Finance Minister Arun Jaitley on Saturday said BRICS nations should develop their own arbitration mechanism to cut reliance on dispute redressal centres in the developed nations. Such a mechanism will be needed as trade among these economies of Brazil, Russia, India, China and South Africa grows.
Speaking at a conference on ‘International arbitration in BRICS’, organised by the finance ministry, industry chamber FICCI and Indian Council of Arbitration, he said faster growth will return to emerging economies once the world comes out of the current slowdown and the dispute resolution mechanism should be now perfect as trade between countries grows.
The finance minister highlighted economic and political challenges that the Brics economies are facing since the global slowdown that started in 2008. Sharp drop in commodity and metal prices have created a new set of challenges for Brazil, Russia and South Africa, while China has conceded that its “new normal” for growth is lower than the rate at which it grew for past three decades, he said.
Security threat from ISIS and a new wave of trade protectionism unleashed by developed economies were creating political challenges globally, he noted. For free and fair trade to flourish in this background, there was a need for an adequate dispute resolution mechanism to look after interest of developing economies.
“Many countries fear, and have been suggesting, that the awards emerging out of these arbitration are at times loaded against the emerging economies. Therefore, a need has been felt to develop parallel arbitration centres across the world. Let alone London, let alone Paris, now we see Singapore emerging as an emerging arbitral centre.
“Therefore, inter-se the BRICS nations resolve trading disputes which may arise out of
Brics nations itself, it is extremely important that we have to develop a mechanism as far as the BRICS nations is concerned,” Jaitley said.
He suggested that the BRICS countries should set up a task force comprising officials and experts to discuss and then set up a appropriate mechanism where these nations can have arbitral centres of their own.
“And hopefully if we are able to evolve and develop that capacity, eventually those centres will also become centres of great international acceptability even with regard to the non-BRICS nations as far as arbitral abilities are concerned,” he said.
Giving rationale behind companies resorting to international arbitration, he said, they fear an institutional bias and hence look for a neutral forum for applicability of law.
“The experience over the years has been that some centres did monopolise a bulk of international arbitrations, they developed capacities, they created arbitrators of stature, they created a set on international lawyers who could practice from one jurisdiction to other. Therefore, those jurisdiction tended to have a big share in international arbitration,” he said.
The BRICS nations would have to put forth a common agenda for growth and the key is to develop local capabilities to deal with the challenges that lie ahead, he added.