Justice L Nageswara Rao Reflects on His Arbitration Journey
Upon retiring from the Supreme Court, Justice L Nageswara Rao embarked on a path that would reshape his understanding of arbitration. With three decades of courtroom experience, he initially held misconceptions about arbitration, but his subsequent four years in full-time arbitral practice have provided him with valuable insights. He now participates in arbitration proceedings linked to prestigious international institutions and travels extensively to forums in London, Singapore, Dubai, and Hong Kong. In an exclusive conversation with Debayan Roy for Bar & Bench’s ‘After the Bench’ series, Justice Rao sheds light on the intricacies of arbitration, the challenges posed by India’s Insolvency and Bankruptcy Code (IBC), and the nation’s position in the global arbitration landscape.
The Shift from Judiciary to Arbitration
Justice Rao acknowledges that transitioning from a Supreme Court judge to an arbitrator required a significant shift in mindset. He explains that unlike the courtroom, arbitration is governed by party autonomy. He emphasizes the importance of unlearning judicial practices to adapt to the role of an arbitrator. Justice Rao candidly shares that one of the common criticisms of retired judges as arbitrators is their inclination towards running arbitrations like court proceedings.
Challenges in Indian Arbitration
During the interview, Justice Rao addresses the criticism that retired judges often focus on jurisprudential aspects rather than the facts in their arbitral awards. He argues that while legal interpretation plays a role, an arbitrator must maintain control over the facts. He highlights that arbitral awards require a different approach than judicial judgments.
IBC’s Impact on Arbitration
Justice Rao discusses the collision of the IBC with the Arbitration Act, particularly Section 14, which imposes a moratorium on arbitration proceedings when a party enters insolvency. He points out that while some courts have attempted to navigate around Section 14, the provision continues to hinder arbitration proceedings in cases involving security debts. Justice Rao argues that Section 14’s broad prohibition poses challenges for arbitration in India.
India’s Position in Global Arbitration
In the global race for arbitration dominance, Justice Rao candidly states that India is not yet a preferred seat for arbitration. He cites surveys by Queen Mary’s College and White & Case, which reveal a low preference for India as an arbitration seat. According to Justice Rao, factors such as court delays and interference contribute to India’s low standing. He emphasizes the need for institutional development and reduced court interference to elevate India’s status as a global arbitration hub.
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The Path Forward for Indian Arbitration
Justice Rao advocates for expanding the pool of arbitrators beyond retired judges. He notes that many legal professionals in India view arbitration as a part-time activity, unlike their international counterparts who dedicate their careers to it. Justice Rao stresses the importance of training and appointing a diverse range of arbitrators, including younger professionals, to build a robust arbitration community.
Addressing Criticisms and Future Outlook
Regarding criticisms from Senior Advocate Harish Salve, who labeled arbitration in India as a disaster, Justice Rao provides a balanced perspective. He acknowledges the challenges but remains optimistic about the growth of arbitration in the country. Justice Rao underscores the need for systemic improvements and legislative clarity to foster a more favorable arbitration environment in India.
Conclusion
Justice L Nageswara Rao’s insights highlight the complexities and opportunities within India’s arbitration landscape. His experiences and recommendations provide a roadmap for enhancing India’s standing in global arbitration and addressing the challenges that currently impede its progress.
