Arun Jaitley said newer challenges will emerge on how to address issues between investor-to-investor.
The BRICS group of emerging economies need to soon set up a task force of officials to explore a mechanism for setting up arbitration centres for use by the grouping as well as by non-BRICS countries, Indian Finance Minister Arun Jaitley said on Saturday.
"Over the next few months, BRICS members have to interact more often to explore creating a task force of officials that would discuss setting up a mechanism that would create arbitral centres for the BRICS countries," Mr Jaitley said while delivering the valedictory at a conference in Delhi on 'International Arbitration in BRICS' organised by industry chamber Ficci jointly with the Department of Economic Affairs.
The conference was organised as a lead-up to the BRICS (Brazil, Russia, India, China, South Africa) leaders summit to be held in Goa in October, India being the chair of the grouping this year.
"We need to create more arbitration centres, create more ability. While we deal with free trade, we should also have fair trade," he said, pointing out that such centres could also be used by non-BRICS countries.
Mr Jaitley said that a credible dispute resolution mechanism has to be absolutely fair and detached from local influence.
"Implementation of awards have to be free from the jurisdiction of local courts. It is required to restrict the jurisdiction of local courts in arbitration cases," he said, noting that the rationale behind arbitration is that "you don't automatically submit to the jurisdiction of local courts".
"To maintain the credibility of the dispute resolution process, you look for neutral fora and applicability of neutral laws," he added.
Mr Jaitley also said that some centres, particularly in the developed world, had monopolised the international arbitration process and created arbitrators who were familiar with processes all over the world.
"Those jurisdictions dominated the pie as far as international arbitration was concerned," he said.
"Many countries felt that the awards in these arbitrations are loaded against the emerging economies," the finance minister said.
"It is, therefore, important that for disputes among the BRICS, we have to develop a mechanism for BRICS countries. It is important to develop arbitration capabilities, capacity building and our own jurisdiction centre," he added.
The finance minister said that with increasing trade, newer challenges will emerge on how to address issues between investor-to-investor and between investor and the state.
Speaking at the event earlier, Economic Affairs Secretary Shaktikanta Das elaborated on the importance of arbitration at a time of global economic slowdown, which has increased protectionist tendencies among developed countries.
"The tendency in cases of disputes in taxation or investment is for foreigners to bypass the local framework and go for arbitration - forum shopping it is called.
"The key is to develop local capabilities in the BRICS countries, so we can deal with these issues," he said.