Finance Ministry 2024 arbitration memo a ‘plaintive cry of a disgruntled litigant’: Darius Khambata

The Finance Ministry’s 2024 memorandum cautioning government bodies against routinely choosing arbitration appeared to be the “plaintive cry of a disgruntled litigant” rather than a serious policy announcement, Senior Advocate Darius Khambata said on Monday.

Khambata was speaking at the Singapore International Arbitration Centre (SIAC) Symposium 2026 during a panel titled Cross-Border Disputes across China, India and the US: Strategy, Enforcement and Risk.

The session was moderated by Clifford Chance partner Kabir Singh. The other panellists were Three Crowns founding partner Luke Sobota, Alibaba Group’s Head of Dispute Resolution and Regulatory Investigations Li Jieyun and Hui Zhong Law Firm Singapore head Hazel Tang.

Khambata was responding to a question on whether governments were moving away from arbitration in favour of domestic courts.

He said India could not afford such a retreat because its courts were already clogged with constitutional, service and social litigation.

“If you’re talking about India, I don’t think India can ever afford to move away from commercial arbitration.”

Indian courts did not have the time or space to devote similar attention to conventional commercial suits, Khambata said. Consequently, commercial disputes had increasingly moved towards arbitration over the past two decades.

He then addressed the Finance Ministry’s 2024 memorandum on arbitration and mediation in domestic public procurement contracts. The memorandum advised government entities against automatically including arbitration clauses in contracts.

Khambata said the document had been issued by a Deputy Secretary in the Ministry’s Procurement Policy Division and could not be treated as evidence of a larger policy shift.

“First of all, that’s not how the government signals policy shifts. At minimum, you get something out of the Law Ministry. This is not the Law Ministry.”

The memorandum appeared to have been drafted from the perspective of a party dissatisfied with unfavourable arbitral outcomes, he remarked.

“If you read that memo, it is more the plaintive cry of a disgruntled litigant rather than someone making policy.”

Khambata said the document complained about the alleged lack of finality in arbitration. This was surprising because the government was the largest litigant before Indian courts and frequently pursued cases through successive forums, he added.

The memorandum nevertheless contained some useful recommendations. It discouraged meritless challenges to awards and supported institutional arbitration where parties opted to arbitrate.

However, it had produced no discernible change in the two years since its issuance, Khambata said.

“It has had no impact. It’s two years down the line, things have not changed. It’s much ado about nothing, actually.”

India’s commitment to arbitration was better reflected in the proposed amendments to the Arbitration and Conciliation Act, which sought to recognise emergency arbitration and strengthen institutional arbitration, Khambata added.

Luke Sobota said commercial arbitration continued to enjoy acceptance in the United States, although resistance to investor-State arbitration and multilateral investment arrangements was becoming more visible. Parties were also paying greater attention to neutrality, the governing law and eventual enforcement while selecting an arbitral seat.

Hazel Tang said China had witnessed a broadly positive trend in the enforcement of arbitral awards. The greater practical difficulty often arose after a party had succeeded, particularly in securing payment and navigating foreign-exchange controls.

Li Jieyun said businesses should focus on the arbitral seat rather than concentrating only on the institution. She added that in-house legal teams were increasingly involved in selecting arbitrators and assessing their experience, neutrality and familiarity with China-related disputes.