[Arbitration after the Bench] Not sending the right message: Justice Kurian Joseph on Centre's retreat from arbitration in procurement contracts

After the Bench is a series featuring former judges of India's higher judiciary who have moved to the arbitration table after retirement. Each episode explores what the system looks like from inside, through the eyes of the people who are now deciding some of India's largest commercial disputes..India's arbitration ambitions have never been louder, even as its actions are quite contradictory. The Central government itself pulled arbitration clauses out of public procurement contracts in 2024. Awards against public sector enterprises (PSUs) are challenged in courts as a matter of institutional reflex. And the system that was built to deliver finality keeps producing new grounds for litigation. Justice Kurian Joseph has watched all of this from two sides of the table, first as a Supreme Court judge and now as one of India's most active arbitrators.The presiding arbitrator in disputes including the Vizhinjam International Seaport arbitration between the Kerala government and Adani Ports speaks to Bar and Bench's Debayan Roy on arbitrator independence, India's retreat from arbitration in government contracts, what it takes to build a credible arbitration seat and more..Edited excerpts follow..Debayan Roy [DR]: What are the key things you had to unlearn when you became an arbitrator? After being a judge for so long, what are the things you had to keep back when you joined an arbitration proceeding?.The elephant I had to keep out of the room is this: you are not a judge. You are an arbitrator, arbitrating a commercial dispute between the parties and reaching a solutionJustice Joseph.Justice Kurian Joseph: Unlearning. That was a very difficult task for me initially. This is my eighth year as an arbitrator. I spent close to 19 years on the Bench, always listening to arguments, not actually exposed to any trial. Hardly anyone of us who retired from the Supreme Court now in arbitration was a trial judge. The unlearning process was this: in arbitration, you are not listening to who is legally right and who is wrong and you are not going to lay down a law. In the Supreme Court, whatever you say under Article 141 is law, binding on courts and tribunals across the country. That is always at the back of a judge's mind. Here, people come with commercial disputes. As I always say, quoting Justice Midha of Delhi: both sides know the truth, only the poor arbitrator is put on trial to find out the truth. The elephant I had to keep out of the room is this: you are not a judge. You are an arbitrator, arbitrating a commercial dispute between the parties and reaching a solution. The award that you pass is not a judgment. It is, in the facts and circumstances of the case, who is entitled to what. A totally different approach altogether..DR: There have also been a lot of criticism by PSUs that since former judges are the ones who take upon the role of arbitrators in India, the awards often become very complicated, long and winding. Have you tried somewhere to not fall into this sticky domain?.Justice Kurian Joseph: I have not only tried, I must honestly claim that I have been successful. In the backdrop of my mind, I always said to myself: Kurian, you are not a judge. See the facts, analyse them, look at the evidence, find where the truth lies. I am not going to introduce equity unless the parties confer that jurisdiction on me. If you write too much on the law and complicate it too much, that is what gives rise to Section 34 and 37 challenges. If you concentrate on facts and go to the threadbare aspects of the factual dispute rather than drawing on your experience in law, you will be very comfortable. The arbitrator is not meant to digress on the legal position. He is only expected to apply the minimum law to the larger factual dispute..DR: Arbitration in India is still led by a small circle of retired judges and senior advocates. Do you see it as a strength of the ecosystem that is being developed, or as a structural bottleneck which stops India from being seen as a competitive international seat of arbitration?.Justice Kurian Joseph: In the international market, I have not seen as many judges serving as arbitrators as in India. The majority of international arbitrators are from a non-judicial background. I have sat with them in international arbitrations. They are very thorough and very professional in their approach.But India has a client mindset that judges are better placed to analyse the factual and legal aspects involved. And Indian lawyers feel more comfortable presenting their case and arguing before former judges than before academicians or technical people. Both from the client's point of view and for the comfort zone of lawyers, India has this problem, which is not there in other jurisdictions.It is very difficult to make a technical person sitting with me understand, for example, the question of limitation. They treat some communication as keeping an issue alive, whereas from a legal background, we know it requires an actual acknowledgement. But I have also seen people gain experience sitting with judges and lawyers, becoming sober, mature and enlightened in that process..DR: Arbitrators who are judges bring a lot of legal authority to the proceedings. But disputes such as those involving infrastructure, investment and construction often turn on technical facts. Can a career judge really adjudicate