Indian Arbitration Ecosystem: Challenges and Improvements
India's growing economy has sparked discussions on leveraging Indian arbitration to support its growth. The rise in domestic and international trade has led to inevitable commercial disputes. However, the Indian litigation system is overloaded and often inefficient, particularly with time-sensitive and complex disputes. As a result, arbitration, especially through specialized institutions, is considered a viable solution. The critical questions are whether the Indian arbitration system is truly effective and if India is on course to become a global arbitration hub.
Role of Arbitrators
The success of Indian arbitration largely depends on the arbitrators, who are the core decision-makers. Their responsibilities include:
- Conducting efficient arbitral proceedings.
- Determining the procedural framework and timelines.
- Finalizing procedural issues and imposing sanctions when necessary.
- Delivering arbitral awards that can withstand challenges in court.
Challenges Facing Indian Arbitrators
Despite the importance of arbitrators, little effort has been made to develop elite Indian arbitrators. Justice D.Y. Chandrachud highlighted the lack of Indian arbitrators in international disputes. A key reason is the preference for appointing retired judges as arbitrators, assuming their judicial background ensures quality in arbitration. However, this assumption is flawed as noted by the Ministry of Finance in June 2024, pointing out issues such as prolonged proceedings and poorly reasoned awards.
Necessary Improvements
The Indian arbitration ecosystem requires two main enhancements:
- Diversify the pool of arbitrators to include specialists beyond retired judges and advocates.
- Implement rigorous training and accreditation for arbitrators through courses and workshops to build necessary skills.
These changes aim to elevate arbitration in India beyond being a secondary option to litigation, ensuring that Indian arbitrators can take their rightful place in the global arbitration community.
