Arbitration in India: The Cure That Became the Disease
Why Reforms Haven’t Worked
Lessons from Global Jurisdictions and the Road Ahead
By Vishwas Kumar
New Delhi: June 29, 2026:
India’s arbitration regime was envisioned as a faster, more efficient alternative to litigation, but decades of reform have not cured its chronic weaknesses. The Arbitration and Conciliation Act, 1996, modelled on the UNCITRAL Model Law, sought to reduce judicial interference and promote party autonomy. Yet despite amendments in 2015, 2019, 2021, and the Draft Arbitration Bill of 2024, arbitration in India often mirrors litigation—delayed, adversarial, and court-dependent.
One of the biggest hurdles is excessive judicial intervention. Courts continue to entertain challenges under Sections 11, 34, and 37, undermining arbitration’s finality. Even though the Supreme Court has clarified that courts cannot modify awards (Gayatri Balasamy v. ISG Novasoft) and must respect emergency arbitrator orders (Amazon v. Future Retail), High Courts frequently step in, eroding confidence in arbitration’s autonomy.
Another challenge is the dominance of ad hoc arbitration. Over 80% of disputes are resolved outside institutions, leaving proceedings vulnerable to inefficiency and procedural wrangling. Institutional arbitration, which thrives in Singapore through SIAC and in the UK under the Arbitration Act 1996, remains underdeveloped in India. Without strong institutions, arbitration cannot shed its reliance on courts.
Comparisons with global leaders highlight India’s shortcomings. The UK’s 2025 reforms codified arbitrator immunity and streamlined summary disposal of weak claims. Singapore’s SIAC enforces strict timelines and attracts international investors. The US Federal Arbitration Act, though older, reflects a strong pro-arbitration stance. India, by contrast, struggles with fragmented reforms and inconsistent enforcement.
The consequences are real. Infrastructure disputes drag on for years, MSMEs face conflicting precedents under the MSMED Act, and foreign investors hesitate to commit capital due to uncertainty in dispute resolution. Arbitration, meant to be the cure for litigation’s delays, has become the disease itself.
The way forward lies not in endless amendments but in ecosystem reform: strengthening arbitral institutions, training judges to exercise restraint, and reshaping party behaviour to treat arbitration as cooperative rather than adversarial. If India can achieve this cultural and structural shift, arbitration could finally fulfil its promise—delivering swift, credible justice and boosting investor confidence.
Origins and Legislative Framework
Arbitration and Conciliation Act, 1996: Modeled on the UNCITRAL Model Law, intended to reduce judicial interference and promote speedy resolution.
Amendments (2015, 2019, 2021, Draft 2024 Bill): Focused on institutional arbitration, emergency arbitrators, stricter timelines, and reducing court intervention.
Constitutional Context: Articles 226/227 empower High Courts to intervene, but Supreme Court rulings emphasize restraint to preserve arbitration’s autonomy.
Judicial Precedents in India’s Arbitration Landscape
The evolution of arbitration law in India has been shaped significantly by judicial precedents, which continue to define the contours of court intervention and arbitral autonomy. Three landmark cases illustrate this trajectory.
Gayatri Balasamy v. ISG Novasoft (2025) clarified the limited scope of judicial power under Sections 34 and 37 of the Arbitration and Conciliation Act. The Supreme Court held that courts cannot modify arbitral awards; they may only set them aside or uphold them. This ruling reinforced the principle of finality in arbitration, discouraging courts from stepping into the shoes of arbitrators and altering substantive outcomes.
Serosoft Solutions v. Dexter Capital (2025) further narrowed judicial oversight. The Court emphasized that High Courts may interfere with arbitral orders only when they are “perverse” or shockingly unreasonable. This precedent sought to balance judicial review with respect for arbitral independence, signalling that mere disagreement with an arbitrator’s reasoning is not enough to justify intervention.
Perhaps the most transformative case was Amazon.com NV Investment v. Future Retail (2021). Here, the Supreme Court recognized the enforceability of emergency arbitrator orders, a concept previously uncertain in Indian law. By affirming that such orders are binding, the Court aligned India with international best practices and paved the way for codification in the Draft Arbitration Bill, 2024. This decision was particularly significant for foreign investors, as it demonstrated India’s willingness to honour urgent interim relief granted outside traditional court structures.
Together, these precedents illustrate India’s gradual but deliberate move toward limiting judicial interference and strengthening arbitration’s credibility. Yet, the persistence of litigation culture means that courts remain heavily involved, often diluting the efficiency arbitration was meant to deliver. The challenge now lies in ensuring that these rulings translate into consistent practice across jurisdictions.
