Alok Singh
On 5 June 2025, while speaking at the 2025 edition of the London International Disputes Week (LIDW), India’s Solicitor General Tushar Mehta raised serious concerns regarding the systemic disadvantages faced by the Indian government and public sector undertakings (PSUs) in arbitration. The panel was hosted by 39 Essex Chambers and Alvarez & Marsal, with participation from eminent arbitration professionals and stakeholders.
Mehta noted that when Government entities are pitted against private parties in arbitration, there is often a lack of a level playing field. He particularly questioned the integrity and impartiality of arbitral tribunals, citing issues such as repeated appointments of the same arbitrators and the phenomenon of plagiarised or “copy-paste” awards, especially in disputes involving PSUs.
Although reaffirming the Government’s commitment to arbitration as a preferred method of dispute resolution, Mehta emphasised that institutional safeguards are essential for arbitration to be a viable mechanism in high-value public sector disputes. He called for systemic reforms to ensure neutrality, competence, and procedural transparency.
On the controversial 2024 Government circular discouraging the referral of disputes exceeding USD 1 million to arbitration, Mehta clarified that it is not a binding law but rather an administrative policy to address procedural deficiencies. He expressed openness to revisiting the policy, subject to introducing accountability and reform in the arbitration ecosystem.
Highlighting the constraints under Sections 34 and 37 of the Arbitration and Conciliation Act 1996, Mehta advocated for establishing a specialised arbitration court or tribunal. This, he argued, could help address the overload of civil courts and allow for broader and more meaningful review mechanisms.
Senior Advocate Shashank Garg supported these concerns, pointing out a trust deficit among the PSUs in arbitration. He noted that PSUs often face more stringent scrutiny than private parties and must justify their claims to auditors, whereas private entities may inflate claims with relative impunity.
In response, the Arbitration Bar of India has constituted five task forces, including one dedicated to developing a code of conduct and ethics for arbitrators. The objective is to propose “soft laws” that can later be adopted judicially or legislatively to address gaps left unaddressed by the Arbitration Act.
The panel also discussed Article 142 of the Indian Constitution in arbitration-related matters. The discussion focused on the Gayatri Balaswamy Case, in which the Supreme Court modified an arbitral award under Article 142.
Experts cautioned that, while constitutionally valid, such use of Article 142 may foster unrealistic expectations among PSUs and is inconsistent with the limited judicial review envisaged under Section 34 of the Arbitration Act. The scope of Article 226 by High Courts in arbitration challenges was also debated, though the issue remains jurisprudentially unsettled.
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