Context:

• Rapid economic development in India has heightened commercial conflicts both inside and outside of the country.
• Complicated, high-value, time-sensitive conflicts are too much for Indian courts to manage and they lack the tools needed.
• One exciting substitute to relieve this load is specialised commercial arbitration.

What are the two major criteria for determining the credibility and legitimacy of Indian arbitration?

• To maximise efficiency and minimise needless delays, arbitrators are responsible for overseeing the scheduling, processes, and hearings of the arbitration process. An arbitrator who keeps sessions on time and prevents several adjournments, for instance, increases the credibility of arbitration in a construction contract dispute.
• In order to be upheld by courts, arbitration rulings must be accurate in terms of facts, have strong reasoning, and be legally sound.
• For example, in a technology dispute, the award will be respected and supported if the arbitrator carefully looks at the technical evidence and clearly explains how the compensation was calculated.

The Importance of Human Capital in Arbitration

Role of Human Capital:

Structured frameworks are important, but the quality of human capital, especially arbitrators and arbitration attorneys, is what really makes an arbitration mechanism operate.

Arbitrators as Decision-Makers:

Arbitrators are important people in Indian arbitration since they serve as decision-makers and have a significant impact on the final result of the process.  

Their responsibilities include the efficient management of processes, the establishment of timelines, the resolution of disputes, and the imposition of penalties for inappropriate behaviour.

Global Acceptance of Arbitral Awards:

The effectiveness of India's arbitration system is heavily dependent on the decisions (awards) made by arbitrators, since they are the end product of the arbitration process and can be upheld or overturned in courts around the world.

Issues with Arbitration in India

Lack of Focus on Arbitrator Development:

The cultivation of a pool of outstanding Indian arbitrators is not being prioritised, despite the fact that there are attempts being made to broaden the scope of the Indian arbitration bar. Because of this mismatch, the reputation of Indian arbitration is harmed on a global scale.

Absence from International Arbitration:

In March 2024, former Chief Justice of India, Justice D.Y. Chandrachud, pointed out that Indian arbitrators are often absent in international disputes that lack domestic elements. This highlights India’s weak integration into global arbitration networks.

Judicial Appointments as Arbitrators:

Arbitrators in high-value disputes are typically appointed by retired judges from the Supreme Court or High Courts in India. This is the approach that is most commonly followed in the country. This presumption that having judicial experience is equivalent to having expertise in arbitration is frequently lacking in accuracy.

Challenges of Retired Judges as Arbitrators:

The Ministry of Finance’s 2024 guidelines indicate that arbitration proceedings led by retired judges tend to mirror court procedures, leading to:

• Lengthy and expensive proceedings
• Poorly reasoned awards that are frequently challenged and set aside.

Persistent Gaps in Developing Elite Indian Arbitrators

Neglect of Arbitrator Development:

Efforts to strengthen the arbitration bar are underway, but not enough attention is being paid to training skilled arbitrators. This negatively impacts the ecosystem of arbitration as a whole.

Global Isolation:

There is a substantial cause for concern regarding the low global presence of Indian arbitrators as well as the absence of Indian representation in international arbitration. It is clear from this that India faces difficulties in competing with other countries in the elite global arbitration group.

Dependence on Retired Judges:

The appointment of arbitrators depends mostly on retired judges, which results in the erroneous belief that judicial knowledge guarantees quality in arbitration. Still, the reality as shown by Ministry of Finance's guidelines is often marked by delays, high costs, and unequal benefits.

What are the steps taken by the Indian government?  Passed the Arbitration and Conciliation (Amendment) Acts (2015, 2019, 2021) to lower judicial intervention, impose rigorous deadlines, and encourage institutional arbitration, so reducing For instance, introduction of a 12-month time restriction to finish arbitration processes. Establish the India International Arbitration Centre (IIAC) in New Delhi to advance institutional arbitration at line with world norms. For instance, IIAC seeks effective handling of domestic and international arbitrations. Government supported professional bodies like the Chartered Institute of Arbitrators (CIArb) India branch in supporting specialised training courses and certificates for arbitrators. For instance, working with international arbitration bodies helps Indian arbitrators be trained in worldwide best standards.

Requirement for Becoming a Proficient Arbitrator

Skills Beyond the Courtroom

• The change in perspective from a judicial to an arbitral one calls for a review of techniques and abilities.
• Modern arbitration is distinguished by the ability of a qualified arbiter to be both legally competent and adept at managing processes, therefore combining procedural clarity with creativity and flexibility.
• Unlike litigation, where inflexible norms of civil procedure and evidence reign supreme, international arbitration necessitates knowledge with best practices that are frequently more flexible, efficient, and party-centered.

Ability to Collaborate with Different Legal Systems

• Furthermore, in international settings, arbitrators frequently work with colleagues from various legal systems and cultural backgrounds.
• Successfully navigating such multi-national panels necessitates refined soft skills such as negotiation, persuasion, and cross-cultural awareness, which are not necessarily acquired through judicial service.

Specialised Skills in Evidence Management

• Finally, draughting an arbitral decision requires a different process than writing a judicial judgement.
• Arbitral awards usually require a thorough study of considerable documented evidence, expert and fact-finder testimony, and sophisticated financial analysis.
• Arbitrators must consequently exhibit specialist abilities in evidence management, fact-finding, and damage quantification, all of which require dedicated training.

Way Forward in Arbitration

Arbitration Skills

An arbitrator serves purposes beyond only legal expertise. A competent arbiter has to be special in combining talents including:

• Procedural certainty: Arrangement of arbitration procedures is apparent.
• Flexibility and creativity: Capacity to modify processes according to case calls for.

Drafting Arbitral Awards

• Drafting an arbitral award differs significantly from writing a court judgment. It demands:
• Meticulous examination of evidence and testimonies.
• Intricate financial analysis to determine compensation or damages.

Expanding the Candidate Pool

• To strengthen India's arbitration ecosystem, the candidate pool must be diversified. The inclusion of experts from fields such as finance and technical domains will provide more nuanced perspectives in arbitration.

Training and Accreditation

• A robust training program is essential for all potential arbitrators, regardless of their professional background. Specialized certificate courses and workshops by arbitral institutions can help cultivate competence and ensure that arbitration is recognized as a viable alternative to court litigation.

Conclusion

The goal is to create not only competent arbitrators but also a culture whereby arbitration coexists with litigation on equal basis. This will enable India to generate top arbitrators capable of earning their place and respect anywhere.

Practice Questions Discuss the role of skilled arbitrators in achieving this goal and the challenges faced in developing a competent arbitration ecosystem in India.”(250 words)