Need robust Indo-German arbitration mechanism as trade grows: CJI

Highlighting substantial and growing economic relationship between India and Germany, Chief Justice of India Surya Kant on Thursday said there is a necessity of having trust in international commerce and a robust arbitration mechanism can build the confident ecosystem.

Speaking at the Indo-German arbitration conclave in Berlin, Germany, CJI Kant pointed out that disputes are a natural feature of commercial activity but their existence does not necessarily indicate a failure of trust. 

“What matters is whether the legal system provides a reliable mechanism through which disagreements can be resolved without undermining the commercial relationship itself,” he said, adding that an arbitration agreement is more than a procedural clause in a contract, which represents a commitment to a method of resolving future disagreements. “India and Germany share a substantial and growing economic relationship. German investment in India spans important sectors, while Indian companies are increasingly entering the German market. As these relationships become more sophisticated, the contracts that support them also become more complex,” he said.

He further said that long-term supply arrangements, infrastructure projects, technology agreements, joint ventures and cross-border investments inevitably raise questions that may not always be resolved through negotiation alone. 

CJI Kant pointed out that the arbitral process must be supported by efficient institutions, capable arbitrators and courts that intervene only where it is extremely necessary, without delaying or displacing the arbitral process. 

“International commerce depends upon trust at every stage. Businesses must trust their contractual partners and have confidence in the legal framework. When a dispute arises, they must be confident that there exists an institution capable of resolving it fairly, efficiently and in accordance with law. Arbitration can fulfil this role only when the entire ecosystem surrounding it commands that confidence,” CJI Kant said.

He emphasised the need for specialised arbitral institutions, arbitrators, counsel and, equally importantly, the courts that support the arbitral process. 

The CJI said institutional trust is not created overnight and is built through consistent practice, professional integrity and sustained engagement.

“India and Germany have the opportunity to develop a long-term framework for arbitration cooperation, drawing upon the strengths of our institutions and professional communities. Such cooperation can begin with closer engagement between arbitral institutions, but should ultimately extend to practitioners, academics and judges. The objective should be to create an ecosystem in which knowledge and experience move in both directions,” he underscored.

The CJI further said that one area that deserves particular attention is institutional cooperation and Indian arbitral institutions such as the India International Arbitration Centre, the Mumbai Centre for International Arbitration and the Nani Palkhivala Arbitration Centre can explore structured relationships with German institutions, including the DIS (German Arbitration Institute) and other relevant bodies. 

“German practitioners have considerable experience in technically complex commercial disputes, particularly those involving engineering, manufacturing and infrastructure. Indian practitioners, meanwhile, are gaining extensive experience in high-value commercial disputes arising from one of the world’s fastest-growing major economies,” he said.

CJI Kant said these relationships could take the form of joint programmes, professional exchanges, collaborative research and training initiatives and there may also be scope for common professional programmes and greater interaction between arbitrators and counsel.          

For businesses engaged in cross-border transactions, such familiarity can be valuable, he said, adding that a German company entering into a contract with an Indian counterpart should have confidence that institutions in both countries understand such disputes and can administer them efficiently and fairly.

“There is much that the two sides can learn from one another. Structured exchanges, professional secondments, joint training programmes and academic collaborations can help create a generation of practitioners who are comfortable working across legal systems and understand the expectations of international commerce,” he said. 

Emphasising the need for judicial dialogue, the CJI said arbitration cannot function in isolation from the courts and courts play an essential role in supporting arbitral proceedings, particularly in relation to interim measures, appointment of arbitrators, assistance in the conduct of proceedings and enforcement of awards. 

“Arbitration’s credibility depends upon judicial restraint and respect for the parties’ choice,” he said, adding that greater understanding between the judiciaries of the two countries can contribute to greater predictability for businesses. 

“Predictability is one of the most important reasons why commercial parties choose arbitration,” he said, adding that consistency and clarity in judicial approaches can therefore strengthen confidence in arbitration as a whole.