptance of professionals of different backgrounds.[14] This has been supported by both judiciary and clients who are – evidently – increasingly focused on merit rather than on age, gender or other social factors.

On the contrary, there appears to be only limited participation of Indian-origin practitioners in international arbitration, at all levels and across all roles, perhaps on account of certain reluctance to engage these professionals in international matters. Therefore, it appears there is much to be done in that regard by the global arbitration community.

Closing remarks

This chapter draws attention to some of the peculiarities of domestic arbitration in India and how they contrast with standard practice in international commercial arbitration, from the lens of an expert witness.

Advocacy and expert evidence procedures in domestic arbitration in India have shortcomings that need to be addressed. These issues relate to procedural aspects, the use of expert witnesses for damages assessment and the cross-examination of experts. Improvements to these procedures are required to align practice in India with global best practices and to ensure the effectiveness and fairness of the arbitration process. While arbitration was intended to be a more efficient and cost-effective alternative to litigation, the flexibility allowed in ad hoc arbitration has resulted in practices that resemble litigation.

To improve the arbitration process in India, several measures can be taken. First and foremost, there is a need to promote institutional arbitration and encourage parties to opt for established arbitral institutions with robust rules and procedures. This will provide a structured framework for arbitration and ensure greater efficiency, consistency and transparency in the process. The government can support this by facilitating the establishment of world-class arbitral institutions in India and promoting awareness about their benefits among businesses and legal professionals. Part of this is already underway with the establishment of the Mumbai Centre for International Arbitration (MCIA), the Delhi International Arbitration Center, the International Arbitration and Mediation Center and others. Increasingly, parties are opting for institutional arbitrations governed by established rules. For example, in 2022, a dispute concerning damages of US$1 billion between Adani Transmissions Ltd and Reliance Industries Ltd[15] was referred under the MCIA Rules.[16]

It is also essential to streamline the appointment process of arbitrators. The emphasis should be on expanding the pool of qualified arbitrators by encouraging professionals from diverse backgrounds, such as industry experts, financial experts, accountants, academics and experienced lawyers, to become arbitrators. This will bring a broader range of expertise and perspectives to the arbitration process. As above, some of this is already taking place: institutions and courts have been more open to appointing experienced counsel as arbitrators.

To address the issue of delays, strict adherence to prescribed timelines for completing arbitration proceedings is crucial. The 2015 amendments to the Arbitration and Conciliation Act introduced time limits, but their effective implementation and enforcement needs to be ensured. This requires a proactive approach from both parties and arbitrators to avoid unnecessary adjournments and extensions. Encouraging arbitrators to adopt case management techniques, such as early procedural conferences and setting realistic deadlines, can help expedite the process.

Another area of improvement is the harmonisation of Indian arbitration practices with international standards. This includes adopting modern approaches to evidence and expert testimony. Parties should be encouraged to present concise and focused pleadings, supported by relevant evidence, including independent expert opinions, at an early stage of the proceedings. The appointment of professional and experienced expert witnesses and qualified firms that specialise in providing expert witness services should be encouraged to enhance the reliability and credibility of expert evidence. This will promote efficiency and help arbitrators make informed decisions. Additionally, training programmes and workshops can be organised to educate legal professionals and arbitrators on international best practices and emerging trends in arbitration.

When it comes to the hearing and examination of evidence, it is essential to establish clearer procedural rules and timetables in arbitrations, encouraging parties to adhere to international best practices. Implementation of procedural guidelines for cross-examination will ensure efficient and focused proceedings. These improvements would contribute to the overall effectiveness, fairness and timeliness of domestic arbitration in India.

In recent years, there has been a notable increase in commercial disputes involving Indian parties or investments by Indian entities in other jurisdictions. As a result, the exposure to international arbitration regimes has started to have a transformative impact on the domestic arbitration system in India. This exposure has brought about several positive changes and has shaped the approach of counsel and tribunals in domestic arbitration.

