Fix domestic arbitration delays first, says Justice L Nageswara Rao for India's global hub goal

In a pointed address that underscores the persistent challenges plaguing India's arbitration ecosystem, former Supreme Court judge Justice L Nageswara Rao has urged the legal community and policymakers to prioritise the overhaul of the domestic arbitration framework before aspiring to transform the country into a global arbitration hub. Speaking at a recent event, Justice Rao stressed that India's ambition to rival established centres like Singapore and London cannot be realised without first addressing fundamental issues such as procedural delays, excessive court interference, and a prevailing lack of confidence among stakeholders in the domestic arbitration system.

His remarks come at a time when the Indian government has been actively promoting the New Delhi International Arbitration Centre (NDIAC) and introducing legislative amendments to align domestic arbitration practices with international standards. However, Justice Rao's warning serves as a sobering reminder that legislative intent must be matched by effective implementation and a cultural shift within the judiciary and the legal profession.

The State of Domestic Arbitration in India

India's arbitration landscape has undergone significant transformation since the enactment of the Arbitration and Conciliation Act, 1996 , which was modelled on the UNCITRAL Model Law. The Act aimed to minimise judicial intervention and ensure speedy resolution of commercial disputes. Yet, over the past two decades, the system has been repeatedly criticised for failing to deliver on these promises. Delays remain endemic, with cases often languishing for years due to frequent challenges before courts at various stages—from appointment of arbitrators under Section 11 to setting aside awards under Section 34 .

Justice Rao's comments highlight a core paradox: while India has a robust legal framework and a growing pool of talented arbitrators, the actual experience of parties in domestic arbitration is marred by inefficiency. The former judge pointed out that court interference, especially at the interim and post-award stages, undermines the finality and speed that arbitration is supposed to guarantee. "India must first address delays, court interference and the lack of confidence in its domestic arbitration system before seeking to become a global arbitration hub," he stated.

Judicial Overreach and the Need for Minimal Intervention

One of the most persistent criticisms of Indian arbitration practice is the tendency of courts to entertain challenges on merits, effectively allowing appeals that defeat the purpose of arbitration . Despite the 2015 and 2019 amendments to the Arbitration Act—which introduced stricter timelines, limited grounds for challenging awards, and established the Arbitral Tribunal's authority to grant interim relief —judicial attitudes have not fully shifted. Many judges continue to apply a "public policy" test in an expansive manner, leading to a high rate of award set-aside and remand .

Justice Rao's remarks echo the concerns of several legal experts who argue that unless courts exercise self-restraint and adhere to the pro- arbitration stance intended by the legislature, India will struggle to attract international arbitration work. International businesses and law firms are wary of jurisdictions where arbitration awards are frequently overturned or subjected to prolonged litigation.

The Global Hub Ambition: A Reality Check

The Indian government's ambition to establish the country as a global arbitration hub is not new. In 2019 , the Parliament passed the New Delhi International Arbitration Centre Act , creating a statutory body to promote institutional arbitration . The NDIAC was envisioned as a world-class institution that could compete with the Singapore International Arbitration Centre (SIAC) and the London Court of International Arbitration (LCIA) . Additionally, several state governments have set up arbitration centres, and the judiciary has been urged to adopt a "hands-off" approach.

Yet, as Justice Rao pointed out, the numbers tell a different story. India continues to be a net importer of arbitration services, with most high-value international contracts specifying a foreign seat of arbitration . The reasons are well-documented: uncertainty regarding the enforceability of awards , lack of specialised commercial courts, and the perception that Indian courts are slow and unpredictable.

Building Confidence Through Institutional Reform

Justice Rao's call to action is not merely a critique but a roadmap. He emphasised the need for institutional arbitration to replace ad-hoc arbitration , which remains the dominant mode in India. Institutional arbitration , with its clear rules, administrative support, and quality control, can significantly reduce delays and improve the consistency of awards. The former judge also stressed the importance of training arbitrators and judges in arbitration law and practice.

Another critical aspect highlighted by legal observers is the need to foster a culture of " arbitration first" among the business community and their legal advisors. Many litigants still view arbitration as an extension of litigation, filing voluminous pleadings and seeking frequent court interventions. A shift in mindset is essential.

The Way Forward: Prioritising Domestic Credibility

Justice Rao's message is clear: before India can market itself as a global arbitration hub, it must first earn the trust of its own domestic users. This requires not only legislative reforms but also consistent judicial behaviour, improved infrastructure, and a robust institutional framework. The former judge's comments serve as a timely reminder that the foundation of any international arbitration hub is a strong and reliable domestic arbitration system.

As India continues to position itself as a preferred destination for dispute resolution, the legal community must heed Justice Rao's advice. Without fixing the core issues of delays, court interference, and lack of confidence, the dream of a global arbitration hub will remain elusive. The priority, as he succinctly put it, is to "fix domestic arbitration before pursuing global arbitration hub ambitions."