Persistent Challenges
Ad hoc vs Institutional Arbitration: Over 80% of arbitrations remain ad hoc, undermining efficiency.
Section 11 Bottleneck: Appointment of arbitrators often devolves into prolonged litigation.
Behavioural Issues: Parties import litigation culture into arbitration, contesting every procedural step.
Comparative Perspectives
Case Studies: Humanizing Arbitration
Infrastructure Dispute in Delhi Metro: Arbitration dragged for years due to repeated Section 11 challenges, defeating the purpose of speedy resolution.
Small Business vs PSU: MSME arbitration under Section 18 of MSMED Act saw conflicting precedents, leaving entrepreneurs in limbo.
FDI Investor Case: Foreign investors forced to exhaust domestic remedies for five years before international arbitration, discouraging investment.
Arbitration FAQ Index
What is arbitration? Arbitration is a private dispute resolution process where parties agree to submit their conflict to one or more arbitrators instead of courts. The decision, called an award, is binding.
How does arbitration differ from litigation? Litigation happens in public courts with judges, while arbitration is private, faster, and more flexible. Arbitration awards are final with limited scope for appeal.
What is the Arbitration and Conciliation Act, 1996? It is India’s primary law on arbitration, based on the UNCITRAL Model Law, governing both domestic and international arbitration.
What are ad hoc and institutional arbitration? Ad hoc arbitration is managed by parties themselves, while institutional arbitration is administered by recognized bodies like SIAC or ICAI.
Why is Section 11 significant? Section 11 empowers courts to appoint arbitrators when parties fail to agree, but frequent litigation under this section causes delays.
What is kompetenz-kompetenz? It is the principle that an arbitral tribunal can rule on its own jurisdiction, including objections to the validity of the arbitration agreement.
Can courts intervene in arbitration? Yes, but only in limited circumstances like appointment of arbitrators, enforcement of awards, or setting aside awards under Section 34.
What is an emergency arbitrator? An emergency arbitrator is appointed to grant urgent interim relief before the main tribunal is constituted.
Are emergency arbitrator orders enforceable in India? Yes, after the Supreme Court’s Amazon v. Future Retail ruling, emergency arbitrator orders are enforceable.
What is Section 34 of the Act? Section 34 allows parties to challenge arbitral awards in court on limited grounds like fraud, bias, or violation of public policy.
Can courts modify arbitral awards? No, courts can only set aside or uphold awards, not modify them, as clarified in Gayatri Balasamy v. ISG Novasoft.
What is Section 37? Section 37 provides for appeals against certain orders of arbitral tribunals and courts, but not against arbitral awards themselves.
How does the Limitation Act apply to arbitration? The Limitation Act applies to arbitration proceedings, meaning claims must be filed within prescribed time limits.
What is the MSMED Act’s role in arbitration? The MSMED Act mandates arbitration for disputes involving micro and small enterprises, often creating overlaps with the Arbitration Act.
What is the difference between “seat” and “venue”? The “seat” determines the legal jurisdiction and procedural law, while the “venue” is the physical location of hearings.
What reforms were introduced in 2015? The 2015 amendment reduced court intervention, introduced timelines, and promoted institutional arbitration.
What did the 2019 amendment achieve? It created the Arbitration Council of India to regulate institutions and introduced confidentiality obligations.
What was the 2021 amendment about? It restricted automatic stays on awards challenged under Section 36, aiming to prevent misuse by losing parties.
What is the Draft Arbitration Bill, 2024? It proposes codifying emergency arbitrators, strengthening institutions, and clarifying timelines for awards.
How does arbitration affect FDI? Efficient arbitration boosts investor confidence by ensuring quick dispute resolution, while delays discourage FDI.
What is institutional arbitration? Institutional arbitration is conducted under established rules of recognized arbitral institutions, ensuring discipline and efficiency.
Why is SIAC successful? SIAC thrives due to strong institutional support, clear rules, global credibility, and strict timelines.
What is the UK Arbitration Act 1996? It is the UK’s main arbitration law, emphasizing party autonomy and minimal court interference.
What reforms did the UK introduce in 2025? The UK codified arbitrator immunity, summary disposal of weak claims, and enforceability of emergency relief.
What is the US Federal Arbitration Act? The FAA (1925) enforces arbitration agreements and awards, reflecting a strong pro-arbitration stance.
