Time Has Come For India To Take Lead In Fostering Culture Of International Arbitration : CJI DY Chandrachud

“Rule of law heralds better economic and commercial outcomes. Respect for the rule of law promotes fairness stability and predictability. This creates a conducive environment for economic growth as investors thrive in a system where rights are protected contracts are enforced and disputes are resolved efficiently. A strong rule of law framework also encourages investment, promotes trade and enhances global competitiveness ultimately driving sustainable economic development and improving living standards. Rule of law is the virtual semiconductor of our digital era.”

Referring to India's projected 7 percent GDP growth for 2024-2025 as forecasted by the IMF and World Bank, he said that India is well-positioned to take a leading role in international arbitration.

“The time has come for India to take the lead in fostering a culture of international arbitration. Providing a level playing field for dispute resolution beyond the domestic courts…We do not stand at the cusp of a country which is fearful of the inroads of foreign direct investment or human capital from abroad into India because we are net exporters of capital both human and economic. By establishing robust institutional framework India can champion the growth of arbitration, promoting a fair efficient and reliable means of resolving commercial disputes.”

The CJI was speaking at the inauguration event of a two-day Conference on International Arbitration and Rule of Law marking the dual occasion of the 75th year of establishment of the Supreme Court and the 125th anniversary of the Permanent Court of Arbitration (PCA).

Justice Sanjiv Khanna, PCA Secretary General Dr. Marcin Czepelak, UNCITRAL Secretary General Anna Joubin-Bret, former Supreme Court judge and PCA member Justice Indu Malhotra, Attorney General of India R Venkatramani and SCBA President Kapil Sibal also spoke at the event.

CJI Chandrachud began his address remembering Fali Nariman, a doyen of international arbitration, who passed away earlier this year.

CJI Chandrachud cited recent Supreme Court judgments that have significant impact on the arbitration landscape in India.

He highlighted Indian judiciary's shift from relying on retired judges as arbitrators to appointing young advocates, including women practitioners, and acknowledged the growing pool of skilled arbitration lawyers in India. The CJI revealed that, out of the 45 recent arbitrator appointments made by him, over 23 were lawyers from the bar, with the rest being former judges.

“There is so much of work generated that there is enough for people particularly young woman lawyers to act as arbitrators completely displacing the gender imbalance in the world of arbitration”, the CJI said.

He stressed that good arbitrators also make good judges, highlighting that arbitration related cases require specialized expertise, and several members of the bar with experience in arbitration have been appointed as judges of the high courts in recent years.

“As arbitration gains traction as preferred means of dispute resolution, related litigation increases before the courts requiring judges with specialised expertise. Members of the bar with experience in conducting arbitrations and appearing in arbitration related cases have been appointed as judges of the high courts in the last few years. Similarly practitioners with significant experience in international arbitration are increasingly being designated as senior advocates”

The CJI noted that India's early struggles in investor-state arbitration have now transformed into successes. He highlighted the government's role in training diplomats and professionals to handle complex international disputes.

CJI Chandrachud expressed hope for constructive discussions during the conference to further strengthen the Indian arbitration ecosystem.

Supreme Court judge Justice Sanjiv Khanna in his address talked about the challenges faced by the Indian judiciary regarding the backlog of cases. He praised Lok Adalats as a mechanism of alternate dispute resolution. In the past six years, Lok Adalats have resolved 130 million cases, demonstrating their effectiveness in reducing the burden on courts, he said.

“every judicial system grapples with the problem of backlog of cases. To tackle this problem Indian judiciary has turned to innovative solutions combining modern legal frameworks with traditional methods of dispute resolution in the villages. Among these, Lok Adalat or people's court which operate outside the conventional court rooms focusing on informal reconciliatory dispute resolution stand out as a remarkable innovation. The success of Lok Adalats is the testament to their effectiveness. In the last 6 years they have resolved 130 million cases underscoring the capacity to deal with backlogs.”

Justice Khanna concluded by predicting that conciliation will play a larger role in the future of international dispute resolution.

SCBA President Kapil Sibal in his address emphasized that the Supreme Court has played a crucial role in safeguarding the principle of Rule of Law in arbitration matters. However, he noted the delays in the execution of arbitration awards, which dilute the essence of expeditious dispute resolution.

“Sometimes an arbitration award is upheld by all Courts in India and but the process of execution is so dilatory that the very objective of expeditions resolution is lost. It is necessary that within the judicial hierarchy at all levels the significance of expeditious resolution in these matters is understood and acted upon”, Sibal said.