Context

• India’s economic ascent has been accompanied by intensified discussions regarding its arbitration framework’s potential to contribute meaningfully to the country’s commercial growth.
• As cross-border and domestic commerce flourish, the inevitability of commercial disputes has become evident.
• However, India’s traditional court-litigation system, burdened by overwhelming caseloads and inefficiency, struggles to meet the demands of a rapidly evolving economic landscape.
• These discussions often highlight legislative reforms and judicial restraint but overlook a crucial factor, the role of arbitrators, the most significant stakeholders in the arbitration ecosystem.

The Importance of Human Capital in Arbitration

• The success of any legal or dispute-resolution mechanism is determined not only by its theoretical or structural framework but also by the quality of its human capital.
• In the case of Indian arbitration, this human capital encompasses a community of arbitration lawyers and, even more crucially, arbitrators themselves, who serve as decision-makers in the process.
• The credibility and legitimacy of Indian arbitration are largely dependent on two critical parameters: the efficient conduct of arbitral proceedings and the quality of arbitral awards.
• In both aspects, the arbitrator’s role is central.
• While arbitration lawyers significantly influence proceedings, it is the arbitrators who ultimately govern procedural rules, set timelines, resolve procedural disputes, and penalise improper conduct.
• Their decisions, the arbitral awards, are the final products that parties may choose to accept or challenge in courts worldwide.
• Thus, arbitrators form the backbone of India’s arbitration environment and are essential to its success on the global stage.

The Neglected Discussion in Indian Arbitration: Building Elite Indian Arbitrators

• Despite their pivotal role, arbitrators rarely feature in the mainstream discourse on improving Indian arbitration.
• While numerous initiatives focus on expanding the arbitration bar, comparable efforts to strengthen the arbitration bench are notably absent.
• This omission is particularly concerning in light of observations by Justice D.Y. Chandrachud, the former Chief Justice of India, who recently questioned the absence of Indian arbitrators in purely international disputes.
• The marginalisation of Indian arbitrators on the global stage stems from a deep-rooted trend: the identification of elite Indian arbitrators primarily with retired judges of the Supreme Court or High Courts.
• It is a common practice in India, especially for high-value disputes, to prefer retired judges as arbitrators, assuming that their judicial experience naturally ensures procedural efficiency and well-reasoned awards.
• However, this assumption has been increasingly challenged.
• In June 2024, guidelines issued by the Ministry of Finance painted a grim picture of arbitration proceedings in India, highlighting their resemblance to protracted court procedures, their inefficiency, and the frequent setting aside of poorly reasoned awards.
• Clearly, judicial experience alone does not automatically translate into effective arbitration.
• The skills required to manage arbitral proceedings and deliver high-quality awards differ substantially from those needed in traditional courtroom litigation.

Requirement to Become a Proficient Arbitrator

• Skills Beyond the Courtroom
  • The transition from a judicial to an arbitral mindset demands a reorientation of skills and approaches.
  • A proficient arbitrator must be not only legally sound but also an adept manager of proceedings, balancing procedural certainty with innovation and flexibility, hallmarks of modern arbitration.
  • Unlike litigation, where rigid rules of civil procedure and evidence dominate, international arbitration demands familiarity with best practices that are often more flexible, efficient, and party-centric.
• Ability to Collaborate with Diverse Legal Systems
  • Additionally, in international settings, arbitrators often collaborate with colleagues from diverse legal systems and cultural backgrounds.
  • Successfully navigating such multi-national panels requires refined soft skills, including negotiation, persuasion, and cross-cultural sensitivity, competencies not automatically imparted through judicial service.
• Specialised Skills in Evidence Management
  • Finally, the drafting of an arbitral award demands a different methodology compared to writing a court judgment.
  • Arbitral awards typically involve a detailed examination of extensive documentary evidence, expert and fact-witness testimony, and sophisticated financial analysis.
  • Arbitrators must, therefore, possess specialised skills in evidence management, fact-finding, and damage quantification, areas that require dedicated training.

The Way Forward

• Diversification
  • First, the pool of Indian arbitrators must be diversified beyond the traditional cadre of advocates and retired judges.
  • Specialists from fields such as finance, engineering, international trade, and technology — who possess arbitration-specific expertise, must be encouraged to enter the field.
  • A broader base of arbitrators with diverse backgrounds would enrich decision-making and ensure more sophisticated, well-rounded outcomes.
• Structured Training
  • Second, rigorous and structured training programs must be institutionalised.
  • Prospective arbitrators should undergo comprehensive certification courses, practical workshops, and join professional arbitration associations to build a deeper understanding of both substantive and procedural aspects of arbitration.
  • Such programs would promote not just skill development but also a cultural shift, positioning arbitration as a first-choice career path rather than a secondary option post-retirement or post-litigation.

Conclusion

• The promise of Indian arbitration lies not only in legislative reforms or judicial restraint but significantly in the strengthening of its human capital, the arbitrators.
• By expanding and professionalising the arbitration community, India can move beyond traditional frameworks and truly establish itself as a global arbitration destination.
• A vibrant, diverse, and rigorously trained group of Indian arbitrators will not only enhance domestic confidence in arbitration but also elevate India’s standing on the international arbitration stage.