Arbitration in India has evolved into a central pillar of the country’s dispute resolution framework, offering an alternative to traditional court litigation. It is a process in which parties to a dispute agree to submit their differences to one or more arbitrators, whose decision—known as an award—is binding on them. The primary purpose of arbitration is to provide a fair, efficient, and less formal forum for resolving disputes, often with the advantage of confidentiality and expertise in the subject matter.
The statutory foundation of arbitration in India is the Arbitration and Conciliation Act, 1996, which consolidated and modernised the law relating to domestic arbitration, international commercial arbitration, and enforcement of foreign arbitral awards. This Act was inspired by the UNCITRAL Model Law on International Commercial Arbitration and the UNCITRAL Arbitration Rules, ensuring that India’s arbitration law aligns with globally accepted practices. Over the years, the Act has been amended—most notably in 2015, 2019, and 2021—to address concerns about delays, court intervention, and institutional capacity, all with the aim of making India a more arbitration-friendly jurisdiction.
Arbitration offers several advantages over traditional litigation. Proceedings are generally quicker, allowing parties to avoid the years-long delays common in Indian courts. Arbitrators can be chosen for their expertise in the relevant field, ensuring that the decision-maker understands the technical or commercial nuances of the dispute. The process is also more flexible—parties can decide procedural rules, timelines, and the venue, which can even be outside India for international cases. Moreover, arbitration proceedings are typically confidential, protecting sensitive commercial information from public scrutiny, unlike court cases which are a matter of public record.
However, arbitration in India has not been without challenges. Historically, excessive judicial intervention hindered its efficiency. Courts often entertained petitions challenging arbitral awards on expansive grounds, which diluted the finality and speed of the process. The 2015 amendments to the Act sought to address this by restricting the scope of judicial review and mandating that arbitral proceedings be completed within twelve months, extendable by six months with party consent. They also introduced measures to ensure neutrality and independence of arbitrators, such as disclosure requirements and a schedule specifying grounds for ineligibility.
Institutional arbitration has been promoted in recent years as a way to improve the quality and speed of arbitration in India. Institutions like the Mumbai Centre for International Arbitration (MCIA) and the Delhi International Arbitration Centre (DIAC) offer professional case management, established procedural rules, and administrative support, reducing the risk of procedural delays that can occur in ad hoc arbitrations. The Supreme Court has also repeatedly stressed the importance of minimal judicial interference and encouraged a pro-arbitration approach in its rulings, strengthening party autonomy and respecting the sanctity of arbitration agreements.
In the context of international commercial arbitration, India is a signatory to the New York Convention, which facilitates the recognition and enforcement of foreign arbitral awards in over 160 jurisdictions. This international commitment, coupled with domestic reforms, has aimed to enhance India’s standing as an arbitration hub, particularly in Asia. Yet, enforcement challenges and occasional delays in court proceedings continue to affect the perception of India’s arbitration landscape.
Landmark judicial decisions have shaped the contours of arbitration law in India. In Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (BALCO), the Supreme Court clarified that the 1996 Act is seat-centric and that Part I does not apply to arbitrations seated outside India, bringing the law in line with international practice. Similarly, in Swiss Timing Ltd. v. Commonwealth Games 2010 Organising Committee, the court reaffirmed that arbitration agreements are to be interpreted liberally, favouring their validity.
Arbitration’s growing acceptance in India reflects both necessity and design. The overburdened judicial system makes alternative dispute resolution essential, while legislative and judicial trends indicate a concerted effort to align with global best practices. Nevertheless, the success of arbitration as a preferred mechanism depends on continued reforms, institutional strengthening, and a cultural shift towards respecting party autonomy and the finality of arbitral awards.
In its present form, arbitration in India stands at a promising crossroads—firmly grounded in a modern statutory framework, increasingly supported by a pro-arbitration judiciary, and poised to evolve into a faster, more reliable, and globally competitive dispute resolution mechanism. It embodies the potential to balance efficiency with fairness, offering disputing parties a way to resolve conflicts without the burdens of protracted litigation, and to do so in a manner that is both commercially sensible and legally sound.
Contributed by : Kavi Nandan Biswas (intern)