Nearly six years after Parliament amended India’s arbitration law to strengthen institutional arbitration, a key reform remains on paper. The Arbitration Council of India (ACI), envisaged as the nodal body to regulate and promote arbitration, is yet to be constituted. The Supreme Court’s intervention in January 2025 has revived scrutiny of both the delay and the deeper structural concerns surrounding arbitration reform in India.
Why Has the Supreme Court Stepped In?
On January 23, 2025, the Supreme Court of India sought the Union government’s response on a petition demanding the constitution of the ACI and the framing of uniform standards for arbitral institutions and arbitrators. The plea highlighted that despite statutory backing under the 2019 amendments to the Arbitration and Conciliation Act, the institutional framework has not been operationalised.
The court’s concern reflects a broader frustration with India’s slow transition from ad hoc arbitration to a credible, institutionalised system of dispute resolution.
The Original Vision Behind the Arbitration Council
The ACI was conceptualised through the recommendations of the High-Level Committee on Arbitration chaired by Justice B.N. Srikrishna, which submitted its report in July 2017. The committee argued that India’s aspiration to become a global arbitration hub required strong institutions, predictable procedures, and professional oversight.
Accordingly, the 2019 amendments proposed the ACI as a central regulatory and promotional authority, mandated to:
- Grade arbitral institutions in India,
- Recognise professional bodies that accredit arbitrators,
- Maintain a repository of arbitral awards, and
- Advise the government on arbitration policy.
The Council was to be headed by a Chairperson appointed by the Union government in consultation with the Chief Justice of India, supported by members drawn partly from the executive.
Independence Concerns and Structural Criticism
A major criticism of the ACI model lies in its perceived lack of institutional independence. Since most members are appointed or nominated by the government, concerns have been raised about executive influence—especially problematic given that the government is India’s largest litigant.
Experts argue that a government-dominated regulator with powers to grade institutions and accredit arbitrators risks undermining confidence in neutrality. Comparable arbitration-friendly jurisdictions like Singapore and Hong Kong rely on strong, central arbitral institutions rather than a regulatory body supervising multiple institutions.
The Indian model also allows the ACI to accredit an unlimited number of arbitral institutions, potentially diluting quality standards, increasing administrative burdens, and raising public costs.
Foreign Arbitrators and Global Credibility
Another contentious feature of the 2019 framework is the exclusion of foreign legal professionals from the pool of accredited arbitrators. This restriction could deter foreign parties from choosing India as a seat of arbitration, weakening India’s global competitiveness in cross-border commercial dispute resolution.
What the Draft Arbitration Amendment Bill, 2024 Proposes
In October 2024, the Union government released the draft Arbitration and Conciliation (Amendment) Bill, 2024, signalling a rethink of earlier reforms. The Bill attempts to revive institutional arbitration through structural changes rather than regulatory centralisation.
Key proposals include:
- Redefining “arbitral institution” as any body that conducts arbitration under its own rules, without requiring court designation.
- Empowering arbitral institutions to extend timelines for awards, substitute arbitrators, and reduce fees for tribunal-caused delays.
These changes aim to shift procedural control away from courts and towards arbitral institutions. However, in March 2025, Union Law Minister Arjun Ram Meghwal informed Parliament that the Bill remains under consideration.
How Judicial Intervention Is Being Curtailed
The draft Bill also proposes to limit judicial intervention in arbitration. Courts would retain the power to grant interim relief only before arbitration begins or after an award is delivered—not during proceedings.
Significantly, a proposed Section 9-A would allow parties to approach an emergency arbitrator for interim relief once arbitration has commenced but before the tribunal is constituted. This aligns Indian law more closely with international arbitration practice and reduces court dependency.
Why Ad Hoc Arbitration Still Dominates India
Justice Srikrishna’s report identified procedural autonomy as the main reason parties prefer ad hoc arbitration. This preference is reinforced by persistent distrust of domestic arbitral institutions, especially regarding independence, efficiency, and administrative competence.
Until this trust deficit is addressed, merely creating regulatory bodies or amending statutes may not shift user behaviour.
What to Note for Prelims?
- Arbitration Council of India proposed under 2019 amendments but not constituted.
- Justice B.N. Srikrishna Committee laid the groundwork for institutional arbitration reform.
- Draft Arbitration Amendment Bill, 2024 seeks to reduce court intervention.
- Emergency arbitrator concept proposed under Section 9-A.
What to Note for Mains?
- Tension between regulatory oversight and institutional independence in arbitration.
- Limits of executive-driven reform in dispute resolution.
- Importance of institutional credibility for making India a global arbitration hub.
- Judicial intervention versus party autonomy in commercial dispute resolution.