Editorial 1: The real Indian arbitrator needs to stand up

Context

The focus in Indian arbitration discussions often misses the crucial need to build a class of elite arbitrators.

Introduction

India’s economic growth has naturally sparked many discussions about the potential of Indian arbitration to play a major role in this expansion.
As domestic and cross-border commerce increase, commercial disputes have become unavoidable. The Indian court system remains overloaded and ill-equipped to handle such disputes, which are often time-sensitive, technical, and involve high-value claims. As a result, commercial arbitration, especially through specialised arbitral institutions, is seen as an attractive alternative.
 

Rethinking Indian Arbitration: Are We Overlooking the Role of Arbitrators?

• However, a key question arises: is the Indian arbitration ecosystem truly meeting the expectations of its growing popularity?
• Is India genuinely on its way to becoming a global arbitration hub?
  • While much attention is given to legislative reforms and reducing judicial interference, the most critical players — the arbitrators — often escape close examination.

The subject of human capital

• The success of any legal system depends not just on its rules and structure, but also on the strength of its human capital.
• In Indian arbitration, this human capital includes arbitration lawyers, but more crucially, the arbitrators who act as decision-makers.
• The credibility and legitimacy of Indian arbitration mainly rest on two factors:
  • the efficient management of arbitration proceedings, and
  • the quality of the final arbitral awards.
• In both these areas, arbitrators play a key role.
• While lawyers assist during the proceedings, it is the arbitrators who:
  • shape the procedure,
  • fix timelines,
  • settle procedural disputes, and
  • impose penalties when necessary.
• The arbitral awards they deliver can be challenged in courts, either in India or internationally, making their decisions extremely important.
• Therefore, the Indian arbitrator stands at the very core of the country’s arbitration ecosystem.

An exclusion

• Conversations around Indian arbitration rarely stress the need to build elite arbitrators.
• There are many efforts to strengthen the arbitration bar (lawyers), but little focus on the arbitration bench(arbitrators themselves).
• This gap is unfortunate.

Recent Concern Raised

Event	Key Point
March 2024	Former Chief Justice of India, Justice D.Y. Chandrachud, questioned why Indian arbitrators are missingin international disputes without Indian connections.
Observation	Indian arbitrators are largely absent from the elite global community of repeatedly appointed international arbitrators.

Reasons for the Exclusion

• Traditional Thinking:
  • In India, elite arbitrators are often assumed to be retired Supreme Court or High Court judges.
• Appointment Practices:
  • Courts, litigants, lawyers, and arbitral institutions prefer former judges for high-value disputes.
• Assumption:
  • It is assumed that judicial experience automatically means better arbitration outcomes.

Reality Check

Source	Key Findings
Ministry of Finance Guidelines (June 2024)	Highlighted problems: Lengthy, costly arbitral proceedings resembling court processes, and poorly reasoned awards that get frequently challenged and set aside.

What Needs to Change

• Judicial experience alone is not enough to make an effective arbitrator.
• A good arbitrator must be:
  • Legally proficient.
  • A strong manager of the arbitration process.
  • Flexible and innovative, moving beyond rigid court-style procedures.
  • Skilled in using international best practices.
• Soft-skills are essential:
  • Arbitrators often work with colleagues from different countries and cultures.
  • They must deliberate, negotiate, and convince other arbitrators.
  • Special training is needed to build these skills.
• Writing an arbitral award is different from writing a court judgment:
  • Requires detailed review of documents, expert testimonies, and financial analysis to determine damages.

The improvements needed

• The ecosystem of Indian arbitration needs at least two key improvements.
• First, the pool of Indian arbitrators must be diversified to include candidates specialising in arbitration.
  • It should not be limited to advocates and retired judicial officers.
  • It should also welcome trained experts from various fields, who can offer a range of nuanced perspectivesin decision-making.
• Second, every candidate, regardless of their background, must complete a rigorous training and accreditation process.
  • This can involve specialised certificate courses, workshops organised by arbitral institutions, or membership in professional arbitration associations.

Conclusion

The goal is not just to upskill, but also to build a culture where arbitration is no longer seen as a neglected sibling of court litigation. Only then can a truly elite Indian arbitrator emerge and take their rightful place in the global arbitration community.

Editorial 2: ​Clean AI

Context

Significance of AI data centres and associated  demand.

Introduction

The IMF report suggests that the economic benefits of AI applications will likely outweigh the environmental cost linked to the increased energy demand of AI data centers. Countries with robust renewable energy infrastructure will reduce the social and environmental costs of AI growth. India’s strategy, supported by initiatives like IndiaAI, emphasizes the need for sustainable energy integration in AI development.

IMF Report on AI’s Environmental Impact and Economic Gains

• Key Insights: The IMF report suggests that AI’s economic benefits are likely to surpass its environmental costs due to the increased energy demand of AI data centers.
  • AI is not fundamentally opposed to global sustainable growth strategies.
• AI and Sustainable Growth: Countries with strong renewable energy infrastructure will face lower environmental and social costs while pursuing AI advancements.
  • India’s AI infrastructure, funded through the IndiaAI Mission, does not yet impact the nation’s overall energy mix but pursuing renewable energy for AI is essential.
  • The government’s approach, outlined at the AI Action Summit in Paris, emphasizes renewable energy and sustainable practices for AI.

The Importance of Renewable Energy in AI Development

• AI’s High Energy Consumption: AI’s energy demands are significant, particularly in the United States, which is the largest global hub for AI computing.
  • The IMF warns that AI expansion could increase electricity prices by up to 9%, contributing to broader price pressures.
  • Renewable energy is crucial to offset the emissions associated with conventional energy sources.
• AI and Renewable Infrastructure: Data centers, where AI operates, are well-suited for renewable energy integration.
  • Indian firms have already begun investing in renewable energy for their data centers.
  • Data centers occupy large spaces, making them ideal for solar energy integration.
  • Nuclear energy, particularly small modular reactors, may complement renewable energy to reduce emissions at data center clusters.

Broader Environmental Impact of AI

• Additional Environmental Footprints
  • AI’s environmental footprint extends beyond electricity use, including:
    • Large-scale mining of minerals.
    • Water consumption.
    • Effluents from electronics manufacturing.
• India’s Role in Electronics Manufacturing: India aims to expand its electronics manufacturing sector, which presents both opportunities and environmental challenges.
  • Achieving India’s net zero target by 2070 will require scaling down conventional emission sources while managing energy consumption from growing industries.

Conclusion

As AI continues to revolutionize industries, the challenge lies in managing its environmental footprint, especially regarding energy consumption. The adoption of renewable energy solutions for AI data centers is crucial in minimizing emissions. India’s approach of combining AI growth with sustainable practices and renewable energy sets a positive example, ensuring that technological advancements contribute to a greener, more sustainable future.