NEW DELHI: Arbitration and mediation are essential components of a modern and responsive justice system and should not be seen as mere alternatives to traditional litigation, Supreme Court judge Justice P V Nagarathna said on Saturday.
Speaking at the International Conference on “Arbitration in the Age of Globalization” organized by the Indian Council of Arbitration here in the national capital, Justice Nagaratna highlighted the growing importance of alternative dispute resolution mechanisms in an increasingly complex and globalized economy.
“Disputes are not only legal matters, but also social, commercial and relational matters that may require more voluntary resolutions than a court ruling,” she said. “Arbitration and mediation are therefore not just alternatives to litigation, but are essential components of a modern and responsive justice system.”
The Supreme Court judge said that there has been a noticeable shift from the traditional method of resolving disputes towards alternative dispute resolution mechanisms such as mediation and arbitration.
Justice Nagaratna said arbitration has emerged as the most preferred method for resolving cross-border trade disputes due to advantages such as neutral forums, procedural flexibility, confidentiality and independence of parties.
“Their advantages, namely neutral forums, procedural flexibility, confidentiality, party independence and enforceability of judgments under international agreements, have made them indispensable in global trade for practitioners,” she said.
She pointed out that the effectiveness of international arbitration is enhanced by the New York Convention, which allowed arbitration awards to be recognized and implemented across more than 170 jurisdictions.
Justice Nagaratna also referred to investment arbitration under BITs in her speech and said that such mechanisms protect foreign investors from unlawful expropriation.
“These treaties provide foreign investors with protections such as fair and equitable treatment, protection from unlawful expropriation, and access to neutral dispute resolution mechanisms against host states,” the Supreme Court judge said.
Justice Nagaratna also noted that disputes across sectors such as infrastructure, construction, technology and telecommunications often require arbitrators with specialized industry experience as well as legal knowledge.
“Developing greater sector-specific arbitration expertise in India will be essential if we are to strengthen India’s position as a credible arbitration authority,” she said.
Regarding mediation, the judge said that it reflects a different philosophy of resolving disputes by facilitating dialogue between parties and helping them reach mutually acceptable results.
She notes that mediation is particularly useful in disputes involving long-term business relationships, family matters and community conflicts because it helps maintain relationships and promote lasting settlements.
Referring to the Mediation Act, 2023, Justice Nagaratna said the legislation represents an important step towards institutionalizing mediation in India, but acknowledged that its implementation remains limited.
“Though we have the structure in the form of legislation, there is no real effective implementation as many judgments are yet to be notified and the Indian Mediation Board has not been constituted,” she said.
The judge also stressed the importance of pre-litigation mediation under Section 12A of the Commercial Courts Act 2015, and called for improved coordination between mediation centres, legal services authorities and training institutions to ensure the ruling is implemented in its true spirit.
“Mediation is proving increasingly effective in sectors where business relationships are ongoing, for example, in joint ventures, shareholder disputes, supply chain relationships and business partnerships,” she said.
She noted that jurisdictions such as Singapore have successfully institutionalized these models through institutions such as the Singapore International Arbitration Center and the Singapore International Mediation Centre.
“As far as India is concerned, wherever we have institutionalized arbitral institutions, whether they are linked to the high courts or high courts, like the ICA, it is imperative that they train mediators alongside, even in arbitrations that are initiated, even perhaps after the cases have been crystallized,” she said.
Emphasizing the role of negotiation, she said that it remains a basic and often underappreciated form of dispute resolution, and can help resolve disputes even before they escalate into arbitration or litigation.
“No single dispute resolution mechanism can address all types of disputes. Therefore, a mature legal system must support a diverse and integrated dispute resolution framework,” she said.