How do US courts treat arbitration agreements? US courts generally uphold arbitration agreements, limiting judicial review to narrow grounds like fraud or bias.
What is the New York Convention? It is an international treaty ensuring recognition and enforcement of foreign arbitral awards across member states.
How does India enforce foreign arbitral awards? India enforces awards under the New York Convention, subject to limited exceptions like public policy violations.
What is kompetenz-kompetenz in practice? It means tribunals decide jurisdictional challenges first, with courts reviewing only after awards are challenged.
What role do High Courts play under Articles 226/227? High Courts can intervene in arbitration only in cases of perversity or violation of fundamental rights.
Can arbitral awards be appealed? No direct appeal is allowed; awards can only be challenged under Section 34 on limited grounds.
What is an Appellate Arbitral Tribunal (AAT)? It is a proposed mechanism in some reforms to allow limited appeals within arbitration itself.
How does arbitration impact small businesses? Arbitration can be costly and complex, but MSME-specific provisions aim to protect small enterprises.
Why do parties prefer litigation over arbitration in India? Because litigation is familiar, cheaper upfront, and courts are perceived as more authoritative.
What is the future of arbitration in India? With reforms and institutional strengthening, India aims to become a global arbitration hub, but cultural change is essential.
Op-Ed Style Closing Vision
Arbitration in India was meant to be the antidote to litigation’s delays, but it has mutated into the very disease it sought to cure. The repeated legislative tinkering—2015, 2019, 2021, and now the Draft 2024 Bill—has not addressed the cultural and systemic malaise. The problem is not the text of the law but the mindset of its users.
India’s arbitration ecosystem suffers from three interlinked failures: institutional weakness, judicial overreach, and adversarial party conduct. Institutions like SIAC in Singapore thrive because they enforce discipline, timelines, and procedural clarity. India’s arbitral institutions, by contrast, remain underutilized, underfunded, and overshadowed by ad hoc proceedings. Without credible institutions, arbitration cannot shed its dependence on courts.
Judicial overreach is the second failure. Despite Supreme Court pronouncements limiting interference, High Courts continue to entertain challenges at every stage. This undermines arbitration’s finality and erodes confidence among investors. The judiciary must embrace restraint, recognizing that arbitration thrives only when courts step back.
The third failure lies in party behaviour. Indian litigants approach arbitration with the same adversarial zeal as litigation, contesting every procedural issue. This cultural migration of litigation practices into arbitration has hollowed out its efficiency. Reform must therefore focus on changing behaviour, not just statutes.
Comparative lessons are clear. The UK’s reforms in 2025 codified arbitrator immunity, summary disposal, and enforceability of emergency relief—measures that enhance efficiency without sacrificing fairness. Singapore’s SIAC demonstrates how institutional arbitration can attract global confidence. The US, despite its wide judicial review, maintains a strong pro-arbitration stance that ensures predictability. India must learn from these models.
The way forward is not another amendment but a three-pronged vision:
Institutional Strengthening: Establish well-funded, credible arbitral institutions with statutory backing. Encourage parties to opt for institutional arbitration through incentives and mandatory clauses in government contracts.
Judicial Restraint: Train judges in commercial law and arbitration, create specialized benches, and enforce strict limits on intervention.
Cultural Shift: Educate lawyers and parties to treat arbitration as a cooperative resolution mechanism, not a battlefield. Promote mediation and conciliation alongside arbitration to reduce adversarial conduct.
India’s aspiration to be a global arbitration hub will remain elusive unless it addresses these systemic failures. Arbitration must reclaim its identity as a swift, efficient, and credible alternative to litigation. The vision is not merely legal—it is economic. Faster dispute resolution will boost FDI, ease of doing business, and investor confidence. Arbitration is not just about resolving disputes; it is about enabling commerce, fostering trust, and strengthening India’s global standing.
If India can transform arbitration from a disease back into a cure, it will not only heal its dispute resolution system but also unlock the potential of its economy. The time has come to stop amending the law and start reforming the ecosystem. Arbitration must be rescued from itself.
Jurisdiction — Key Features — Lessons for India
UK (Arbitration Act 1996, reforms in 2025) — Party autonomy, minimal court intervention, enforceability of emergency relief — Codify arbitrator immunity, strengthen institutional oversight
US (Federal Arbitration Act, 1925) — Strong pro-arbitration stance, wide judicial review scope — Balance autonomy with limited review
Singapore (International Arbitration Act) — Efficient institutional arbitration via SIAC, clear seat/venue rules — Build credible institutions, emulate SIAC’s discipline