Why only appoint judges as arbitrators? - Hindustan Times
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Why only appoint judges as arbitrators?

Mar 13, 2023 07:01 PM IST

The government needs to pay heed to the advice of CJI Chandrachud by creating a diverse pool of Indian arbitrators for ITA comprising judges, lawyers, and academicians

Chief Justice of India (CJI) DY Chandrachud recently remarked that the arbitration space in India resembles an old boy’s club. He elaborated on this by arguing that retired judges dominate arbitral appointments, and, in the process, several promising candidates (such as lawyers and academicians) are overlooked. CJI Chandrachud lamented, and rightly so, the lack of diversity in appointing arbitrators. One doesn’t know whether the CJI had commercial arbitration in his mind while making these remarks or whether he also said this for investment treaty arbitration (ITA). But his observation is spot on for ITA as well. Let me explain how. But first, it is important to understand the difference between commercial arbitration and ITA.

Resolving an ITA dispute requires expertise in international law. The SC and HC judges spend almost all their judicial careers deciding cases based on domestic law, not international law. Most of their judicial time is spent addressing complex domestic law, not international law, questions. This raises questions about their suitability to sit on an ITA tribunal that would involve challenging international law questions (Getty Images/iStockphoto) PREMIUM
Resolving an ITA dispute requires expertise in international law. The SC and HC judges spend almost all their judicial careers deciding cases based on domestic law, not international law. Most of their judicial time is spent addressing complex domestic law, not international law, questions. This raises questions about their suitability to sit on an ITA tribunal that would involve challenging international law questions (Getty Images/iStockphoto)

Chief Justice of India (CJI) DY Chandrachud recently remarked that the arbitration space in India resembles an old boy’s club. He elaborated on this by arguing that retired judges dominate arbitral appointments, and, in the process, several promising candidates (such as lawyers and academicians) are overlooked. CJI Chandrachud lamented, and rightly so, the lack of diversity in appointing arbitrators. One doesn’t know whether the CJI had commercial arbitration in his mind while making these remarks or whether he also said this for investment treaty arbitration (ITA). But his observation is spot on for ITA as well. Let me explain how. But first, it is important to understand the difference between commercial arbitration and ITA.

While the source of commercial arbitration is generally a contract (private law instrument), ITA owes its origins to an investment treaty (public law instrument). Commercial arbitration generally involves two private parties at variance over a private law matter. On the other hand, ITA will entail a dispute between a private investor and a sovereign State, involving a sovereign action. The core question that an ITA tribunal must answer is whether the impugned State conduct is in accordance with international law. In short, commercial arbitration and ITA deal with intrinsically different questions. However, both use the adjudicative model of arbitration to do so. Consequently, like in commercial arbitration, we have party-appointed arbitrators in ITA too. In all ITA cases, the State against whom the claim has been brought will appoint one arbitrator.

Since 2011, India has been involved in several ITA claims brought by many foreign investors under different bilateral investment treaties. According to United Nations Conference on Trade and Development, out of 14 ITA disputes, involving India, for which data is available, India appointed an Indian as an arbitrator in six cases and a foreigner in eight cases. Interestingly, in all the six cases where an Indian was appointed, the appointee happens to be a retired judge (four of them retired from the Supreme Court (SC) and two from the high courts (HCs). Thus, while nominating an Indian arbitrator to the arbitration tribunal, the government has failed to look beyond the pool of retired judges. This lack of diversity in making arbitral appointments is telling for several reasons. First, there are several Indian lawyers and academics who work in international investment law and ITA. Many of these lawyers and scholars have better expertise in ITA than retired judges because of their sustained work and experience in this area of law. Yet, no Indian lawyer or academic has been allowed to serve on an arbitration tribunal.

Moreover, resolving an ITA dispute requires expertise in international law. The SC and HC judges spend almost all their judicial careers deciding cases based on domestic law, not international law. Most of their judicial time is spent addressing complex domestic law, not international law, questions. This raises questions about their suitability to sit on an ITA tribunal that would involve challenging international law questions.

Second, related to the previous point, is the larger systemic pattern of India consistently ignoring appointing academicians to international judicial or dispute resolution bodies. Instead, the preference has been for retired judges or former bureaucrats.

Third, since ITA involves arbitral appointments made by the State, appointing a retired judge as an arbitrator is akin to offering a post-retirement position. This is an important point when seen in the context that judges accepting post-retirement positions from the government is often seen as an affront to the independence of the Indian judiciary.

Additionally, when appointing an arbitrator to an ITA tribunal, the government should allow Indians to showcase their talent as arbitrators. This is especially relevant when India aspires to be a global arbitration hub. The fact that in as many as eight cases, India appointed a foreigner as an arbitrator shows that the opportunity for Indians to demonstrate their talent as arbitrators have been squandered. The government needs to pay heed to the advice of CJI Chandrachud by creating a diverse pool of Indian arbitrators for ITA comprising judges, lawyers, and academicians.

Prabhash Ranjan is professor and vice-dean, Jindal Global Law School, OP Jindal Global University.The views expressed are personal

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