How Close Is India to Becoming a Global Leader in Arbitration?

This article has been written by Akshitaa Mathur, a passionate law student currently pursuing her undergraduate studies at Symbiosis Law School, Hyderabad.

***This article has been selected for LegalOnus Law Journal (LLJ) Volume 1, Issue 6, 2025

 Introduction

The central objective of this article is to explore how India can transform into a global hub for arbitration by scrutinizing its present disputes and potential challenges. To begin with, it is imperative to delve into understanding the notion of what is called ‘Arbitration’. The term ADR or Alternative Dispute Resolution primarily denotes some sort of out-of-court processes that are espoused to resolve disputes. Arbitration is considered one of the oldest forms of conflict resolution between private parties. It is a process whereby the parties opt for a private method of determining their conflict, by circumventing the need for court proceedings. It has been defined under the Arbitration and Conciliation Act, 1996[2] as “any arbitration whether or not administered by permanent arbitral institution”. Former Supreme Court judge, Hemant Gupta, who also stands as the chair of India International Arbitration Centre (“IIAC”), is positive that India is stepping in the right direction and has observed there has been a “sea-change” in the outlook of arbitration mechanisms in our country as far the last decade is concerned.

Global arbitration hubs are cities or regions that are identified for their powerfully built infrastructure, proficient and adept professionals as well as their user-friendly legal frameworks that lead their way to making them attractive for determining cross-border disputes. Let’s take for example, London, United Kingdom where the country’s prominence as a global arbitration hub grew circumspectly because of its reputation for neutrality as well as the strength and stability of English common law. As we know, the Singapore International Arbitration Centre (“SIAC”), has stood up as a prominent hub, due to factors such as contemporary modern infrastructure and strong government support that have contributed to Singapore’s success. Now, as far as the status of India is concerned, it is important to note that it has made some significant legislative changes to orient it with International Arbitration standards. Over the years, arbitration centres have been established in various parts of the country. Mr. Adarsh Saxena, director of international arbitration at Cyril Amarchand Mangaldas, also traces the swift rise of arbitration institutions “The Indian Council of Arbitration founded its headquarters at New Delhi in 1965. The Nani Palkhivala Arbitration Centre emerged in 2005 in Chennai marking the end of the forty-year period since ICA’s establishment. The new establishment known as the Delhi International Arbitration Centre began operations in 2009.”[3]

From Promise to Pitfall: Is India Truly an Arbitration Haven

The development of India into a worldwide arbitration center responds to both rising reforms together with major problems in the path. Federal policies aim to improve arbitration procedures but specific obstacles remain which halt its further development.

Under economic liberalization India has seen arbitration rise to become the preferred system over traditional litigation as a means to handle sophisticated business disputes. The Indian government is actively pursuing international recognition as a global arbitration center to reduce disputes about Indian parties and assets that seek resolution in foreign territories such as Singapore and Dubai. A stable arbitration environment with rapid dispute resolution needs to develop alongside minimal judicial intervention to reach this vision. A recent landmark decision by the Supreme Court bolstering our country’s position in the global arbitration landscape, addressed a contentious matter of whether arbitration agreements contained in unstamped or insufficiently stamped instruments are admissible in evidence. In December last year, a seven-judge bench of the Supreme Court delivered a unanimous ruling in the case In re: Interplay between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899[4]. The Court clarified that while such agreements are initially inadmissible due to a curable defect, this does not render them void or unenforceable. By overturning the earlier decision in NN Global Mercantile Pvt. Ltd. v. Indo Unique Flame Ltd.[5], the Court resolved uncertainty surrounding objections to under-stamping or non-stamping at the time of deciding applications under Sections 8 and Section 11 of the Arbitration Act[6].

This ruling is significant for India’s arbitration ambitions. By reducing procedural bottlenecks and ensuring that arbitration agreements are not invalidated over technical defects, the Supreme Court has sent a strong signal to the global community. Such clarity in the legal framework enhances India’s credibility as an arbitration-friendly jurisdiction and demonstrates the judiciary’s commitment to fostering a robust and efficient arbitration ecosystem. Notably, a deliberate move towards alternative conflict resolution procedures is shown in the adoption of new rules for arbitration and mediation in domestic public procurement contracts. These rules are intended to simplify procedures and lessen the need for conventional litigation.

