India will need stronger arbitral institutions if it wants to attract disputes: Ciarb President Cesar Pereira

India’s strong economy and the volume of commercial activity taking place in the country give it the essential foundation required to become a global arbitration hub, Chartered Institute of Arbitrators (Ciarb) President Cesar Pereira said.

Pereira is the first Latin American President of Ciarb and a partner at Brazilian law firm Justen, Pereira, Oliveira & Talamini.

Speaking to Bar & Bench's SN Thyagarajan, Pereira discussed India’s prospects as an arbitration centre, artificial intelligence, arbitrator disclosures, diversity, opportunities for young professionals and transparency in government disputes.

Edited excerpts follow.

SN Thyagarajan (SNT): India has repeatedly spoken about becoming a global arbitration hub. What gives it a realistic chance of achieving that?

Cesar Pereira (CP): India has many strengths, but one is particularly important: it has a strong economy. It is difficult to become an arbitration hub if there is no real business taking place in that jurisdiction.

London, New York, Singapore, Hong Kong, Paris and Dubai all have considerable commercial activity. Arbitration may become an industry of its own, but it generally develops as a by-product of business occurring in a particular place. India already has that essential element. It is, therefore, easy to imagine disputes arising from Indian business being resolved in India and, over time, supporting an autonomous arbitration industry.

However, two issues must be addressed. First, for the world to trust India as a seat, international parties must understand how its courts operate and how supportive they are of arbitration. They must know how courts deal with applications supporting arbitral proceedings and challenges to awards. They must also be confident that there are no parochial peculiarities in the handling of arbitration cases.

Second, India relies heavily on ad hoc arbitration. Such proceedings tend to appear less predictable to international parties. A process in which an arbitrator may ultimately be appointed by a court can appear uncertain to a foreign user.

Established institutions have defined rules and appointment mechanisms. That makes international parties more comfortable. India will need stronger arbitral institutions if it wants to attract disputes connected with the country that are presently resolved abroad. Support from the government, courts and arbitral community for institutional arbitration will be important.

SNT: Your presidential theme is 'Trust in a Changing World'. What poses the greatest threat to trust in arbitration?

CP: Costs, delays, opaque appointments, inconsistent disclosure standards and artificial intelligence are all important. Each contributes to a level of distrust in the process. But this must be placed in perspective. Despite the criticism directed at arbitration, it remains by far the preferred method for resolving cross-border disputes. That does not mean arbitration has no flaws or that those flaws should not be addressed.

Artificial intelligence (AI) has already begun changing dispute resolution. It may be the main factor we must address over the next 3-5 years.

At the same time, we must remain mindful of the ethical standards governing arbitrators. The increased availability of information, combined with a general atmosphere of distrust, has raised questions about how arbitrators are selected and whether they can be relied upon.

Ciarb is well placed to contribute because its ethical standards are enforced through a disciplinary process. Many institutions have codes of conduct, but they can be aspirational. There may be no real sanction for a breach. Ciarb’s code is supported by a robust disciplinary mechanism.

SNT: Ciarb has around 18,000 members, but only about 40 disciplinary cases are ordinarily pending. Is the mechanism sufficiently well known?

CP: Fortunately, the number is small. We believe that is because most members comply with the code of conduct. But I would not rule out the possibility that many people do not know they can complain. The existence of around 40 ongoing cases shows that complaints are taken seriously and pursued when required. I have been speaking about the disciplinary process to increase awareness. Ciarb Fellows, Members and Associates undertake a particular ethical commitment and accept the possibility of disciplinary proceedings for a breach. That adds value to membership and builds trust in arbitration.

I learnt in India that courts frequently appoint retired judges as arbitrators in ad hoc proceedings. Retired judges are regarded as reliable, particularly in an ethical sense. Apart from their knowledge and experience, they carry the ethical recognition associated with their time on the Bench. This demonstrates a demand for ethical reliability. It also reveals a space that professional arbitrators who are not retired judges should occupy.

Institutions such as Ciarb must show the market that other arbitrators can be just as reliable. Recognition as a Ciarb Fellow should indicate both competence and adherence to ethical standards that the market can trust.

SNT: Arbitration is frequently criticised for becoming as expensive and time-consuming as litigation. What can tribunals do?

CP: The single most important thing a tribunal can do is engage with the case from the beginning. The more present and involved a tribunal is, and the more it maintains a dialogue with the parties, the less likely it is that delays will occur. Problems arise when tribunals are too laid-back and try to understand what is happening only after the case has derailed.

Tribunals should conduct frequent case-management conferences, anticipate procedural issues, establish clear rules and enforce them. They should not be afraid to exercise their powers to organise proceedings. This requires considerable work. Arbitrators who accept too many cases cannot provide that level of engagement.

If the market trusts only a handful of arbitrators and repeatedly appoints them, they will become overburdened. We must train more arbitrators and trust younger and more diverse practitioners. Expanding the pool of qualified arbitrators can address several shortcomings at once. Ciarb is especially important for young professionals. They can join early and grow in their careers as they progress through the different levels of membership.

