Systemic cultural issues undermine India’s appeal as an ADR hub for investors: Experts

Prolonged judicial delays and a lack of institutional support for alternative dispute resolution (ADR) mechanisms are eroding investor confidence in India, top corporate lawyers said at the Mint India Investment Summit and Awards 2025 in Mumbai on Sarturday.

The legal experts highlighted that India has not emerged as a preferred destination for resolving international commercial disputes like Singapore and Dubai due to the absence of strong ADR institutions and a culture of judicial intervention in arbitration matters.

“The biggest cost of judicial delays is the erosion of faith of investors, which cannot be quantified. Justice delayed is justice denied. Dubai and Singapore started much later, and they are ahead of us,” said Madhav Uppuluri, general counsel at Tata Motors Ltd.

“Businesses prefer commercial arbitration for confidentiality and speedy resolution. However, India’s arbitration framework lacks a harmonized policy, preventing it from becoming a global arbitration hub, added Deepak Acharya, group general counsel and chief legal officer at Aditya Birla Group.

The experts identified systemic cultural issues and policy inconsistencies as key reasons for India’s failure to establish itself as a hub for international arbitration.

Uppuluri pointed out that India’s judiciary tends to intervene excessively in arbitration matters, preventing swift resolution. “Cultural issues with the judiciary persist. Arbitration matters often get stuck in courts instead of reaching finality,” he said.

Another challenge is the severe shortage of judicial and quasi-judicial officers and the lack of incentives due to inadequate remuneration. “India has only 25 judges per million people, whereas the US has 150 per million. This shortage delays case resolutions,” said Varghese Thomas, partner at JSA Advocates & Solicitors.

He also criticized the inefficiencies in tribunals like the National Company Law Tribunal (NCLT), saying: “There is no incentive to finish cases efficiently. At the NCLT, the priority is to wrap up proceedings by lunchtime rather than ensure thorough resolution.”

The legal heads also emphasized the difficulties in enforcing arbitration awards in the country. The state remains the biggest litigant and often resists arbitration-based resolutions.

Acharya highlighted inconsistencies in government policies regarding arbitration. “One arm of the government wants India to be an arbitration hub, while another mandates that PSU disputes should only be resolved in court. This contradiction hinders arbitration growth,” he said.

Acharya further pointed out that the Indian mindset towards litigation needs to change. “Many litigants in India prefer to freeze matters rather than resolve them. This prolongs disputes unnecessarily,” he said.

“India’s litigant struggles begin after a judgment is passed. Execution of an arbitration award or court judgment in India is a nightmare. Any case filed in the last 25 years for execution must be pending. It is impossible,” remarked Thomas of JSA.

They cited the Daiichi Sankyo vs. Ranbaxy case as a key example, where the Singapore International Arbitration Centre (SIAC), in 2016, awarded ₹3,500 crore ($500 million) to Japanese firm Daiichi Sankyo. The tribunal ruled that Ranbaxy’s former owners, Malvinder Singh and Shivinder Singh, had concealed critical information about regulatory violations and fraudulent practices during the company’s sale. However, the execution of the award remains pending in the Delhi high court to this day.

According to Uppuluri of Tata Motors, there is a lack of binding impact in ADR cases. “Mediation has been around for a long time in rural India, but it remains toothless. It’s a mindset issue. There is nothing binding. Mediation has not picked up. Nobody is learning from the lessons of arbitration. When you have mediation, there needs to be discipline; it should have a binding impact. We need to reach a mature phase before mediation can be truly effective.”

They also emphasized the need for structured ADR frameworks, enhanced digital infrastructure, and judicial reforms to restore investor confidence and establish India as a credible arbitration hub.

They concluded that India needs improved digital literacy among arbitrators and judges, along with a more structured ADR framework and the use of disruptive technology like artificial intelligence (AI) in the legal world.

On the use of AI in legal work, Acharya of Aditya Birla Group said: “The legal market will be significantly impacted by generative AI. The way legal work is done today relies on knowledge and understanding of lawyers, but GenAI is now generating case laws that do not even exist.”

“For the spread of online dispute resolution (ODR), we need robust digital infrastructure and digital literacy. Many judges and arbitrators struggle to adapt to arbitration-related technology,” said Uppuluri.

Thomas observed that while India is producing more lawyers than ever before, the legal market is skewed in favour of large corporate firms. “Young lawyers are drawn to booming capital markets, making corporate law the flavour of the season,” he said.

Uppuluri also highlighted the struggles faced by first-generation young lawyers in making a career in litigation. “First-generation lawyers do not get any support. They can’t sustain themselves and often move out to corporate law instead,” he said.