The limited visibility of the India International Arbitration Centre (IIAC) reflects a larger trust deficit in institutional arbitration in India, former Supreme Court Justice L Nageswara Rao said while discussing a recent Parliamentary Standing Committee report.
Justice Rao was speaking at a panel organised by the Singapore International Arbitration Centre (SIAC) during Singapore Convention Week.
The discussion was moderated by White & Case Partner Aditya Singh.
The Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice published recently had examined the functioning of the IIAC. It noted that the Centre was set up to compete with leading international arbitral institutions such as SIAC, LCIA and HKIAC. However, the Committee flagged its limited visibility and usage.
Justice Rao, however, said that the more fundamental challenge was convincing lawyers, general counsel and other users to repose confidence in arbitral institutions in India.
“Unless the law firms and the general counsel start improving institutions, suggesting to the parties that, instead of ad hoc arbitrations, we should go to institutional arbitration, things are not going to change.”
The panel also featured former Supreme Court Justice S Ravindra Bhat, former Attorney General for England and Wales Lord Peter Goldsmith KC, Senior Advocate Rajshekhar Rao and SIAC Director and Head of South Asia Shwetha Bidhuri.
Bidhuri said it would be unfair to expect a relatively new institution to compete immediately with institutions that had spent decades building credibility. She added that establishing an institution involved much more than adopting rules and fee schedules. The quality of the people administering cases, the consistency in implementation, and the scrutiny of awards were all important.
“It’s too short a while to comment that it’s not visible enough, or this and that has not happened. It will happen.”
She pointed to SIAC's own development over 35 years and said that institutional trust had been built gradually through the work of its court, board and secretariat.
The Parliamentary Committee had also recommended clearer guidelines on the scope and limits of judicial intervention in arbitration matters. It said that such guidelines could help reduce unnecessary delays.
Senior Advocate Rao disagreed with the suggestion that India required further legal guidance. He said that India already had a reasonably developed body of law governing interference with domestic and international awards. The real difficulty, according to him, was the manner in which that law was applied.
He also criticised the manner in which the IIAC had been built and supported. He said that the problem began with an approach that involved providing an institution with infrastructure and a corpus, renaming it and then expecting it to compete with established global centres.
The senior advocate pointed particularly to delays at the challenge and enforcement stages.
“You have judges who can decide the same 34 in 15 minutes. And then there are judges who give you 15 dates for the same 34. So it’s really a question of application.”
The solution, he said, lay in better application of the existing law rather than creating more tribunals or additional layers of regulation.
Goldsmith said that India had taken several steps supportive of arbitration. However, he expressed concern over government moves to reduce reliance on arbitration in large public contracts. He said that such measures could make it harder to persuade international parties that India was a jurisdiction where arbitration enjoyed institutional support.
“I think if the government genuinely wants to promote arbitration, it’s got to think hard about whether it’s prepared to submit itself to arbitration as well.”
His concern was the signal sent when the State itself moved away from arbitration while seeking to promote India as an arbitration destination.
The panel then discussed the Supreme Court's ruling in Gayatri Balasamy and the power of courts to modify arbitral awards in limited circumstances.
Justice Bhat said that the impact of the ruling could not be assessed only through the experience of the Supreme Court and the High Courts. Challenges to and enforcement of awards could come before thousands of lower courts across India.
“There could be about 8,000 to 10,000 of these courts. So each one of them potentially could be interventionist or adventurist, as you choose the term. So that is what really worries me.”
The former Supreme Court judge added that the position across the country was still unclear and would have to be watched as the ruling was applied beyond the High Courts.