Why are Indian companies still sending commercial disputes abroad for arbitration?

Indian companies continue to choose foreign arbitration centres for major commercial disputes. It raises questions about trust in India’s arbitration system. The choice of venue is becoming an important issue for Indian companies and lawyers.

New Delhi: As India’s economy grows, its legal community is asking whether Indian companies should continue taking major commercial disputes to arbitration centres outside the country.

The question came up recently at a legal conference in Singapore, where Supreme Court Justice Manmohan highlighted an imbalance in India’s participation in international arbitration. He said Indian lawyers got far fewer tribunal appointments at the Singapore International Arbitration Centre (SIAC) than the number of cases involving parties from the country.

He said India accounted for about 178 SIAC references last year, while Indian lawyers received only around 31 tribunal seats. He was speaking on August 28 at the India-Singapore Legal Bridge, organised by the General Counsels' Association of India with Drew & Napier during the Singapore Convention Week 2026.

The numbers have added to a larger debate among Indian lawyers and businesses about the country’s ability to build an arbitration system that can attract both Indian and international parties.

Why businesses choose Singapore

Singapore, London and Hong Kong have become popular destination for international arbitration because companies see them as neutral venues with established procedures, efficient case management and limited court intervention.

These centres have built their reputation over years by giving businesses greater confidence about how disputes will be handled. India has been working to develop similar systems, but lawyers say institutional trust will be crucial to attracting more major international cases.

“The issue is not whether foreign arbitration centres are good. The real question is whether Indian and eventually global companies trust India just as much. India cannot become an economic powerhouse while exporting its disputes,” said Senior Counsel Tushad Cooper.

The issue was also raised in a recent Singapore judgment involving Tata Power and Kleros Capital Partners Ltd. The case dealt with issues over the reasoning of an arbitral tribunal, disclosure of professional and institutional connections and relationships involving the arbitration ecosystem and third-party litigation funding.

The Singapore Court declined to interfere with the award and reaffirmed the limited grounds on which courts can review an arbitral decision.

India has changed its arbitration laws

India has made several changes to its arbitration laws over the past decade. Amendments to the Arbitration and Conciliation Act in 2015, 2019 and 2021 were aimed at speeding up proceedings, improving neutrality and reducing unnecessary court intervention.

Institutions such as the Delhi International Arbitration Centre have also developed administrative systems, arbitration rules and panels of arbitrators.

The challenge now lies in building confidence in these institutions on a much larger scale. Businesses looking at an arbitration seat want to know that the institution handling their case will operate independently, professionally and predictably.

Cooper said the aim should not be to favour Indian companies or create a system based on nationality.

“This is not an argument for protectionism. Nor should Indian arbitration become an instrument for favouring Indian parties. The objective should be to create institutions that are so independent and professionally administered that neither side needs to worry about where the arbitrator comes from,” he said.

More business disputes ahead for Odisha

The issue has relevance for states such as Odisha, which are attracting investment across mining, metals, energy, infrastructure and manufacturing.

Tata Power operates four electricity distribution companies in Odisha, making the recent Singapore judgment relevant to the state as well. More investment and larger commercial projects can bring a greater need for reliable mechanisms to settle disputes between companies, investors and other parties.

Tapan Kumar Swain, a lawyer based in the state, said Indian companies should treat the choice of an arbitration seat as a strategic business decision, much like decisions involving investments and international partnerships.

He said companies should consider transparency, fairness, accountability and confidence in the dispute-resolution process when deciding where a dispute should be heard.

India’s economic ambitions therefore extend beyond attracting factories, capital and international partnerships. The country also needs dispute-resolution institutions that businesses can trust when large and complicated commercial disagreements reach arbitration.

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