Indian government proposes arbitration law reforms: The Draft Arbitration and Conciliation (Amendment) Bill 2024
India’s approach to arbitration has evolved significantly in recent years, reflecting its commitment to becoming a global hub for dispute resolution. Indian courts have shown increasing willingness to support arbitration by upholding the finality of awards and enforcing foreign arbitral awards under the New York Convention. Additionally, the establishment of dedicated arbitration centres, like the Mumbai Centre for International Arbitration (MCIA), highlights the country’s focus on enhancing its institutional framework. With its strategic position, growing economy, and legal modernisation, India is positioning itself as a favourable jurisdiction for arbitration in cross-border disputes.
A recent development in this area further highlights India’s pro-arbitration stance and its efforts to align its arbitration framework with international best practice through legislative reforms. On 3 November 2024, the Indian government closed a public consultation process to refine the country's arbitration framework. The consultation invited comments on the draft Arbitration and Conciliation (Amendment) Bill and this Perspective considers the key components of the draft. We also discuss how implementation of the Bill seeks to strengthen India’s arbitration ecosystem, positioning it as a hub for efficient dispute resolution.
Government objectives
The draft Bill focuses on addressing some of the long-standing challenges within India’s existing arbitration framework. The three primary objectives outlined by the Government are to:
- Promote institutional arbitration: the proposed reforms aim to shift the focus from ad hoc arbitration to institutional arbitration.
- Reduce judicial intervention: the proposals seek to minimise court interference, allowing arbitration proceedings to proceed smoothly without unnecessary delays.
- Ensure timely resolution of disputes: the Bill aims to expedite arbitration processes, addressing concerns over protracted dispute resolution.
Key changes in the draft Bill
The draft Bill introduces several notable changes, including:
- An express permissive provision to conduct arbitral proceedings virtually: this is in line with international arbitration best practice and ensures that arbitration remains flexible and can continue uninterrupted, especially where there are geographical constraints or in case of emergencies.
- A new emergency arbitration provision: the introduction of this provision is a clear recognition of the need for urgent relief in certain disputes. This feature aims to allow parties to seek interim measures before the constitution of the arbitral tribunal, addressing critical issues in a timely manner.
- Appellate arbitral tribunals: these tribunals will provide an additional layer of review within the arbitration framework and the stated intention is to provide parties with a mechanism to appeal arbitration awards without resorting to courts.
- Promoting efficiency in the arbitration process: the draft Bill proposes new time limits, including a 60-day time limit for disposing of court applications for referral to arbitration where there is an arbitration agreement and a 30-day limit for an arbitral tribunal to dispose of jurisdictional objections as preliminary issue.
- Enhanced support for institutions: the Bill also seeks to bolster the capabilities of arbitral institutions in India, ensuring they have the resources and framework to manage disputes effectively. This includes giving arbitral institutions the power to extend time limits to issue awards and to substitute arbitrators.
Comment
The Indian Ministry of Law and Justice has encouraged a broad spectrum of stakeholders to participate in the consultation process, which should assist in crafting amendments that reflect the needs of all parties involved in arbitration. Legal professionals have expressed cautious optimism about the proposals. While many appreciate the emphasis on institutional arbitration and reduced court intervention, there are understandable concerns regarding the potential complexity and costs associated with new and untried mechanisms, including appellate tribunals.
More widely, the amendments proposed in the Bill are part of a broader longer-term effort to position India as a preferred destination for arbitration and reflect the Government’s recognition of arbitration as a cornerstone of commercial activity in India. As the global business landscape evolves, India’s arbitration framework will inevitably adapt to remain competitive and responsive to the needs of businesses and investors. The Government has demonstrated its commitment to creating an effective system and the hope is that these reforms will pave the way for a faster and more efficient arbitration process in India.