Recent Amendments in Arbitration Laws in India: An Overview

Arbitration in India has undergone a major transformation over the past decade. What was once criticised for being slow, expensive, and riddled with excessive judicial interference is now on a path to becoming a globally competitive dispute resolution mechanism. The driving force behind this shift? A series of targeted amendments to the Arbitration and Conciliation Act, 1996 – in 2015, 2019, and 2021 – each building on the previous one to make arbitration faster, fairer, and more aligned with international standards.

Why were amendments needed in the first place? 🔗

The Arbitration and Conciliation Act, 1996 was originally modelled on the UNCITRAL Model Law and was a significant step forward when it replaced the outdated Arbitration Act, 1940. However, over time, serious problems emerged. Arbitration proceedings in India often dragged on for years with no statutory deadline for delivering awards. Courts frequently intervened at various stages, turning what should have been a quick alternative to litigation into something just as cumbersome. Costs kept escalating, and parties increasingly lost confidence in the system.

The Law Commission of India, in its 246th Report, highlighted these issues in detail and recommended sweeping changes. The government acted on these recommendations, and the result was the Arbitration and Conciliation (Amendment) Act, 2015 – the first of three significant amendments that would reshape Indian arbitration law.

The 2015 amendment: laying the foundation 🔗

The Arbitration and Conciliation (Amendment) Act, 2015 was promulgated as an ordinance on 23 October 2015 and later received parliamentary approval in December that year. It came into effect from the date of the ordinance itself. This amendment tackled several structural weaknesses in the arbitration framework.

Redefining the role of courts 🔗

One of the most notable changes was the amendment to the definition of “Court” under Section 2(e). For international commercial arbitration, the relevant court was restricted to the High Court only, removing district courts from the equation. This was a deliberate move because, as several experts noted, lower courts had often taken positions that were not favourable to arbitration. By channelling international arbitration matters exclusively through the higher judiciary, the amendment aimed to ensure more consistent and arbitration-friendly judicial oversight.

Additionally, Part I provisions – covering interim relief under Section 9, court assistance in taking evidence under Section 27, and appealable orders under Section 37 – were extended to apply to international commercial arbitrations even where the seat was outside India, subject to party agreement to the contrary.

Independence and impartiality of arbitrators 🔗

The 2015 amendment brought substantial changes to Section 12, which deals with the grounds for challenging an arbitrator’s appointment. Under the revised framework, any person approached for appointment as an arbitrator must make written disclosures about relationships or interests that could raise doubts about their neutrality. The amendment introduced the Fifth Schedule (listing situations requiring disclosure) and the Seventh Schedule (listing relationships that make a person ineligible to serve as arbitrator), both drawing significantly from the IBA Guidelines on Conflicts of Interest in International Arbitration.

This was a critical reform. Before the amendment, the standard for challenging an arbitrator was vague. Government entities, for instance, routinely appointed their own employees as arbitrators – a practice that raised obvious fairness concerns. The new provisions put specific, enforceable standards in place.

Time limits for arbitral awards – Section 29A 🔗

Perhaps the most impactful change introduced by the 2015 amendment was the insertion of Section 29A, which imposed a statutory time limit for delivering arbitral awards. Under this provision, an arbitral tribunal must render its award within 12 months. This period can be extended by up to six months with the consent of both parties. If the award is not delivered even within this extended period, the tribunal’s mandate terminates automatically – unless the court grants a further extension.

The section also introduced financial incentives and penalties. If an award is delivered within six months, the tribunal can receive additional fees. Conversely, if delays are attributable to the arbitrators, the court may reduce their fees by up to five per cent for each month of delay. Courts were also empowered to impose costs on parties responsible for unnecessary delays.

Fast track procedure 🔗

The 2015 amendment also introduced Section 29B, which provides a fast-track arbitration procedure. Parties can mutually agree to resolve their dispute through this expedited process, where the award must be delivered within six months. Under the fast track route, the arbitral tribunal decides disputes based on written submissions and documents, without the need for oral hearings unless the parties or the tribunal considers them necessary.

