Arbitration needs stronger teeth

Ever since the Modi government assumed control of the national government, the country's alternative dispute resolution (ADR) ecosystem has been undergoing changes and adjustments. With the amendments, particularly the Arbitration and Conciliation (Amendment) Act, 2021, and the proposed draft Arbitration and Conciliation (Amendment) Bill, 2024, India is beginning a new chapter in its arbitration ecosystem. These measures, which build on prior modifications in 2015 and 2019, seek to reduce judicial interference, enhance institutional arbitration, and match the country's dispute resolution framework with international best practices.

- P. MADHAVA RAO

The Arbitration and Conciliation Act of 1996, based on the UNCITRAL Model Law, was enacted to modernise India's arbitration landscape. However, later years showed other flaws, including excessive judicial interference, delays by courts in hearing the cases under Section 34, delays in appointment of arbitrators, and a lack of procedural clarity, and lack of awareness of party autonomy in arbitrator appointment. This resulted in a series of revisions intended to remedy these issues.

The 2015 Amendment Act was the first revision made to the Arbitration and Conciliation Act after the Modi government took office. This reform was a watershed moment because it addressed the automatic stay of awards, limited court interference in arbitral appointments, and created time limits for completing processes. It also changed the meaning of "court" in international commercial arbitration, directing such cases only to the High Court.