Forging a New Dispute Resolution Frontier, The Long-Awaited Arbitration Council of India and the Quest for Credibility

The global business landscape is defined by speed, certainty, and efficiency. In this environment, arbitration has emerged as the preeminent mechanism for resolving complex commercial disputes, offering a private, binding alternative to the often protracted and public process of litigation. Nations vie to become attractive “seats” of arbitration, as this status brings not only prestige but significant economic benefits—legal services revenue, hotel bookings, and enhanced credibility as an investment destination. For over two decades, India has aspired to join the ranks of leading arbitration hubs like Singapore, London, and Hong Kong. Yet, its journey has been fraught with false starts, legislative tweaks, and persistent concerns about judicial overreach and institutional capacity.

As reported by Aaratrika Bhaumik, this ambition is now poised at a critical juncture. Nearly six years after the Arbitration and Conciliation (Amendment) Act, 2019, which promised a transformative leap forward, its centerpiece—the Arbitration Council of India (ACI)—remains unconstituted. Meanwhile, a new draft Bill in 2024 seeks to recalibrate the framework once more. This ongoing evolution underscores a fundamental struggle: Can India build a world-class, impartial arbitration ecosystem that commands global trust, or will domestic scepticism and structural flaws continue to hold it back?

The Genesis: The Srikrishna Committee and the 2019 Vision

The push for reform gained serious momentum with the 2017 report of the High-Level Committee (HLC) chaired by former Supreme Court Justice B.N. Srikrishna. The Committee diagnosed a critical ailment in India’s arbitration landscape: the overwhelming dominance of ad hoc arbitration. Unlike institutional arbitration, where a professional body (like the Singapore International Arbitration Centre or SIAC) administers the process under established rules, ad hoc proceedings are conducted by the parties and arbitrators themselves, with minimal administrative support. While offering flexibility, ad hoc arbitration in India had become synonymous with delay, inefficiency, and a high incidence of court intervention, as parties rushed to judiciary at every procedural hiccup.

The HLC’s prescription was a robust institutional framework. Its key recommendation was the creation of a statutory body to regulate, promote, and grade arbitration institutions in India. This vision was crystallized in the 2019 amendments through the proposed Arbitration Council of India (ACI).

The Proposed Mandate of the ACI (2019):
The ACI was envisioned as a premier regulatory and promotional body with a wide-ranging mandate:

Grading Arbitral Institutions: It would formulate norms, grade professional arbitral institutions, and recognise professional institutes providing accreditation of arbitrators.
Maintaining a Repository: It would create and maintain a digital depository of all arbitral awards made in India (subject to confidentiality).
Promoting Research & Training: It would promote academic research, organise conferences, and disseminate best practices.
Advising the Government: It would act as a think-tank on policy and legislative matters related to arbitration.
Promoting Domestic Arbitration: Its overarching goal was to promote institutional arbitration for domestic and international commercial arbitrations.

The Council was to be headed by a Chairperson—a former Supreme Court judge or a former Chief Justice of a High Court—appointed by the Union Government in consultation with the Chief Justice of India. Its composition would include eminent arbitration practitioners, academicians, and government representatives.

The Unresolved Concerns: Impartiality, Dilution, and Exclusion

Despite its ambitious scope, the 2019 framework for the ACI attracted significant criticism, raising red flags about its potential efficacy and impartiality.

