Continuous Cooperation Between International And Domestic Arbitration Bodies Needed: Justice Surya Kant

Supreme Court judge Justice Kant on Sunday stressed the need for continued cooperation between international and domestic arbitration bodies in ensuring that arbitration remains a fair, cost-effective, and accessible mode of dispute resolution.

Justice Kant was speaking at the valedictory function of the two-day Conference on International Arbitration and Rule of Law. It was organised on the occasion of the 75th year of establishment of Supreme Court and the 125th anniversary of the Permanent Court of Arbitration (PCA).

“A key takeaway from the sessions is the need for continued cooperation between international and domestic arbitration bodies. This collaboration is essential for upholding the integrity of arbitration and reinforcing the rule of law. By working together we can address the complexities and challenges that arise ensuring that arbitration remains a fair, cost effective and accessible mode of dispute resolution. Our commitment to the strengthening international framework has never been more crucial. Both India and the global arbitration community stand united in the dedication to enhancing and evolving these frameworks. Through shared efforts and collective vision we can build a more cohesive and reliable system that serves the need of all parties involved”, Justice Kant said.

Justice Kant highlighted that as per PCA's 2023 annual report, PCA administered 246 cases, including 7 inter-state arbitrations, 122 investor-state arbitrations and 110 arbitrations involving contracts with state entities or intergovernmental organizations. He pointed out that this increase from the previous year's 202 cases demonstrates the growing preference for arbitration in global disputes.

CJI DY Chandrachud on Friday virtually launched PCA India Office in the VK Krishna Menon Bhawan across the Supreme Court. Justice Kant today said that the establishment of PCA office in India will not only attract international parties to prefer India as seat of arbitration but also build capacity through training programs that will enhance the skills of Indian arbitrators and other stakeholders.

Justice Kant called India's association with the Permanent Court of Arbitration (PCA) a manifestation of the country's commitment to institutional arbitration and promoting India as a hub for international commercial arbitration.

He highlighted that four Indian appointments to the PCA's roster are retired Supreme Court and High Court Judges. He said that arbitration is rapidly becoming the preferred mode of dispute settlement in India, and the infrastructural support being provided to arbitration has also increased, including the recent establishment of the Arbitration Bar of India.

Ministry of External Affairs Secretary Dammu Ravi called for reform in the Investor-State Dispute Settlement (ISDS) system, emphasizing the need for more development oriented invests for developing countries like India. He said that the MEA would promote responsible investments in UNCITRAL meetings.

“ISDS particularly focuses on profit and not so much as development of a developing country. Reform is very much needed. In the Ministry of External Affairs delegation we send for the UNCITRAL meetings we would like to bring this idea of responsible investments. The investments coming into the developing world have to be much more development oriented and not treaty shopping, not taking advantage of the changes in law. The developing countries have an obligation to deliver to its people which is why often the investment law becomes very dynamic. But it doesn't mean that the investor is losing. Investor has to look at it from the point of view of where the economy is growing”, Ravi said.

Ravi highlighted India's economic growth and said that disputes are natural when economy is growing, making mechanisms like mediation and arbitration critical. He stressed the importance of establishing a reliable arbitration ecosystem to encourage greenfield investments and foster confidence among entrepreneurs and investors. Ravi said that without an effective dispute resolution system, investments may shift towards brownfield projects, which could hinder economic expansion.

Senior Legal Counsel and PCA Representative in Singapore Dr. Tulio Di Giacomo Toledo noted that international arbitration is undergoing a period of resurgence, becoming increasingly mainstream. He highlighted that participants of the conference agreed that no institutional reform currently being proposed will solve all the issues in arbitration, and that a more inclusive ISDS mechanism is required.

Dr. Toledo also remembered Fali Nariman, an eminent jurist in international arbitration, who passed away earlier this year.

Senior Advocate Gourab Banerji called Fali Nariman the guiding light behind organizing the previous PCA conferences and bridging the gap between the Supreme Court and the PCA. Banerji highlighted that Nariman had recognized the failure of resolution of ISDS disputes by ad hoc arbitration. He stressed that “arbitration practitioners must consider the party outside the arbitration hall”, who is the most important player in a dispute, rather than only focusing on the technicalities of arbitration processes.

Banerji also said that there is tension between arbitration and the rule of law, as well as a crisis of confidence among users in domestic arbitration. He highlighted three key points made by Fali Nariman:

1. Arbitration is a process, not the endpoint.

2. Merely issuing an award does not automatically give it sanctity; there are both good and bad awards, and bad awards must be set aside.

3. Courts must retain supervisory jurisdiction over arbitration, as private processes must still comply with the rule of law.

Solicitor General Tushar Mehta said that India is becoming a preferred destination for arbitration due to the limited scrutiny at the reference stage, which expedites the appointment of arbitrators. Further, he highlighted provisions in India's Arbitration Act meant to ensure time-bound resolution of disputes.