a dispute which is essentially about soil compaction or load-bearing capacity?.Justice Kurian Joseph: These issues come in one form or another in courts also. I still remember Harish Salve coming to court with a Christmas tree type of structure, explaining the process of oil extraction. We have a training of mind. If I come across something I do not know, I must learn. A judge with that mindset will always learn and be in a position to adjudicate. The trend now is that parties lead their own expert evidence in high-stakes matters. Both sides bring experts. And finally the tribunal has to analyse which expert is right and which is wrong. In one case, we tried a methodology where both experts sat together to see what areas they could agree on and what they could not. To my surprise, even 10 per cent they could not agree on, despite claiming to be experts of international repute. Left to me, if I get a domain expert as a co-arbitrator, I am very happy. The moment I face a situation where I do not have knowledge or exposure, I can ask and learn instead of getting a coloured version from party experts. But I have seen two problems: the domain expert who thinks lawyers know nothing and takes a tough position and the one who becomes passive and just goes along until the award is written. In complicated issues, I would rather appreciate a domain expert as a co-arbitrator..I have seen two problems: the domain expert who thinks lawyers know nothing and takes a tough position and the one who becomes passive and just goes along until the award is writtenJustice Joseph.DR: India has described itself as an emerging hub of arbitration for years. Yet, recently the Government of India did away with arbitration in some of the public procurement and infrastructure contracts. What sort of a message does this send to the global arbitration community about India's confidence in its own framework?.Justice Kurian Joseph: In international platforms, India speaks so loudly about being a great hub for arbitration. But when it comes to the brass tacks, 70 per cent of arbitration is by PSUs and government bodies. And they backed out, leaving scope only for disputes below ₹10 crore to be arbitrated. You are not sending a right message. People find it so embarrassing. Having participated in large platforms with big people speaking so highly about India's scope for arbitration and inviting people to come, when they come they find there is no plate to take your food. You have only a table, no plate. It was a very unwise and imprudent decision, I must say. I do not mind them having their own internal mechanisms to check whether they should go to arbitration at all. But once it reaches a stage where there is nothing but adjudication left in the matter, it should be left to the adjudicatory process..DR: You had arbitrated the Vizhinjam arbitration dispute between the Kerala government and Adani Ports, resolving a bottleneck and opening a mega infrastructure project worth more than about ₹7,000 crores. If the June 2024 Ministry of Finance guidelines were to be followed during this dispute and it would have been referred to an expert committee, would the resolution you achieved in the Vizhinjam arbitration have been possible?.Justice Kurian Joseph: It would have been a disaster. And that port would not have been a port even now. It would have been a port on the files.Both parties were commercially prudent to look beyond the dispute before them and to see whether in the long-term perspective it would be in the interest of both to have the issues resolved other than through a judicial process. By the time the consent award was passed, the parties had realised where they stand, what their strengths are and what their weaknesses are. So it was easy to find a solution.It was also a contract for a long-term relationship. The question was whether for a small present dispute you want to spoil the future, or for the future you want to make a little sacrifice of the present. Both the State government and Adani were prudent, taking a very informed commercial decision, facilitated by the arbitration tribunal..DR: Cox and Kings confirmed that a non-signatory party can be bound by an arbitration agreement even though they have not signed it. Many in several quarters have critiqued it as compelled arbitration. Doesn't that fundamentally undermine the consent architecture on which the arbitration regime rests in India? And for foreign investors, does it not make India a less predictable seat?.Justice Kurian Joseph: Your question has the answer also. Fundamentally, arbitration is about the disputing parties agreeing to refer their dispute to a neutral tribunal. But if the parties can also agree that disputes whose resolution can affect third parties should also be referred, that is well and good. As you rightly said, the third party should consent to it. If the outcome of an arbitral award is likely to affect a party not before the tribunal, it is always better to get them into the process of adjudication so that there is finality. An award is not meant to open a new gate of litigation by a third party. It must be for the disputing parties to get the consent of that third party. Rather than the tribunal compelling them, the parties can make the third party agree. In principle, I would say the decision is correct. But the methodology, the process of how this third party comes in, could have been laid down a little differently..DR: Data placed before Parliament shows that a