Limiting judicial interference with awards 🔗

The amendment narrowed the grounds on which a court can set aside an arbitral award under Section 34. The concept of “public policy of India” – a frequently misused ground for challenging awards – was clarified. An award would now be considered contrary to public policy only if it was induced by fraud or corruption, violated the fundamental policy of Indian law, or conflicted with basic notions of morality or justice. Crucially, the amendment explicitly stated that a mere review of the merits of the dispute would not qualify as a valid ground for setting aside an award.

Another important reform under Section 36 ensured that merely filing an application to challenge an award would no longer automatically stay its execution. The court would need to separately grant a stay, subject to conditions it deemed appropriate.

Empowering the arbitral tribunal 🔗

Section 17 was amended to empower arbitral tribunals to grant the same kinds of interim relief that a court can provide under Section 9. More importantly, such interim orders by the tribunal were made enforceable in the same manner as court orders. This was a significant step in reducing dependence on courts during the arbitration process.

The 2019 amendment: refining the framework 🔗

The Arbitration and Conciliation (Amendment) Act, 2019, which came into effect on 9 August 2019, built on the 2015 reforms. It addressed several gaps and ambiguities that had surfaced during implementation.

Establishment of the Arbitration Council of India 🔗

The 2019 amendment inserted Part IA into the Act, providing for the establishment of the Arbitration Council of India (ACI). This independent body was envisioned to promote arbitration and other ADR mechanisms in India. Its key functions include grading arbitral institutions based on infrastructure and quality, accrediting arbitrators, formulating training policies, and maintaining an electronic depository of arbitral awards made in India.

The amendment also introduced the Eighth Schedule, which set out the qualifications and experience required for arbitrators to be accredited. While well-intentioned, this schedule drew considerable criticism, as discussed later in the context of the 2021 amendment.

Changes to the appointment mechanism 🔗

Under the 2019 amendment, the Supreme Court and High Courts were empowered to designate graded arbitral institutions for the appointment of arbitrators, rather than courts doing it themselves. For international commercial arbitration, the institution designated by the Supreme Court would handle appointments. For domestic arbitration, the High Court-designated institution would take over. Where no such institution existed, the Chief Justice of the relevant High Court could maintain a panel of arbitrators.

Revised timelines under Section 29A 🔗

The 2019 amendment made an important adjustment to the 12-month deadline under Section 29A. The starting point for calculating the period was shifted from the date the tribunal enters upon reference to the date of completion of pleadings under Section 23(4). This gave parties a fairer window, since the earlier calculation method meant a chunk of the 12 months was consumed by preliminary steps. The amendment also exempted international commercial arbitrations from the mandatory 12-month deadline, though tribunals were still expected to resolve such matters as quickly as possible.

Confidentiality and arbitrator protection 🔗

The 2019 amendment introduced Section 42A, which mandated confidentiality of all arbitration proceedings by the arbitrators, arbitral institutions, and parties. The only exception was disclosure of the award itself where necessary for implementation and enforcement. Section 42B was also added to protect arbitrators from suits or legal proceedings for acts done in good faith.

Completion of written submissions 🔗

A new sub-section 4 was added to Section 23, requiring the statement of claim and defence to be completed within six months from the date the arbitrators receive notice of their appointment. This complemented the overall goal of making arbitration time-bound from start to finish.

The 2021 amendment: course corrections 🔗

The Arbitration and Conciliation (Amendment) Act, 2021, which received parliamentary assent on 10 March 2021 and is deemed to have come into force from 4 November 2020, made two primary changes.

Unconditional stay on awards tainted by fraud or corruption 🔗

The 2021 amendment inserted a proviso to Section 36(3), allowing courts to grant an unconditional stay on the enforcement of a domestic arbitral award if the court is satisfied on a prima facie basis that the underlying arbitration agreement, contract, or the award itself was induced by fraud or corruption. Before this, courts had discretion over whether to stay enforcement, but could not grant it unconditionally. This amendment was given retrospective effect from 23 October 2015.

This provision attracted mixed reactions. While it protects parties from enforcing awards tainted by dishonesty, critics have argued that it could become a tool for award-debtors to delay enforcement by simply alleging fraud. The amendment does not define what constitutes a “prima facie case” in this context, which leaves room for inconsistent judicial interpretation.

