Overview of Justice Bhuyan’s Concerns on Arbitration
Supreme Court Justice Ujjal Bhuyan recently expressed concerns about the contradiction between celebrating arbitration through events and the undermining of it through court verdicts and governmental policies. Speaking at a symposium titled ‘Arbitration in India: The Reform, Relevance and the Road Ahead,’ organized by The Law Forum, Justice Bhuyan highlighted the barriers these actions pose to India’s aspirations of becoming a global arbitration hub.
Critique of Government Policies
Justice Bhuyan criticized the Union Finance Ministry’s June 2024 memorandum advising government departments and public sector undertakings to limit the inclusion of arbitration clauses in high-value public procurement contracts. The memorandum recommended arbitration for disputes below ₹10 crore, suggesting mediation or litigation for larger claims. Justice Bhuyan described this as a “sudden and controversial policy shift against arbitration.” He noted that major corporations like Oil India Limited and the Oil and Natural Gas Corporation have removed arbitration clauses from significant public procurement disputes, a move echoed by the Delhi government’s Public Works Department.
Impact of the Supreme Court’s DMRC Judgment
Justice Bhuyan highlighted the Supreme Court’s 2024 ruling in the Delhi Metro Rail Corporation (DMRC) case, which he believes severely impacted arbitration in India. The Court, by exercising curative jurisdiction, set aside an arbitral award over seven years old, despite completed proceedings under relevant sections of the Arbitration and Conciliation Act, 1996 and the Constitution. This decision, Justice Bhuyan argued, constitutes judicial overreach into arbitration, challenging the finality of arbitral awards and India’s reputation as a venue for resolving commercial disputes.
Judicial Interference and Proposals for Reform
Justice Bhuyan discussed the potential for increased judicial interference following proposals to allow courts limited powers to modify arbitral awards, as recognized in the Constitution Bench judgment in Gayatri Balasamy v. ISG Novasoft Technologies Limited. He expressed concerns that this opens the door to more judicial intervention in arbitral matters.
Government Vision vs. Ground Reality
He referenced Prime Minister Narendra Modi’s 2016 commitment to fostering a robust institutional arbitration ecosystem and the establishment of the India International Arbitration Centre. However, Justice Bhuyan pointed out that the Centre has not effectively pursued its objectives. He also mentioned External Affairs Minister S. Jaishankar’s endorsement of arbitration as a mechanism promoting economic growth and rule of law.
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Conclusion: The Future of Arbitration in India
Justice Bhuyan questioned the disconnect between India’s policy directions and actual practices, especially concerning international loans that mandate arbitration. He emphasized that mediation and arbitration are not rivals but complementary, urging a balanced approach. Justice Bhuyan’s address serves as a call for more consistent and supportive policies to bolster India’s position as an arbitration hub.
