Blog

Written By: Apoorv Agarwal, Tanushvi Singh

Introduction

India’s arbitration landscape is undergoing a transformative shift with the Draft Arbitration and Conciliation (Amendment) Bill, 2024. Released for public comments in October 2024, the Bill aims to boost institutional arbitration, reduce judicial intervention, and ensure timely resolution of disputes. These objectives are not merely procedural, they are central to improving the ease of doing business and attracting foreign investment, both of which depend on a robust and predictable dispute resolution framework.

Key Reforms Under the Draft Bill

The Draft Bill introduces several significant changes. First, it clarifies the distinction between the “seat” (which determines jurisdiction) and the “venue” (the physical location of hearings), resolving long-standing judicial confusion. Second, it grants statutory recognition to emergency arbitration under Section 9A, codifying the Supreme Court’s ruling in Amazon v. Future Retail and making emergency awards enforceable under Section 17(2).

Third, the Bill proposes Appellate Arbitral Tribunals (AATs), allowing institutional challenges to awards without approaching courts under Section 34. This novel two-tier model is intended to reduce court burden, but critics warn it may create a parallel layer of litigation rather than streamline dispute resolution.

Fourth, the Bill imposes strict timelines 60 days for courts to decide Section 8 applications and for filing Section 11 petitions though consequences for non-compliance remain unclear. Finally, it promotes technology by recognising proceedings via audio-visual means, aligning with global digital trends.

Investor Confidence and Enforcement Challenges

Despite these reforms, significant challenges persist. A major concern is the proposed reversal of the protection that bars challenges to international commercial awards on grounds of “patent illegality” a safeguard introduced in 2015. This reversal has drawn sharp criticism, as foreign investors may view it as excessive judicial interference, deterring them from choosing India as an arbitration seat.

The Supreme Court’s 2025 ruling in Gayatri Balasamy v. ISG Novasoft Technologies further complicates the landscape. The Court held that courts have limited power to modify arbitral awards under Section 34, but critics argue this erodes the principle of arbitral finality, a cornerstone of arbitration credibility.

Equally troubling is the National Highways Authority of India’s circular excluding arbitration for claims exceeding INR10 crore. Such a policy reversal by a major government entity casts doubt on the government’s faith in its own framework and risks dampening investor confidence.

On a positive note, the Supreme Court’s order in GPE (India) Ltd. v. Twarit Consultancy Services clarified that payments against foreign arbitral awards do not require RBI approval, reducing regulatory friction and reinforcing India’s credibility among global investors.

The Institutional Arbitration Imperative

The Bill emphasises institutional arbitration over ad hoc proceedings, expanding the definition of arbitral institutions and empowering them to extend timelines and substitute arbitrators. However, concerns remain about vesting excessive supervisory powers in a proposed oversight Council. India’s arbitration institutions currently handle significantly fewer cases than their Singaporean counterparts, indicating substantial room for growth.

Conclusion

India’s arbitration framework post-2025 holds promise, with reforms targeting efficiency, institutionalisation, and technological integration. The clarification of seat and venue, recognition of emergency arbitration, and promotion of institutional arbitration are welcome steps.

However, the success of these reforms will be measured not by legislative intent but by practical outcomes. The persistent tension between arbitral finality and judicial oversight, exemplified by the Balasamy judgment and the proposed reversal of the patent illegality exclusion, threatens to undermine investor trust. Government policies like the NHAI circular send mixed signals about India’s commitment to arbitration.

For India to emerge as a global arbitration hub, it must ensure predictable enforcement, minimise judicial intervention, and build institutional credibility. The decisive test lies in the lived experience of parties who choose or choose not to arbitrate in India. Only by passing this test can India genuinely reform domestic arbitration and attract the foreign investment essential for its economic future.