Introduction
- Arbitration is a private dispute resolution mechanism where parties opt out of traditional litigation to resolve disputes through a neutral arbitrator whose decision is binding. India, aiming to become a global arbitration hub, has focused increasingly on institutional arbitration as an alternative to the overburdened judiciary.
- As per the NITI Aayog’s Strategy for New India @75 report, delays in judicial disposal cost India around 1.5% of GDP annually. According to the 2024 Ministry of Finance Report, despite efforts, India’s arbitration mechanism faces challenges, notably due to the overreliance on retired judges as arbitrators.
- A detailed evaluation of this trend is essential from multiple dimensions to understand both its positive contributions and structural drawbacks, and to suggest a holistic way forward.
Positive Impacts of Appointing Retired Judges
Judicial Expertise and Legal Soundness
Deep Legal Knowledge: Retired judges bring decades of judicial experience, ensuring robust understanding of substantive and procedural law, critical in complex disputes like infrastructure contracts or financial sector arbitrations.
Example: Justice R.V. Raveendran, a retired Supreme Court judge, served successfully in several high-stake arbitrations, including the Vodafone tax dispute.
Scheme: The 2015 Amendment to the Arbitration and Conciliation Act sought to promote the appointment of experienced individuals, including judges, to maintain quality.
Credibility and Trust Among Litigants
Perception of Neutrality: Parties often prefer retired judges, assuming high ethical standards and impartiality, thereby boosting confidence in the arbitral process.
Real-life Case: In the Reliance-ONGC arbitration (2020), appointment of former Chief Justices enhanced trust among international stakeholders.
Initiative: The New Delhi International Arbitration Centre (NDIAC) promotes appointments from a vetted list, often comprising retired judges, to enhance credibility.
Alignment with Indian Legal System
Ease of Enforceability: Awards passed by former judges are perceived as more judicially sound, facilitating smoother enforcement under Section 36 of the Arbitration Act.
Example: In the Delhi Airport Metro Express Pvt Ltd vs. DMRC case (2021), the arbitrators’ judicial experience helped frame a comprehensive, enforceable award.
Policy Note: Arbitration Council of India (2024) standards encourage drafting awards with a view to minimizing challenges in courts.
Procedural Discipline and Orderliness
Courtroom-style Decorum: Judges bring familiarity with structured procedures, which ensures decorum and disciplined conduct during hearings.
Example: The arbitration proceedings in the Antrix-Devas case (2015) highlighted how strict procedural compliance can be both an asset and liability.
Government Action: The Indian Arbitration Forum (IAF) introduced workshops in 2023 on structured conduct, inspired by courtroom protocols.
Negative Impacts of Appointing Retired Judges
Court-like Arbitral Proceedings
Mimicking Litigation: Proceedings often become excessively formal, slow, and rigid — negating the advantages of arbitration like speed, flexibility, and cost-effectiveness.
Example: Ministry of Finance Arbitration Report (June 2024) criticized arbitrations mimicking court procedures, citing average durations exceeding 36 months.
Case Study: Coal India Arbitrations (2022–23) showed prolonged timelines where arbitrators (mostly ex-judges) followed traditional civil procedure models.
Poor Quality of Awards and High Challenge Rates
Inadequate Commercial Understanding: Judicial experience doesn’t always translate into commercial acumen needed for nuanced, sector-specific disputes.
Example: In PSU Construction Arbitrations (2023), 47% of awards were challenged, largely due to weak financial reasoning.
Initiative: The Training Module by NDIAC (2024) aims to improve commercial and technical proficiency of retired judges transitioning into arbitrators.
Lack of International Recognition
Limited Global Appointments: Indian retired judges rarely feature in elite panels like ICSID or SIAC, due to perceived inflexibility and unfamiliarity with global norms.
Observation: Justice D.Y. Chandrachud (March 2024) highlighted the absence of Indians in high-value international commercial arbitrations with no India-link.
Survey: According to Queen Mary University London Arbitration Survey 2024, less than 3% of appointments in international tribunals involve Indian arbitrators.
Monopoly and Lack of Diversity
Narrow Arbitrator Pool: Predominantly appointing retired judges limits opportunities for domain experts (like engineers, accountants) or professional arbitrators.
Example: In the Tech Mahindra vs. SBI arbitration (2023), lack of sectoral expertise led to poor understanding of IT-contract nuances.
Scheme: The ODR Policy Paper 2024 stresses the need for interdisciplinary arbitrators to democratize access.
Holistic Reforms Needed to Improve the Arbitration Ecosystem
Diversification of the Arbitrator Pool
Beyond Judiciary: Include lawyers, domain experts, academicians, and retired bureaucrats, encouraging specialisation-based appointments.
Example: Singapore International Arbitration Centre (SIAC) rosters include engineers and accountants besides lawyers.
Initiative: The Draft Arbitration Bill, 2023 recommends broadening eligibility beyond retired judges.
Training and Accreditation Standards
Structured Capacity Building: Mandatory certification through institutions like NDIAC, IIAM (Indian Institute of Arbitration and Mediation).
Example: Chartered Institute of Arbitrators (CIArb) accreditation is global standard — a similar Indian program could boost arbitrator quality.
Policy: Training Guidelines issued by NDIAC (2024) make accreditation compulsory for empanelment.
Promoting Institutional Arbitration
Reducing Ad hocism: Strengthen institutions like MCIA (Mumbai Centre for International Arbitration) and NDIAC to administer arbitrations.
Example: MCIA rules incorporate strict timelines and transparent selection processes, discouraging monopolies.
Government Initiative: Atmanirbhar Bharat’s Legal Infrastructure Vision (2023) proposes significant investments in arbitration institutions.
Cultural Shift and Awareness
Arbitration as Distinct from Litigation: Promote arbitration not as a judicial extension but as a flexible, efficient alternative.
Example: Singapore’s Maxwell Chambers model promotes arbitration as a business service, not a legal formality.
Scheme: NITI Aayog’s Draft Strategy 2025 identifies “Changing Legal Mindsets” as a core pillar.
Conclusion
While the appointment of retired judges has initially lent credibility, experience, and structure to Indian arbitration, it is insufficient and sometimes counterproductive to achieve India’s ambition of being a global arbitration hub. According to the World Bank’s Ease of Doing Business 2024 data, “enforcing contracts” remains India’s weakest pillar at rank 163/190, emphasizing the urgent need for systemic reforms in dispute resolution.
With a holistic, skill-based, and diversified approach, India can realistically aspire to feature among the top 5 arbitration hubs globally by 2030, as envisaged in India Vision 2047 documents.
