Solicitor General Tushar Mehta has flagged concerns about the impartiality and competence of arbitral tribunals which handle disputes involving the Indian government and public sector undertakings (PSUs).
He said that the government often does not get a level playing field when it comes to arbitration with private entities.“In case of a government and a private entity dispute, the government sometimes does not have a level playing field,” Mehta said. He also voiced concerns about the level of competence and integrity of arbitral tribunals.SG Mehta was speaking as part of a panel during London International Disputes Week (LIDW) 2025.
The session was hosted by 39 Essex Chambers and Alvarez & Marsal, moderated by Vivek Kapoor and attended by senior arbitration figures including Senior Advocate Shashank Garg (Chair, ICC India Arbitration Group), as well as representatives from Singapore International Arbitration Centre (SIAC), London Court of International Arbitration (LCIA), Welspun, and the Dedicated Freight Corridor Corporation of India (DFCCIL).
Mehta also defended the much-criticised 2024 government memorandum that discouraged public entities from referring disputes exceeding USD 1 million to arbitration.He said the circular was a reaction to structural shortcomings but clarified that it was not law and could be reviewed if systemic reforms—such as tribunal accountability and procedural clarity—were implemented.“These are circulars, ultimately not the law. It can always be re-looked at in view of the changed scenario,” he said.
While acknowledging that arbitration remains a core dispute resolution mechanism for the Indian state, Mehta did not shy away from describing systemic limitations. He called for the establishment of a specialised arbitration court or tribunal, noting that the current system of challenges under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 was restrictive and also overloaded the courts.
“The sheer volume of work may be a difficult problem and therefore it may be advisable to have a separate trial,” he said.
Solicitor General Tushar Mehta clarified that the government has not abandoned arbitration as a mechanism but indicated that the current system lacks sufficient safeguards to be relied upon in significant public sector disputes.
Shashank Garg echoed the Solicitor General’s concerns and described a persistent trust deficit experienced by PSUs in arbitration. “There is a perception that arbitrators are biased toward private parties, especially when the government is not seen as a repeat user,” he said.He also noted that PSUs face stricter scrutiny and must justify their claims to auditors unlike private entities who may inflate claims with impunity.
Garg revealed that the Arbitration Bar of India has set up five task forces, including one focused on arbitrator conduct and ethics, to plug gaps left unaddressed by the Arbitration Act. The goal is to draft “soft laws” that could be adopted by the judiciary or the legislature, he said.Abhijeet Shinde, General Counsel at Welspun World, underlined the strategic nature of arbitration planning.“When I’m negotiating contracts, I am actually negotiating future divorces,” he said, highlighting the importance of step clauses and culturally aligned arbitration seats.
Held as part of London International Disputes Week (LIDW) 2025, the session examined India’s evolving role in international arbitration. Several speakers observed that while India continues to grow as a commercial jurisdiction, challenges remain in its dispute resolution framework.
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