Have been talking with the government to reexamine norms restricting its participation in arbitration: AG R Venkataramani

Government may reconsider its norms governing its participation in arbitration, Attorney General R Venkataramani recently said.

Referring to an existing government memorandum restricting government participation in arbitration in big stakes matters, the AG said he has been engaging with the government to rework the same.

“I have been talking to the government as to have a second look at it so that we have more potential and possibilities of making it more a relaxed set of norms for the government to follow,” AG Venkataramani said.

In June 2024, the Ministry of Finance had issued an Office Memorandum (OM) in which the government necessitated a re-examination of approach towards arbitration vis-à-vis other methods of dispute resolution. The OM said that arbitration was time-consuming, draining the exchequer’s money, and also cited the long-drawn litigation after the passing of awards. The OM restricted disputes under ₹10 crore to be amenable to arbitration. The larger focus shifted to exploring mediation and negotiation as alternatives.

The AG said that the said the OM is not a law that it cannot be altered at all.

"And perhaps government may also recall it. And I don't think it is like a statue that cannot be altered at all," he stated.

He was speaking at the Gujarat High Court Arbitration Centre (GHAC) Arbitration Week in GIFT city on 'What changes must India bring into the arbitration regime?'

The AG also said that Bar must play a greater role in improving India’s arbitration system.

Venkataramani placed significant responsibility on the arbitration Bar, arguing that lawyers have not done enough to facilitate the shift from ad hoc arbitration towards institutionalised dispute resolution.

“The bar is the most important engine of transition in the arbitration regime. We have not really played our role. We have become a part-time activist,” he said.

He urged lawyers to participate more actively in the Arbitration Bar of India. He held that this could help build a stronger pool of specialised arbitration practitioners and remove structural impediments to institutional arbitration.

The AG also said that the evolution of arbitration could not be examined merely through amendments to the Arbitration and Conciliation Act. Instead he noted that the evolution also has to account for judicial processes, the Bar, institutional practices and broader economic considerations.

“Look at the role which Supreme Court is playing today in the destinies of our country. It's virtually an alternate policy maker. It's virtually an alternate institutional governance,” observed Venkataramani.

He said this expanding institutional role made it important to consider how courts could contribute to the evolution of arbitration while ensuring that fundamental principles were not diluted.

Venkatramani also cautioned against viewing judicial restraint and reduced government litigation as ends in themselves.

“Judicial restraint and governmental litigation policy to stem litigation are common calls. I am not too sure that ethics and accountability can be compromised at the altar of judicial restraint. I only wish to emphasise the aspect that we do not compromise on fundamentals,” he said.

He also opined that India should avoid “knee jerk reactions” to perceived shortcomings in arbitration law. Instead, he held that the nation needs to develop a 20- to 30-year roadmap for the country’s engagement with domestic and international arbitration.

Additionally, the Attorney General stressed that India’s arbitration regime must reflect its changing position in the global economy.

He said India could no longer view itself only as a recipient of foreign investment, but must also account for its growing role as an exporter of capital and investment and the international disputes that could arise from that shift.