No Forum To Address Arbitrator Misconduct; Courts Wary As Arbitrators Are Often Former Judges: Justice BV Nagarathna
On day two of the 5th Edition of the Indian Council of Arbitration International Conference, themed “Arbitration in the Era of Globalization,” Supreme Court judge Justice B V Nagarathna flagged a structural accountability deficit in India's arbitration framework, cautioning that courts are often reluctant to remove arbitrators accused of misconduct, particularly when they are former judges.
Highlighting the absence of an independent oversight mechanism, she said, “There is no forum as such where a misconduct of an arbitrator is complained against except before a court. And courts are very wary of changing an arbitrators because many of the arbitrators are former judges, Chief Justices.”
She warned that even if instances of removal are rare, the difficulty in addressing allegations of bias or misconduct can itself erode confidence in arbitration, underlining the need for institutional safeguards to ensure credibility in dispute resolution.
Justice Nagarathna clarified that her concern extended beyond arbitrator conduct to the overall institutional maturity of India's alternative dispute resolution ecosystem. Situating this within a broader jurisprudential shift, she said disputes are not merely legal contests but often social, commercial and relational conflicts requiring more voluntary and context-sensitive solutions.
She emphasised that arbitration and mediation are not mere substitutes for litigation but “integral components of a modern and responsive justice system,” which must command the same seriousness, credibility and procedural rigour as court adjudication.
On arbitration, she underscored its centrality to cross-border commerce, describing it as a preferred mechanism for resolving international commercial disputes due to its neutrality, procedural flexibility, confidentiality, party autonomy and enforceability under international conventions.
She noted that the New York Convention enables recognition of arbitral awards across more than 170 jurisdictions, while investment arbitration under bilateral investment treaties has become a key feature of the global economic order.
Turning to mediation, Justice Nagarathna pointed to a gap between legislative intent and implementation. Referring to the Mediation Act, 2023, she said it remains largely inoperative. “The Mediation Council of India is not yet constituted,” she noted, adding that “there is no real active implementation of the said Act, as many provisions are not yet notified.”
She also raised concerns over the perfunctory use of pre-litigation mediation under Section 12A of the commercial courts framework, observing that it is often treated as a mere formality.
Stressing that this undermines the purpose of consensual resolution, she called for greater synergy between mediation centres and legal services authorities so that the process is implemented in “letter and spirit and not just as a formality.”
Justice Nagarathna further endorsed hybrid models such as Med-Arb and Arb-Med-Arb, noting that these allow parties to attempt settlement before proceeding to binding adjudication, thereby balancing flexibility with certainty.
She emphasised that no single mechanism can resolve every dispute and that a mature legal system must support a complementary framework of arbitration, mediation and negotiation.
Senior Advocate Pinky Anand echoed this approach, describing the evolving ADR landscape as a “spectrum of change” and aligning with the view of dispute resolution as a continuum rather than rigid silos.
She said that “by marrying arbitration and mediation” India could create a rule-based legal regime that supports businesses. Flagging rising costs, she noted that while government litigation spending over a decade stood at around ₹400 crore, private companies spent nearly ₹62,000 crore on legal fees in a single year, adding, “As a lawyer, I have no difficulty with these earnings. But as a patriot, I find this unacceptable.”
Anand also addressed gender imbalance in arbitration and mediation, referring to a suggestion highlighted earlier by Arun Chawla that arbitral tribunals comprising three members should mandatorily include at least one woman arbitrator.
She added that while women are often seen as strong mediators, there remains an unfounded bias against their role in commercial disputes. Challenging this perception, she said, “Well, I am sorry, I kind of disagree with that principle and it's high time that we got over that,” adding that stereotypes about women's abilities in finance, accounting, and complex commercial matters must be decisively rejected to achieve true gender neutrality in ADR.