Removal of the Eighth Schedule 🔗

The 2019 amendment had introduced the Eighth Schedule, prescribing strict qualifications for arbitrators – including specific experience requirements and educational thresholds. This was widely criticised because it effectively barred foreign nationals from being appointed as arbitrators in India-seated arbitrations, undermining party autonomy and India’s image as an international arbitration hub. The 2021 amendment addressed this by deleting the Eighth Schedule entirely and replacing the relevant provision (Section 43J) to state that accreditation norms would be prescribed through regulations to be framed by the ACI, once established.

Impact and significance of the amendments 🔗

Taken together, the three rounds of amendments have substantially modernised India’s arbitration regime. The mandatory timelines under Section 29A have brought much-needed discipline. The neutrality requirements for arbitrators have increased confidence in the process. The reduced scope for judicial interference – through narrower grounds under Section 34 and the non-automatic stay provision under Section 36 – have brought India closer to international standards like those seen in jurisdictions such as Singapore and the United Kingdom.

India has also witnessed a rise in institutional arbitration. Centres like the Mumbai Centre for International Arbitration (MCIA) and the Delhi International Arbitration Centre (DIAC) have gained prominence. The judiciary has also supplemented legislative reforms through pro-arbitration judgments, limiting the scope of interference with well-reasoned arbitral awards.

Challenges that remain 🔗

Despite the progress, certain challenges persist. The Arbitration Council of India, envisaged under the 2019 amendment, has not yet been constituted. Several provisions linked to the ACI remain unnotified, creating a gap between the law on paper and its implementation. The unconditional stay provision introduced in 2021 remains a source of concern for its potential to slow down enforcement. Additionally, the rigid 12-month timeline, while effective against delay, has been criticised for being impractical in complex disputes that require extensive evidence and deliberation.

Party autonomy – one of the core principles of arbitration – continues to need careful balancing against regulatory oversight. The deletion of the Eighth Schedule was a positive step, but the regulations meant to replace it are still awaited.

Looking ahead 🔗

India’s arbitration law is a work in progress. The amendments of 2015, 2019, and 2021 reflect a clear legislative intent to make arbitration the preferred method for resolving commercial disputes and to position India as a credible seat for international arbitration. As the ACI becomes operational and the judiciary continues to develop consistent, pro-arbitration jurisprudence, the full potential of these reforms is likely to be realised. The government has also been considering further amendments to address remaining gaps, signalling that the reform process is far from over.

What do you think? Do you believe that the mandatory timelines under Section 29A strike the right balance between speed and fairness in complex commercial disputes? And with the Arbitration Council of India yet to be constituted, can India realistically achieve its goal of becoming a global hub for international commercial arbitration?

References

1. https://www.arbitrationindia.com/pdf/acact.pdf
2. https://prsindia.org/billtrack/the-arbitration-and-conciliation-amendment-bill-2015
3. https://www.pmindia.gov.in/en/news_updates/amendments-to-the-arbitration-and-conciliation-bill-2015/
4. https://repository.nls.ac.in/cgi/viewcontent.cgi?article=1039&context=nlsblr
5. https://www.indiacode.nic.in/show-data?actid=AC_CEN_3_46_00004_199626_1517807323919&sectionId=24531&sectionno=29A&orderno=31
6. https://singhania.in/blog/highlights-of-amendment-to-the-arbitration-and-conciliation-act-1996-via-arbitration-ordinance-2015
7. https://www.amsshardul.com/insight/arbitration-and-conciliation-amendment-act-2019-key-amendments/
8. https://prsindia.org/billtrack/the-arbitration-and-conciliation-amendment-bill-2019
9. https://dailyjus.com/world/2024/04/recent-amendments-in-indian-arbitration-and-conciliation-act-the-winds-have-begun-to-blow-for-the-resolution-of-complex-construction-disputes
10. https://www.mondaq.com/india/arbitration-dispute-resolution/1169106/arbitration-and-conciliation-amendment-act-2021-what-it-holds-for-foreign-investors
11. https://iamch.org.in/judiciary-executive-and-legislative-actions-in-making-india-arbitration-friendly