During a recent panel discussion in London, former Supreme Court Justice L Nageswara Rao expressed concerns about the reluctance of Indian bureaucrats to engage in mediation to resolve government disputes. Justice Rao highlighted that fear of future accusations of favoritism prevents officials from pursuing mediation as a viable option. “Mediation is not seen as an alternative in India because no bureaucrat would take the risk of being accused of bias,” he remarked.
Justice Rao further critiqued India’s contradictory stance on arbitration. Despite aspirations to become an arbitration hub, public sector undertakings have been steering away from this method. “We aim to promote India as an arbitration center, yet public sector undertakings are shying away from it, which is concerning,” he noted. The former justice referenced a 2024 memorandum from the Ministry of Finance that discourages arbitration in high-value government disputes, noting its adoption by public sector entities.
Insights from London International Disputes Week 2026
Justice Rao shared these observations at a panel during the London International Disputes Week (LIDW) 2026, moderated by Anuradha Agnihotri of Herbert Smith Freehills Kramer LLP. The panel also included Rashna Mistry of Tata Projects, Niranjan Venkatesan KC of One Essex Court, Amar Gupta of JSA Advocates & Solicitors, and Neeti Sachdeva of the Mumbai Centre for International Arbitration.
Rashna Mistry addressed the challenges in negotiating dispute resolution clauses in government contracts, which are typically non-negotiable. “Government contracts come with fixed templates, leaving no room for negotiation,” she explained. Mistry added that officials are hesitant to change contract terms, fearing future investigations that could lead to losing their pensions. This leaves contractors with little choice but to accept the terms as they are.
Amar Gupta echoed Mistry’s sentiment, stating that without an institutional framework to support officers in accepting potentially unfavorable outcomes for the government, mediation will remain challenging. Conversely, Neeti Sachdeva provided a more optimistic outlook, citing Maharashtra’s policy mandating institutional arbitration clauses in contracts over ₹5 crore and noting some departments’ openness to institutional arbitration.
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Niranjan Venkatesan KC highlighted the unique challenges of disputes involving State entities, noting that these cases often face delays due to the time taken by State entities to issue instructions. “This is not unique to India; it’s a common challenge with State-related disputes globally,” he observed. Venkatesan pointed out that arbitral tribunals may exhibit leniency toward procedural requests from State entities.
Venkatesan also touched on the perspective of foreign investors, who often demand arbitration clauses or English court jurisdiction for a neutral forum if disputes arise. However, he cautioned that merely having a neutral forum is insufficient when dealing with State entities. “If a dispute arises with a State or State-related entity, a neutral dispute resolution clause alone won’t safeguard your rights,” he warned, emphasizing the importance of securing both a neutral process and governing law when possible.