significant percentage of arbitral awards which have been passed against the government have been challenged in courts. Does this reflect a deeper institutional unwillingness to follow a binding outcome? And can this be reformed?.Justice Kurian Joseph: Analysis exists only on the challenge in court. But what happens to those challenges ultimately? You will find the government or PSU was only buying time in court, finally suffering the hurt. That is my experience. The government should take a policy decision. Why did they agree for a tribunal in the first place? Out of confidence in the tribunal regarding its impartial and independent assistance in finding a solution. Having done that, except for a very minimal issue, unless you have a very strong view that the award is vitiated by fraud or against public policy, you should be slow to challenge it. .DR: What often happens is that if a government officer accepts a large award, he risks being probed by the CAG or CVC. Whereas if a Section 34 challenge is filed, a garb of due diligence is taken..Justice Kurian Joseph: My solution is this: why not confer jurisdiction on a pre-Section 34 body, staffed by trained minds of former judges or those manning statutory tribunals, to conduct a preliminary examination of an award before a challenge is filed? From the legal, factual and technical angle, they can sit together and take a call. The CAG and CVC threat can then be dispensed with..DR: The MSME Facilitation Council often drags businesses and entities into a statutory arbitration which they never contracted for. Courts are still at loggerheads whether the MSME Act overrides the Arbitration Act. If the government on one hand is doing away with mandatory arbitration clauses in certain contracts and on the other hand people are being forced to get into compelled arbitration, then is consent becoming a fiction?.Justice Kurian Joseph: It certainly is. Because you use the right under a statutory contract, you sign when you are bound also. Whether you like it or not, you have to accept this destiny. That is what is causing a bit of friction. You need an amendment in the MSME Act. What happens now is that the Council conducts conciliation and then it goes automatically into arbitration. A filtering mechanism should be put in place to examine whether a case is strong enough to go for arbitration. Instead of everything going automatic, it should be done in a structured fashion..DR: The Supreme Court's curative intervention in the DMRC case effectively scuppered an arbitral award which had survived successive stages of challenge. As a former Supreme Court judge who is now sitting as an arbitrator in multiple disputes, how do you evaluate that particular intervention?.Justice Kurian Joseph: I knew this question would come. Curative is not meant to be taken routinely...It is not meant to be used in such situations. The curative concept itself is a judicially evolved process - the Rupa Ashok Hurra case. We have laid down the principles where this could be employed. I leave it at that. But the broader question is whether a curative route can be taken to undermine the credibility of an arbitral award that has survived so many challenges.In principle, curative should not be used as a platform to settle due process under the Arbitration and Conciliation Act. But in the DMRC case the force majeure point played an important role. As in Latin grammar, no rule is without an exception. The exception is where it has gone beyond shocking the judicial conscience, to actually shocking the constitutional framework of India's concept of justice. That is the area..DR: The West Asia conflict has flooded Dubai's arbitration centres with suppliers invoking the force majeure clause. The Indian Supreme Court in Energy Watchdog had held that cost escalation alone does not trigger the force majeure clause. You yourself dealt with force majeure in the Vizhinjam arbitration during the COVID times. Do you think India's force majeure jurisprudence is too narrow to embrace the kind of disruptions we are seeing in our global geopolitical map. Are we losing out to Dubai and Singapore due to our non-recognition of commercial reality?.Justice Kurian Joseph: Sitting in international arbitrations, I have always faced this situation. The commercial angle at which international members look at these disputes is wholly different from an Indian arbitrator applying Indian jurisprudence. So I would agree with you: ours is a very narrow approach.But I can also suggest a solution. Why do you leave force majeure as abstract as it is? Define it in your contract. I deal with several contracts where force majeure is not left vague. They have said: these are the situations where the force majeure principle applies, nothing more, nothing less. The fundamental principle of force majeure is that the event was not reasonably foreseeable by the person entering the contract. Define the force majeure clause. It is your agreement..DR: Recently, the Singapore Court of Appeal set aside an arbitral award stating that a substantial portion of the reasoning was reproduced from earlier orders. Does this episode raise broader questions on the rigour and originality of Indian arbitral awards and its repercussions on India being seen as a credible international arbitration seat? How far as an arbitrator do you feel the use of AI or taking up bits and pieces from earlier awards can be justified?.Justice Kurian Joseph: Every dispute is unique. It is not a repetition of