Has an Arbitration Council been constituted? | Explained

The story so far: Nearly six years after the 2019 amendments to the Arbitration and Conciliation Act, 1996 (1996 Act), the Union government is yet to constitute the Arbitration Council of India (ACI), envisaged as the central regulatory and supporting body for institutional arbitration.

What was the proposed task?

The 2019 amendments proposed establishing the ACI as a leading regulatory body tasked with promoting, reforming and advancing the practice of arbitration in the country. This institutional framework is derived from the recommendations of the High Level Arbitration Committee chaired by Justice BN Srikrishna, which submitted its report in July 2017. The amendments have given the Council a wide range of functions, including rating of arbitral institutions, recognition of professional bodies that accredit arbitrators and depository of arbitral awards rendered in India. It was proposed that the ACI would be headed by a President appointed by the Union government in consultation with the Chief Justice of India. The Chairman may be a former Supreme Court judge, a former Chief Justice or Supreme Court judge, or a distinguished person with expertise in arbitration. In addition, the Council would consist of ex officio members from the executive branch.

What about institutional independence?

One of the main criticisms of the Council concerns the perceived lack of institutional impartiality. Most of its members are nominated or appointed by the Union government. This has raised concerns about the independence of arbitration in India, especially given that the government remains the sole major plaintiff. Experts have also warned that the government-dominated arbitration regulator, which has powers to rate institutions, accredit arbitrators and advise on policy, raises serious independence problems and finds little precedent in arbitration-friendly jurisdictions.

Concerns have also been raised about ACI’s role in the accreditation and rating of arbitral institutions. Although this framework is said to be inspired by regions such as Singapore and Hong Kong, an important distinction remains. In both jurisdictions, arbitration is administered primarily through a single, centralized arbitral institution rather than a regulatory body that oversees multiple institutions. The 2019 amendments give ACI the power to accredit an unlimited number of arbitral institutions; This is a feature that could dilute quality standards, impose significant administrative demands on the Council and increase costs to the public exchequer. Another concern relates to the exclusion of foreign lawyers from the pool of qualified arbitrators. Their exclusion could further weaken India’s attractiveness as a seat of arbitration for foreign parties.

What does the 2024 Draft mandate?

On October 18, 2024, the Union government published the draft Arbitration and Conciliation (Amendment) Bill, 2024, inviting public comments. The draft bill aims to give new impetus to institutional arbitration through a series of structural reforms. Introduces a revised definition of “arbitral institution” as a body or organization that conducts arbitration proceedings under its auspices, in accordance with its own rules of procedure or as otherwise agreed by the parties. This marks a departure from the 2019 amendments, which required institutions to be formally designated as arbitral institutions by the Supreme Court or Supreme Court.

The bill also proposes to expand the role of arbitral institutions by endowing them with powers that currently belong only to the courts. These include the power to extend the time limit for making an arbitral award, reduction of arbitrators’ fees where delays are attributable to the arbitral tribunal, and substitute arbitrators. These measures, if enacted, are expected to reduce judicial intervention. However, in March 2025, Union Law Minister Arjun Ram Meghwal, replying to a question in Parliament, said that the bill was still under consideration.

How does it limit judicial intervention?

Under the 1996 Act, Indian courts have the power to grant interim measures to protect the rights of parties in arbitration. Currently, such relief can be granted before or during the arbitral proceedings and even after the award is made but before it comes into force in India. The draft bill aims to recalibrate this role by limiting the courts’ power to grant interim measures to the period before the commencement of arbitration or after the award is made. It proposes to amend Section 9(2) of the Act, which currently requires arbitration to be commenced within 90 days of the court granting interim relief before arbitration. According to the proposed framework, this 90-day period will start from the date of application for interim measures. The stated purpose is to reduce delays caused by lengthy pre-arbitration court proceedings. Another important proposal is the introduction of a new Section 9-A, which allows parties to seek interim measures from the emergency arbitrator after the arbitration proceedings have commenced but before the arbitral tribunal is constituted.

What is the way forward?

According to the report headed by Justice BN Srikrishna, the continued dominance of ad hoc arbitration in India is primarily attributable to a strong preference for procedural autonomy. This preference is further strengthened by persistent skepticism towards domestic arbitral institutions, especially in terms of independence and administrative competence. Closing this trust gap is critical if Indian institutions are to compete with established global institutions.