Mehta stated that the Arbitration Act ensures checks and balances that prevent deviations from the rule of law, with constitutional remedies available for rights violations, albeit typically at the conclusion of arbitration to avoid delays.
NEW DELHI: At a discussion during London International Disputes Week (LIDW), Solicitor General of India Tushar Mehta emphasized the strong adherence to the rule of law in Indian arbitration processes.
Speaking on the evolution of dispute resolution in India, now considered an economic powerhouse, Mehta underlined that the Arbitration Act ensures checks and balances that prevent deviations from the rule of law, with constitutional remedies available for rights violations, albeit typically at the conclusion of arbitration to avoid delays.
He emphasized the robust framework of the Arbitration Act, which includes checks and balances to uphold the rule of law, and mentioned that parties have the recourse to approach constitutional courts if their rights are infringed upon.
“Given the inherent goals of arbitration to be quick and cost-effective, whenever there’s a deviation from the rule of law, there are mechanisms to address this. However, these remedies are often postponed to avoid dragging out the arbitration process. The deviations can be challenged, but typically at the final stage of the award,” he explained.
SG Mehta expressed his pride in the enforcement of the rule of law in India, sharing that as a government lawyer, where the government often plays the defendant, he has experienced losses in cases where he believed the rule of law favored the opposing side.
“As a representative of the government in legal matters, I am often on the defending side, and I take pride in how the rule of law is upheld in India, even in cases where my side loses because the rule of law supports the other side,” he noted.
Mehta proudly noted instances where he, representing the government, lost cases where the rule of law favored the opposition. Addressing concerns about potential government bias in disputes involving foreign investors in India, he reassured that the balanced nature of international commercial arbitration, where arbitrators are mutually chosen by both parties, prevents any undue advantage.
He stated that the process requires both parties to mutually select the presiding arbitrator, which ensures fairness.
“This procedure inherently prevents the government from having an upper hand and ensures that neither party has less choice,” Mehta explained.
The discussion also featured insights from Shashank Garg, who talked about the newly established Arbitration Bar of India (ABI), which aims to integrate international best practices into Indian arbitration.
Garg addressed a recent controversial Supreme Court decision involving a domestic arbitration case, clarifying that it should not be viewed as indicative of the broader international arbitration environment in India, as the grounds for setting aside the award in that case do not apply internationally.
He mentioned that the newly established arbitration Bar is set to bridge these gaps by updating laws, formulating guidelines aligned with international best practices, and supporting both government and judicial bodies in policymaking to achieve consistency.
“Given that the volume and scale of disputes have significantly increased over the last two decades, it is clear we need to adapt these internationally recognized best practices to better suit our national context,” he stated.
Garg responded to Vivek Kapoor’s inquiry regarding whether the Indian Supreme Court’s decision in the case between Delhi Airport Metro Express Pvt Ltd (DAMEPL) and Delhi Metro Rail Corporation (DMRC), where a Rs 2,800 crore arbitral award was overturned, represented a setback for international arbitration in India.
He clarified that this decision should not be viewed as detrimental to the international arbitration community.
“This case was a matter of domestic arbitration where the award was set aside on the specific ground of patent illegality, a criterion not applicable in international arbitration. Therefore, this ruling will not affect the international arbitration landscape,” he explained.
SG Mehta addressed a question regarding the capability of Indian courts to set aside arbitral awards, referencing a recent decision by the High Court of England and Wales in the case of Nigeria vs P&ID, where an award was annulled due to fraud.
In his response, Mehta pointed out that the Indian Arbitration Act was amended in 2019 to include fraud and corruption as valid grounds for challenging an award.
“Thus, judges at the district, high, or supreme court levels don’t need to rely on the Nigeria judgment. They have their own statutory framework to guide them,” he explained.
He further highlighted that Indian judges have successfully set aside awards issued by former Supreme Court judges, with these decisions being upheld by the Supreme Court itself.
“As a lawyer—setting aside my role as a government attorney—I have full faith in the competence, strength, courage, and integrity of our district judges to annul arbitral awards when justified,” Mehta stated.
Mehta also responded to queries about the Indian legal system’s capacity to set aside arbitral awards, referencing the 2019 amendment to the Indian Arbitration Act that includes provisions for challenging awards based on fraud or corruption. He expressed full confidence in the capability of Indian judges at all levels to adjudicate such matters effectively, without needing to rely on foreign judgments for precedent.