The Spectre of Government Overreach and Lack of Independence: The most serious concern relates to the composition and appointment mechanism. With the government having a decisive say in appointing the Chairperson and a significant number of members, fears arose that the ACI could become susceptible to executive influence. Arbitration fundamentally thrives on the perceived neutrality of the process. If the regulator itself is seen as an extension of the state, its grading of institutions or accreditation of arbitrators could be viewed with scepticism, especially in disputes involving government entities—a frequent party in Indian arbitration. The requirement for the government to “consult” the CJI was seen as weaker than the “concurrence” model used for judicial appointments, failing to provide a robust firewall for independence.
The “Grading” Dilemma and Quality Dilution: The ACI’s power to grade an unlimited number of institutions presented a paradox. While intended to promote competition and raise standards, critics warned it could lead to a proliferation of mediocre institutions chasing grades, diluting overall quality. The administrative burden on the ACI to continuously monitor and grade multiple entities would be immense. Furthermore, a poor grade could be commercially fatal for an institution, placing tremendous, potentially arbitrary, power in the ACI’s hands without clear, transparent, and appealable criteria.
Structural Divergence from Global Models: The 2019 model drew inspiration from Singapore and Hong Kong but with a crucial difference. In those jurisdictions, a single, highly respected, independent institution (SIAC, HKIAC) acts as both the administrator and the flag-bearer for the country’s arbitration brand. India opted for a regulatory superstructure overseeing multiple competing institutions. This “regulator of many” model is untested in the arbitration world and risks creating fragmentation and inconsistency, rather than the focused excellence of a single champion.
Exclusion of Foreign Lawyers: The 2019 amendments maintained the controversial restriction that prevented foreign lawyers from acting as arbitrators in India-seated arbitrations unless the parties specifically agreed otherwise in an international commercial arbitration. This was seen as protectionist and out of step with global practice. In hubs like London or Singapore, the ability to appoint the world’s best legal minds, regardless of nationality, is a key attraction. This exclusion undermines India’s claim to be an international hub.

The 2024 Draft Bill: A Course Correction and New Ambitions

Recognizing the stagnation and the critiques, the government released the draft Arbitration and Conciliation (Amendment) Bill, 2024. This draft seeks to break the logjam and inject fresh momentum, proposing several significant shifts.

Key Proposals of the 2024 Draft Bill:

Redefining “Arbitral Institution”: It moves away from the 2019 requirement that institutions must be formally “designated” by the Supreme Court or High Courts. Instead, it adopts a functional definition: any body that conducts arbitration under its own rules. This could lower barriers to entry and recognise a wider ecosystem of providers.
Empowering Institutions, Restricting Courts – The Core Philosophy: The most consequential proposals aim to drastically reduce judicial intervention, long identified as the primary source of delay.
- Transfer of Court Powers to Institutions: The draft Bill vests arbitral institutions with powers currently held only by courts: extending time limits for making awards, reducing arbitrator fees in cases of delay, and substituting arbitrators if they become de jure or de facto unable to perform. This is a radical devolution aimed at making arbitration truly self-contained.
- Reining in Interim Relief under Section 9: Currently, parties can approach courts for interim measures (like asset freezing) before, during, and after arbitration. The draft seeks to limit this power to the period before arbitration commences and after the award is rendered. Crucially, it proposes that the 90-day clock to commence arbitration (after getting pre-arbitral relief) starts from the date of filing the court application, not from the date the court grants relief. This is designed to prevent parties from using the court process as a dilatory tactic.
- Introducing the Emergency Arbitrator: A new Section 9-A formally recognises the power of an “emergency arbitrator”—a mechanism offered by leading global rules where a sole arbitrator is appointed urgently, within days, to grant interim relief before the main tribunal is constituted. This provides a swift, arbitral alternative to running to court.
Implicitly Reviving the ACI? While the draft Bill does not explicitly reconstitute the ACI, its framework assumes a landscape of graded, empowered institutions. The logic suggests that for this devolution of power to work, the institutions themselves must be credible. This, in turn, resurrects the need for the ACI or a similar body to perform its envisaged grading and accreditation role to build that credibility.

Criticisms of the 2024 Approach: New Risks Emerge

While the 2024 draft’s pro-arbitration intent is clear, it has sparked a new set of debates:

The Peril of Unchecked Institutional Power: Transferring significant judicial powers to arbitral institutions is a double-edged sword. While it curbs court delays, it places enormous responsibility on often untested domestic institutions. Questions arise: What are the checks and balances if an institution acts capriciously in extending time or substituting an arbitrator? Is there a right to appeal such decisions? The draft is silent on robust oversight mechanisms, risking a shift from judicial interference to potential institutional arbitrariness.
Constitutional Concerns and Access to Justice: Limiting access to courts for interim relief during ongoing arbitration may raise constitutional concerns regarding the right to access justice under Article 21. Courts have traditionally been the guardians of fundamental rights and natural justice. Some legal experts argue that completely barring the court’s door during the pendency of arbitration, especially in cases involving fraud or where the arbitral tribunal itself is alleged to be biased, could be problematic.
The Trust Deficit Persists: The Srikrishna Committee report pinpointed “persistent scepticism towards domestic arbitral institutions” as the root cause of India’s ad hoc culture. The 2024 draft tries to solve this by forcing parties into institutions through legislative fiat, but it does little to directly address the underlying scepticism about their independence (especially from corporate or state influence) and administrative competence. Building world-class institutions requires decades of consistent excellence, not just legislative empowerment.

