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‘Why are most world arbitration court judges from West bloc?’

 PTI |  2016-08-28 23:31:10.0  |  New Delhi

‘Why are most world arbitration court judges from West bloc?’

Terming it as a “sorry state of affairs”, he wondered why very less number of arbitrators are from non-Western countries. “I am proud of my judiciary. It has given some of the best judges. But why do they not get adequate representation in international arbitration?,” he said addressing a conference on International Arbitration in BRICS here. He questioned the presumption that resolutions should come from arbitrators who are either trained in Western systems or who are from the developed world. “It is an important issue and we’ll have to articulate (on this),” he said.

The Law minister said that according to one estimate, 69.8 per cent of the arbitrators are from the developed or first world countries. Prasad also lamented a lack of appellate mechanism in dispute resolution system and said there is a need to consider “some kind of very limited appellate mechanism” so that there is a way to challenge the arbitration award by parties involved in arbitration.

Referring to the quantum of penalties imposed in arbitration awards, he said that when as Law Minister he goes through such orders, the first thing he looks for is the penalty. “My eyes get wide open... I have rarely seen such penalities... should 10 investments and the dispute arising therefrom lead to a dispute redressal with penal consequences that are designed to unsettle the economy of the country (where investments have been made),” he questioned.

Global arbitration must also appreciate the social constraints of investment in a country, he said asking why only “a few world centres” should always remain the “hubs” of international arbitration. Successive governments have been trying to make India into a hub of international arbitration on the lines of London and Singapore.

The 1996 Arbitration law has recently been amended keeping in mind the Narendra Modi’s government’s push for “ease of doing business”.

Later on, after inaugurating the Government-funded ‘Electropreneur Park’, Prasad observed that India has attracted investment from 37 mobile manufacturing companies in the last one year which have generated 40,000 direct jobs and 1.25 lakh indirect employment. 

“We decided to make India a big hub of electronics manufacturing. In the last one year, 37 new mobile manufacturing units have come,” Prasad said. He said that 11 crore mobile phones have been made in the country in the last one year compared to 6 crore earlier. 

Global arbitration awards loaded against emerging economies: FM
Finance Minister Arun Jaitley on Saturday made out a strong case for BRICS (Brazil, Russia, India, China and South Africa) nations developing their own arbitration mechanism to cut reliance on redressal centres in developed nations whose awards at times tend to be loaded against developing countries. 

Speaking at a conference on ‘International arbitration in BRICS’, he said faster growth will return to emerging economies once the world emerges out of the current slowdown and the dispute resolution mechanism should be now perfect as trade between countries grows.

“Many countries fear, and have been suggesting, that the awards emerging out of these arbitration are at times loaded against the emerging economies. Therefore, need has been felt to develop parallel arbitration centres across the world. Let alone London, let alone Paris, now we see Singapore emerging as an emerging arbitral centre,” Jaitley said.

“Therefore, for BRICS nations to resolve trading disputes which may arise out of BRICS nations, it is extremely important that we have to develop a mechanism.” Jaitley suggested that the BRICS countries should set up a task force comprising officials and experts to discuss and then set up an appropriate mechanism where these nations can have arbitral centres of their own.

“And hopefully, if we are able to evolve and develop that capacity, eventually those centres will also become centres of great international acceptability even with regard to the non-BRICS nations as far as arbitral abilities are concerned,” he said. Talking about rationale behind companies going for international arbitration, he said they fear an institutional bias and hence look for a neutral forum for applicability of law.

“The experience over the years has been that some centres did monopolise a bulk of international arbitrations, they developed capacities, they created arbitrators of stature, they created a set of international lawyers who could practise from one jurisdiction to other. Therefore, those jurisdiction tended to have a big share in international arbitration,” he said. 

The emerging economies of Brazil, Russia, India, China and South Africa mostly follow the UNCITRAL model law on international commercial arbitration. According to Jaitley, it is essential that the dispute resolution mechanism is absolutely fair, detached from local commitments, to ensure free and fair trade. 

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