Nageswara Rao: IIAC Trust Deficit Plagues India Arbitration

• Former Supreme Court Justice L Nageswara Rao stated that the India International Arbitration Centre's (IIAC) limited visibility reflects a broader trust deficit in Indian institutional arbitration.
• His comments were made during a panel discussion organized by the Singapore International Arbitration Centre (SIAC) at Singapore Convention Week.
• A Parliamentary Standing Committee report, which Justice Rao discussed, examined the IIAC's functioning and noted its limited usage despite being established to compete with international bodies like SIAC, LCIA, and HKIAC.
• Justice Rao believes the fundamental challenge is convincing legal professionals and users to trust Indian arbitral institutions.
• He emphasized that law firms and general counsel must advocate for institutional arbitration over ad hoc arbitration for the situation to improve.

Justice Nageswara Rao articulated that the core issue extends beyond mere operational visibility.

A significant trust deficit currently plagues institutional arbitration in India, a sentiment underscored by former Supreme Court Justice L Nageswara Rao. He pointed to the India International Arbitration Centre's (IIAC) limited public profile as a clear indicator of this broader challenge within the nation's dispute resolution framework. This observation emerged during a panel discussion held by the Singapore International Arbitration Centre (SIAC) as part of Singapore Convention Week.

Justice Rao's remarks were made in the context of a recent examination of the IIAC's operations by the Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice. The Committee's report, which he was discussing, specifically highlighted the IIAC's restricted visibility and usage, despite its intended role. This finding directly supports the assertion that a lack of confidence is hindering the growth and adoption of domestic institutional arbitration mechanisms.

The India International Arbitration Centre was established with an ambitious goal: to rival prominent global arbitral institutions such as the SIAC, the London Court of International Arbitration (LCIA), and the Hong Kong International Arbitration Centre (HKIAC). However, the Parliamentary Committee's findings suggest that the IIAC has yet to achieve this competitive standing, primarily due to its low visibility and underutilization.

Justice Nageswara Rao articulated that the core issue extends beyond mere operational visibility. He believes the more fundamental challenge lies in persuading legal practitioners, including lawyers and general counsel, along with other potential users, to place their confidence in India's arbitral institutions. This perspective highlights a deep-seated skepticism that impedes the shift towards more structured and institutionalized dispute resolution within the country.

According to Justice Nageswara Rao, a pivotal change in mindset and practice is required to overcome the prevailing India institutional arbitration challenges. He stressed that the landscape will remain unchanged unless law firms and general counsel actively champion institutional arbitration. His view is that these key stakeholders must begin recommending institutional mechanisms to their clients, steering them away from ad hoc arbitration, which currently dominates the scene.

This critical discussion took place during Singapore Convention Week, with the panel moderated by White & Case Partner Aditya Singh. The esteemed panel also included former Supreme Court Justice S Ravindra Bhat, former Attorney General for England and Wales Lord Peter Goldsmith KC, Senior Advocate Rajshekhar Rao, and SIAC Director and Head of South Asia Shwetha Bidhuri, all contributing to the discourse on the future of arbitration in the region.

The observations regarding the IIAC trust deficit Nageswara Rao articulated underscore a significant hurdle for India's aspirations in the global arbitration arena. The contrast between the IIAC's founding vision and its current limited impact points to a broader systemic issue affecting the adoption of institutional arbitration in India. Overcoming this perception of unreliability is crucial for the nation to foster a robust and internationally competitive arbitration ecosystem.

Ultimately, the path forward for strengthening India's institutional arbitration framework, as suggested by Justice Nageswara Rao arbitration views, hinges on a concerted effort from the legal community to actively endorse and utilize domestic institutions. This shift from ad hoc vs institutional arbitration India is not merely a procedural preference but a fundamental requirement for building trust and establishing India as a preferred venue for dispute resolution.

Lawyers advising on dispute resolution in India should note the ongoing trust deficit in domestic institutional arbitration, particularly regarding the IIAC, and consider how this perception might influence client choices between ad hoc and institutional mechanisms, or even international venues like SIAC. This also presents an opportunity for legal professionals to actively advocate for and shape the future of institutional arbitration in India.

Source: Original reporting via Bar & Bench