The Way Forward: Building Trust, Not Just Structure

The draft Bill of 2024 represents a bold, if risky, attempt to break the cycle of delay. However, legislation alone cannot manufacture a global arbitration hub. The path forward requires a multi-pronged strategy:

Constitute an Independent ACI, with Safeguards: The ACI must be constituted, but its design needs refinement. Its appointments should be made by a committee with a strong, decisive role for the Chief Justice of India to ensure operational independence from the executive. Its grading criteria must be transparent, objective, and subject to judicial review.
Foster “One Champion” While Regulating the Field: India may benefit from a hybrid model. While the ACI can regulate the broader field, concerted policy support should be given to one or two institutions (e.g., the Mumbai Centre for International Arbitration or the Delhi International Arbitration Centre) to develop them into “national champions” that can compete with SIAC or LCIA on the global stage.
Embrace Global Talent: To be truly international, India must open its doors. The restriction on foreign lawyers acting as arbitrators should be removed. This would signal confidence and attract complex cross-border disputes.
Invest in Human Capital and Infrastructure: Parallel to legislative change, massive investment is needed in training a new generation of world-class arbitrators, counsels, and arbitration administrators. State-of-the-art hearing facilities in major cities are essential.

The journey of Indian arbitration reform is a telling microcosm of India’s broader aspiration to modernize its legal infrastructure to meet global standards. The 2024 draft Bill is a significant step in acknowledging that for arbitration to thrive, the courts must learn to let go. But the ultimate success will be determined not by how much power is taken away from judges, but by how much trust can be instilled in the institutions meant to replace them. The world is watching to see if India can move from being a perennial “potential” hub to a genuine destination for resolving the disputes of global commerce.

Q&A: Delving Deeper into India’s Arbitration Reforms

Q1: The 2024 draft Bill significantly empowers arbitral institutions with powers currently held by courts. What specific safeguards are necessary to prevent arbitral institutions from misusing these new powers, such as in substituting an arbitrator or extending timelines?

A1: The devolution of power demands a robust framework of accountability to prevent institutional overreach or bias. Necessary safeguards include:

Transparent and Published Rules: Institutions must have crystal-clear, publicly available rules governing the exercise of these powers. The criteria for substituting an arbitrator (e.g., what constitutes “failure or impossibility to act”) or for granting extensions must be objective and specific.
Reasons in Writing: Any decision to substitute an arbitrator, extend time, or reduce fees must be accompanied by a reasoned order, documenting the facts and justification. This creates a record and disciplines decision-making.
A Right to be Heard: The affected party (or the arbitrator, in case of fee reduction or substitution) must have a right to present their case before the institution makes such a decision.
Limited but Clear Judicial Review: While the goal is to minimize court intervention, a complete ouster of jurisdiction is untenable. The law should allow for a narrow, expedited judicial review route, perhaps only on grounds of patent illegality, violation of natural justice, or manifest arbitrariness in the institution’s decision. This acts as a backstop without inviting routine appeals.
Internal Appellate Mechanism: Leading institutions could establish an internal appellate panel for challenging administrative decisions, providing a filter before any matter reaches the courts.

Q2: How does the proposed “emergency arbitrator” mechanism work, and why is its formal introduction in the draft Bill considered a major step forward for Indian arbitration?

A2: An emergency arbitrator (EA) is a sole arbitrator appointed on an ultra-expedited basis (often within 24 hours of a request) by an arbitral institution before the constitution of the main arbitral tribunal. The EA’s sole purpose is to hear and decide applications for urgent interim relief (e.g., to prevent asset dissipation, maintain the status quo, or preserve evidence). The EA’s order is binding on the parties. The main tribunal, once constituted, can modify or vacate it.
Its introduction is a major step because:

Speed and Efficacy: It provides a swift, arbitral solution for urgent matters, which is the very need that currently drives parties to Indian courts and leads to delays. An EA proceeding can be concluded in days, whereas a court application can take months.
Keeps the Dispute within Arbitration: It reinforces the principle of Kompetenz-Kompetenz (the tribunal’s authority to rule on its own jurisdiction) and party autonomy by ensuring that even urgent relief is sought from the chosen arbitral forum, not an external court.
Aligns with Global Best Practices: EA provisions are standard in the rules of all major international institutions (SIAC, ICC, LCIA). Their absence in Indian law created uncertainty about the enforceability of such orders in India. Formal statutory recognition removes this doubt and aligns Indian law with international expectations, making India a more predictable seat.