One significant outcome of this exposure is the incorporation of learnings and international best practices into the domestic arbitration process. Counsel and tribunals involved in domestic arbitration increasingly seek to leverage the knowledge and experience gained from international arbitration proceedings. By adopting these best practices, they aim to enhance the efficiency, transparency and fairness of domestic arbitration proceedings.

Furthermore, the relaxation of certain rules by the Bar Council of India will likely play a crucial role in fostering these positive developments. This has paved the way for greater involvement of foreign lawyers in India’s arbitration landscape. As a result, foreign lawyers bring their expertise, diverse perspectives and familiarity with international standards to India. This exchange of ideas and collaboration between domestic and foreign lawyers contribute to the evolution and improvement of the domestic arbitration system.

The positive changes and advancements in the domestic arbitration system in India not only benefit Indian parties involved in commercial disputes but also contribute to attracting foreign investment. The presence of a robust and efficient arbitration system is a critical factor for foreign investors when considering investment in India. The ongoing improvements in the domestic arbitration regime enhance confidence in the resolution of commercial disputes, providing a stable and predictable legal environment for businesses.


Notes

[1] Montek Mayal is a partner at Osborne Partners Limited. The author would like to thank his colleagues Tarini Seekond in the firm’s London office and Sukanya Mukherjee in the Mumbai office for their valuable assistance in preparing this chapter.

[2] World Bank Group Flagship Report, ‘Doing Business 2015: Going Beyond Efficiency’, www.doingbusiness.org/content/dam/doingBusiness/media/Annual-Reports/English/DB15-Full-Report.pdf.

[3] The Arbitration and Conciliation (Amendment) Act, 2015.

[4] Venancio D’Costa and Astha Ojha, ‘India: Institutional Vis-a-vis Ad-hoc Arbitrations In India’, Mondaq, 24 June 2020, www.mondaq.com/india/arbitration--dispute-resolution/957706/institutional-vis-a-vis-ad-hoc-arbitrations-in-india. See also, Naren Karunakaran, ‘How India Inc is coping with ineffective ad-hoc arbitration and paving way for a new trend’, The Economic Times, 9 September 2015, https://economictimes.indiatimes.com/news/company/corporate-trends/how-india-inc-is-coping-with-ineffective-ad-hoc-arbitration-and-paving-way-for-a-new-trend/articleshow/47996642.cms?from=mdr, which states that, as at 2015, ‘over 95% of arbitration is ad-hoc in India’.

[5] ’Corporate Attitudes & Practices towards Arbitration in India’, PwC, 2013, www.pwc.in/assets/pdfs/publications/2013/corporate-attributes-and-practices-towards-arbitration-in-india.pdf.

[6] Conducted by gathering feedback from 70 respondents comprising legal counsel, legal heads and other legal personnel from various companies in India.

[7] And therefore requires new orders to be passed by the tribunal.

[8] See Montek Mayal and Kenneth D Beale, ‘How to Decipher Expert Reports’, in Shashank Garg (ed.), Arbitrator’s Handbook (LexisNexis, 2022).

[9] Outside the use of handwriting experts or forensic experts, for example, in criminal matters.

[10] These requests, in the author’s view, can be quite critical in certain matters. For example, disputes involving minority interests in private companies where the minority shareholders will not access adequate information to perform a proper valuation of their interest in the business, in the absence of disclosures by the company or controlling shareholder.

[11] The author’s longest cross-examination was seven days, conducted over several months.

[12] This might be done with the intention of putting the opposing party’s case to the witness with the hope of extracting submissions or concessions from the expert witness. However, it remains unclear how useful these submissions would be given the role of an expert witness.

[13] While in some cases this may be a strategic decision, it may also point to opposing counsel’s limited understanding of the expert’s report.

[14] A 2020 study by PwC and Queen Mary University of London showed that between 2014 and 2018, just 11 per cent of the 180 awards made in arbitral proceedings administered by the International Chamber of Commerce in Paris and New York used female expert witnesses. In India, on the other hand, while there is only a small group of individuals who regularly act as damages experts in disputes, a significant portion of these are women.

[15] Reliance Industries Limited, Regulatory Filing, 9 September 2022.

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