an earlier dispute. The circumstances which lead to the dispute are unique. AI only helps you to properly cook what you have fed into it. It does not have a mind on its own...You have to have a virgin approach on each arbitration. On the credibility issue, people want to shake our credibility, because in the international scenario, more than 50 percent of disputes involve Indian entities...India's arbitration centres do not have an ICC-style award scrutiny function. I would agree that scrutiny is useful.The Delhi International Arbitration Centre has started this practice. All awards written there are now scrutinised before publication. They point out clerical mistakes, mistakes in calculations. But there have been issues of plagiarism as well. If you handle it properly and prudently, this embarrassment can be avoided. I would rather go with a mechanism where scrutiny is advisable..DR: Singapore, London, Paris have built their international seats of arbitration not only on the infrastructure around them but on a culture of judicial non-interference. Is India's judiciary, despite its reform rhetoric, still too interventionist to allow India to emerge as a genuine rival to all these international seats of arbitration?.Justice Kurian Joseph: I may not fully agree with it, but there is a perception...The reason is that almost 90 per cent of awards are challenged in courts. Only 10 per cent escape challenge. And after the 90 per cent, courts try to at least examine almost one-third of them. At that threshold, a non-interventionist approach could be better.There is a perception that in India there is too much intervention. Therefore, one of the preliminary issues parties face is whether this is international or domestic arbitration. Because one of the parties would certainly love it to be international, knowing that if it is domestic, certainly there will be a Section 34 and a Section 37..DR: Section 34 has really been critiqued of becoming an appeal on merits in disguise, even though the Supreme Court has held in a catena of decisions that it should not be so..Justice Kurian Joseph: Lawyers project not on the merits, but somehow convince the judge that there is an issue of fraud or a fundamental policy involved. So please examine it with notice, they say. Many times, judges are called upon by lawyers and convinced that there is an issue which requires Section 34. The Supreme Court has time and again laid out that the scope for interference is very, very minimal. And I must say at the threshold itself, judges should be very, very careful not to call the other party unnecessarily to court..DR: Section 29A of the Arbitration and Conciliation Act was revolutionary. It incorporated timelines and even a penalty of fee reduction for arbitrators. Has this provision really improved the discipline in Indian arbitration proceedings or has it simply generated more satellite litigation?.Justice Kurian Joseph: Applying the empirical data of my own arbitrations, this has not caused either any improvement or any embarrassment to me. If lawyers cooperate and parties cooperate, you can pass an award within one year of the completion of pleadings. Almost 90 per cent of the awards I have written or been party to in the last seven or eight years have been done within this period. In the few matters where parties went to court for extensions, it was not because of the tribunal. Their witnesses could not come, lawyers had to be changed, pleadings had to be amended...I have not come across any situation where the blame was put on the tribunal for needing an extension..DR: Several international arbitration jurisdictions require structured training and certification before being empanelled as arbitrators. Should India also move towards a formal certification system, or would that risk excluding the very judges and senior advocates who anchor this particular system in India?.Justice Kurian Joseph: If you are truly open to your own conscience, you would not resist it. Immediately on laying down my office as a judge in the Supreme Court, the first thing I did was undergo 40 hours of training conducted by the Singapore International Mediation Centre. Not to become a certified mediator, but to be trained. I knew I did not require any certification, but to be trained is something. So I would support having a certification. Because that process will help you understand whether there is competence in you to be an arbitrator..DR: Former CJI DY Chandrachud used to nominate very young counsel as arbitrators, lawyers with only three or four years of post-qualification experience. Should they be given more time to get acclimatized?.Justice Kurian Joseph: Yes time to get acclimatized and should have some exposure to arbitral proceedings, either as a lawyer, a witness, or an assistant to senior counsel. Without knowing anything about arbitration, if you think that you can arbitrate, it is as good as asking anybody to go and mediate..DR: The CIArb fellowship examination has a lot of structural elements to it. They test your knowledge of evidence, arbitration procedures and so on. If that system becomes the norm in the country, would you as a practising arbitrator take that examination?.Justice Kurian Joseph: If they require that practising arbitrators also should go in, definitely I would be very happy to do that. If the decision is mandatory that all should go, I would say yes. I will not hesitate. Because you cannot claim to be an absolute authority on everything. Be open.