Like many other Ciarb branches, India has an active Young Members Group. It connects young practitioners with their counterparts in India and abroad. It also works with Ciarb branches to secure speaking engagements and other opportunities for professional growth.

SNT: Should arbitrators, counsel and experts be required to disclose whenever they use artificial intelligence?

CP: Ciarb’s 2025 guidelines recommend disclosure in certain circumstances, particularly when the use of AI creates a risk to the outcome of the arbitration. But they should not be read as imposing a general requirement to disclose every use of AI. “Disclosure” is a difficult word here. We use the same term for conflicts of interest, where the usual advice is to err on the side of disclosure. When it is used for AI, people naturally assume that every use must be disclosed. But AI is a tool. Responsibility and accountability are more important than general disclosure.

A person using AI must ensure that it does not cause a breach of any obligation owed in the arbitral process. If the arbitration is confidential, the tool must not compromise confidentiality. The user must also verify the accuracy of its output. These obligations exist regardless of AI. If an assistant invents a case and counsel uses it without verification, the fault lies with counsel.

Improper delegation is also a problem whether work is delegated to AI or to another person. Arbitrators must not delegate their essential decision-making functions. A general disclosure obligation could excessively interfere with the use of a tool. It is comparable to requiring counsel to use physical libraries instead of online research.

Tribunals have the power to regulate AI use, but they should exercise restraint and openly discuss any limitations with the parties. If disclosure is required, the obligation must be clearly defined and prospective. The danger is an unclear, retrospective obligation. Someone could ask at the end of a case whether an arbitrator had used Copilot and then challenge the award because this was not disclosed.

Courts have so far been relatively balanced. Awards have not been annulled merely because AI was used. Intervention has concerned defects caused by its use, such as invented authorities or reliance on facts outside the record. Those defects can also result from human error.

SNT: Should failure by an arbitrator to disclose information have consequences even when actual bias is not established?

CP: The International Bar Association Guidelines on Conflicts of Interest have effectively become a universal standard. They are not mandatory and their application varies, but they are widely recognised. Decisions such as Halliburton v Chubb indicate that annulling an award ordinarily requires more than a breach of the duty to disclose. There must also be some harm arising from the non-disclosure.

That can be difficult for a losing party to understand. The party may believe that had the information been disclosed at the beginning, the person should not have acted as arbitrator. But the proceedings continued, the arbitrator decided the dispute and the parties incurred all the associated time and expense. The party must then establish harm beyond the failure to disclose.

Disclosure is not an end in itself. It is a means of securing neutrality and impartiality. If the circumstances indicate that impartiality was not compromised, the interest in preserving the award may prevail even though information should have been disclosed. However, an undisclosed fact may be so serious that it creates a presumption of harm. Certain facts can have such an effect on the legitimacy of the proceedings that their non-disclosure should not be tolerated.

The appropriate balance is to ordinarily require proof of harm, while recognising a presumption of harm in particularly egregious cases.

SNT: Should arbitral institutions adopt measurable targets or take stronger steps to diversify appointments?

CP: Institutions should take stronger steps, but serving as an arbitrator carries significant responsibility. Someone cannot be appointed merely because an institution wants to diversify its pool. The process must begin earlier. We need a more diverse group of practitioners with the necessary knowledge and experience. Diversity should extend across gender, geography, ethnicity, experience and professional background.

Users want the best possible arbitrator for their dispute. Our responsibility is to create conditions in which the best-qualified person can be selected from a diverse pool. Institutions can provide the necessary training and opportunities. They can also help the market identify qualified people who are not sufficiently visible.

Repeating familiar appointments is the easy path. It takes greater effort to look beyond the usual names. When institutions organise events, they should identify capable practitioners who are not already famous. Speaking opportunities give them experience and visibility. Counsel and parties will then come to know them, trust them and eventually appoint them. Diversity must be promoted while protecting the integrity of arbitration.

SNT: How should arbitration balance confidentiality with the public interest in disputes involving governments and public money?

CP: My view is shaped by the Brazilian experience. Brazil does not have investor-State arbitration. It is not a signatory to the Washington Convention and does not have bilateral investment treaties providing for investor-State dispute settlement. What it has is contract-based arbitration involving State entities.

Brazil also has a highly transparent public procurement system. Government contracts, unless classified for national security or another legitimate reason, are public. Anyone can request copies of the contract and its amendments. That transparency extends to arbitration. When Brazil began permitting arbitration involving State entities, one of the first principles adopted was that those proceedings would not be confidential. This has created additional trust in arbitrations involving public funds and may be one of the main reasons for the success of such arbitration in Brazil.

Transparency is not limited to the award. Procedural orders, submissions and other documents are also public. This produces scrutiny and accountability consistent with the importance of disputes involving government contracts. Brazil is unusual and represents an extreme form of transparency. Each country adopts its own freedom-of-information standards.

The important principle is that arbitration should replicate the level of transparency applicable to the underlying government contract. My preference is for full transparency in both government contracting and arbitration, but each country must make that policy choice.

What does not make sense is to have one level of transparency for the contract and another for the arbitration. If the public can access a government contract, it should also be able to access the arbitration in which that contract is being interpreted or enforced.