Solicitor General Tushar Mehta warns that choosing arbitrators by name undermines integrity in arbitration and calls on Parliament to take urgent action to restore trust in the system.
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AHMEDABAD: At a two-day conference on arbitration law organised by the Gujarat High Court in Ahmedabad on September 21, Solicitor General of India Tushar Mehta raised pressing concerns about the credibility of arbitration proceedings in India. While speaking, he emphasized that while arbitration was once viewed as a faster and more efficient alternative to litigation, the system has gradually lost the trust of stakeholders.
Mehta pointed to the system of allowing litigants to choose their arbitrators as the root of the problem. According to him, this has led to a growing perception of bias:
“Those who are practicing in the field of arbitration tell me that from the name of certain arbitrators you can find out the firm which must have engaged him and the litigant which must be the client of that firm.”
This, he argued, undermines the neutrality and fairness that arbitration is supposed to embody.
To address this integrity crisis, Mehta suggested introducing a legal mandate requiring all arbitral awards to be published on a single platform.
“You will come to know which company engages which arbitrator very frequently and which lawyer represents that company before that arbitrator almost frequently. This would work as a check.”
Such transparency, he explained, could act as a safeguard against collusion and restore confidence in arbitration.
Highlighting the government’s decision in 2020 to exclude arbitration clauses from contracts above ₹10 crore, Mehta said this reflected deep institutional mistrust:
“It is an alarming decision and irrespective of any empirical data, it speaks volumes.”
He acknowledged that amendments to the Arbitration and Conciliation Act were under consideration, but maintained that integrity cannot be legislated. Instead, the focus should be on building safeguards within the system.
Another challenge, Mehta noted, was the frequent adjournments caused by arbitrators’ overloaded schedules. With characteristic wit, he remarked:
“Earlier, we had only one category of professionals whose dates were problematic and they were film stars. Now the second category is arbitrators.”
Such delays, he explained, often stretch proceedings by six months, forcing parties to seek extensions under Section 29A of the Act.
Turning to the legal framework, the Solicitor General criticised the vague terminology in Section 34, which governs challenges to arbitral awards. Terms like patent illegality and perversity were, he argued, “inherently subjective”, leading to unpredictability and prolonged disputes.
He proposed creating a special tribunal dedicated to Section 34 matters, though he admitted that tribunalisation has not always succeeded in India.
Risks of AI in Arbitration
In a warning about technology, Mehta flagged the increasing use of AI tools like ChatGPT in drafting arbitral awards abroad:
“Arbitral award has to be a reasoned award and the word ‘reasoned award’ would necessarily mean reason of the arbitrator. If you outsource your core judicial function, the award suffers from patent illegality.”
This, he said, directly threatens the legitimacy of arbitration as a quasi-judicial process.