Q3: The Srikrishna Committee identified a “strong preference for procedural autonomy” as a reason for India’s ad hoc arbitration culture. Can institutional arbitration ever fully accommodate this preference, and how?

A3: The preference for procedural autonomy is legitimate; parties want control over the process tailored to their dispute. Institutional arbitration is often mistakenly seen as rigid. However, modern institutional rules are designed to balance efficiency with flexibility. They can accommodate autonomy in several ways:

Default vs. Mandatory Rules: Institutional rules typically provide a comprehensive, efficient default procedure. However, parties are almost always free to modify these rules by agreement. They can agree on different timelines, specific procedures for document production, or tailor the conduct of hearings.
Party-Appointed Arbitrators: Institutions administer the process but do not dictate the tribunal’s procedural decisions. The arbitrators, once appointed (often by the parties themselves), have wide discretion, in consultation with the parties, to determine the procedure.
Tailored Administration: Reputable institutions are often willing to adapt their administrative support to complex cases. The key shift is that the “administrative heavy lifting”—managing funds, communicating with the tribunal, providing hearing facilities—is handled professionally, freeing the parties and tribunal to focus on the substance of the dispute. The institution provides a safety net and efficiency engine, not a straitjacket.

Q4: With the government being a frequent party in arbitration (in PPP disputes, contracts, etc.), how can the grading of institutions by a government-influenced ACI be perceived as impartial, especially when a government-owned entity is involved in a case at a graded institution?

A4: This is the core of the impartiality challenge. To mitigate this, the grading process must be designed as a firewall:

Criteria-Based, Not Discretion-Based: Grading must be based on purely objective, publicly disclosed criteria—infrastructure, caseload management efficiency, average time to award, quality of administrative staff, diversity of arbitrator panels, transparency of fee structures, etc. It should be a quantitative and qualitative audit, not a subjective assessment.
Independent Grading Committee: The actual grading work within the ACI should be delegated to a standing committee composed predominantly of non-government members: retired judges (appointed by the CJI), eminent international arbitration experts, and representatives of industry bodies. Government representatives should be in a minority.
Transparency of Grades and Process: The final grades, and the detailed assessment reports justifying them, should be made public. Sunshine is the best disinfectant.
Strict Recusal Protocols: If a dispute involving a central or state government entity arises at an institution, the ACI’s role in that institution’s grading should have no bearing on the case. Clear protocols must ensure that the institution’s administration and the arbitral tribunal remain independent.

Q5: Given the delays in constituting the ACI since 2019, what are the realistic prospects for the 2024 draft Bill being passed and implemented effectively, and what might be the biggest practical hurdles post-enactment?

A5: The prospects for passage have improved, as the draft Bill addresses long-standing industry demands to curb court interference. However, hurdles remain:

Legislative Priority: The Bill must compete for parliamentary time in a crowded legislative agenda. The government’s stated commitment will be key.
Judicial Scrutiny: Provisions limiting court access, especially for interim measures, may be challenged on constitutional grounds, potentially leading to Supreme Court scrutiny and possible read-downs.
Post-Enactment Hurdles:
- Institutional Capacity Building: The biggest practical hurdle is the capacity gap. Most Indian institutions are not yet equipped, in terms of experienced administrative personnel or sophisticated case management technology, to handle the serious powers being proposed (like substituting arbitrators). A transition period with significant hand-holding and investment will be crucial.
- Cultural Shift: Persuading the Indian legal community—lawyers and clients—to trust institutions over the familiar, if flawed, ad hoc model or the perceived safety of courts will be a generational challenge. It requires demonstrable success stories.
- Constituting a Credible ACI: Finally, none of this works without a credible, independent ACI to set standards. Its swift and proper constitution is the linchpin without which the entire 2024 framework risks collapsing under the weight of its own ambitions.

Forging a New Dispute Resolution Frontier, The Long-Awaited Arbitration Council of India and the Quest for Credibility