Under Prime Minister Narendra Modi’s leadership, the administration took the first step by creating India as an international arbitration centre. The New Delhi International Arbitration Centre (“NDIAC”) Bill established a self-regulated body for dispute resolution services and to take over ICADR operations for NDIAC operations.[7]. In April 2024 Indian Vice President Jagdeep Dhankhar observed that every essential element exists for India to develop into a worldwide arbitration centre. During his speaking engagements, he showed strong opposition to treating arbitration as an extra path within standard legal proceedings. In DMRC Ltd. v. Delhi Airport Metro Express (P) Ltd[8], Vice President Dhankhar pointed out based on Indian Supreme Court’s recent trends, arbitral awards receive normal approval until there is an objection, further appeal, and a strong trend to secure the Indian Supreme Court’s authority in reviewing any court or tribunal decision.

When we talk about the concept of “arbitration friendliness”, its various practical considerations significantly influence the success of India as an arbitration destination. Arbitration friendliness refers to a jurisdiction’s overall approach to supporting and facilitating arbitration, including the legal framework, judicial attitudes, and procedural efficiency. A robust legal structure aligned with international norms, such as the UNCITRAL Model Law, ensures parties feel secure about the predictability and neutrality of the arbitration process.

Additionally, the attitude of the judiciary plays a crucial role. Minimal interference from courts, swift enforcement of arbitral awards, and arbitration-savvy judges create an environment of trust and efficiency. Practical aspects such as accessibility, cost-effectiveness, and the availability of skilled arbitrators also weigh heavily on a jurisdiction’s appeal. Modern infrastructure, state-of-the-art hearing facilities, and user-friendly institutions can further enhance a destination’s attractiveness. Ultimately, a successful arbitration hub provides not just procedural and legal certainty but also logistical ease and economic feasibility for parties.

According to recent government legislation including the New Delhi International Arbitration Centre (“NDIAC”) Bill, 2018 introduced to Lok Sabha India aims to establishing itself as an arbitration ADR destination comparable to London, Paris, Geneva and Singapore and New York..[9]

On Indian front, while Prime Minister Narendra Modi has already stressed the government’s inclination towards arbitration through his valedictory address at the National Institution for Transforming India [“NITI”] Aayog conference ‘National Initiative towards Strengthening Arbitration and Enforcement in India, the Union law minister adhered to the same statement at international level – Brazil, Russia, India, China, South Africa [“BRICS”] summit in 2016. Indeed, it is obvious that New Delhi International Arbitration Centre’s [“NDIAC”] development to the level of “institution of national importance” is a clear indication, that the government is serious about the implementation of this ambitious plan. It seems realistic to exhort this initiative as it raises several relevant questions such as whether India’s being a global arbitration hub will happen just by opening plenty of centres of arbitration.

The Way Forward

What India needs right now, is a more comprehensive and well-defined legal framework for arbitration and its proceedings. Lawmakers must thoroughly understand the unique challenges and needs of businesses that frequently engage in arbitration. Clearer and more precise rules are essential to instil greater confidence in arbitration as an alternative to the traditional judicial system. Currently, many businesses remain hesitant to rely on arbitration, especially in high-stakes matters, due to the perceived uncertainties and risks involved.

A key area requiring reform is the level of court intervention in arbitration. While courts play a necessary role in certain aspects, excessive involvement—both during and after arbitral proceedings—undermines the efficiency and neutrality that arbitration promises. Parties often choose arbitration to avoid judicial delays, but frequent court interference can lead to frustration and hostility toward the judicial system.

To address this, it is critical to limit the scope of judicial intervention, particularly in challenging arbitral awards under Section 34 of the Arbitration and Conciliation Act, 1996[10]. Reducing the grounds for contesting awards and ensuring minimal interference at all stages of arbitration will help create a more predictable and arbitration-friendly environment. Such reforms are crucial to building trust in arbitration as a trusted and effective mechanism for resolving business disputes in India.

Though arbitration procedures move faster than court proceedings, these steps still take too long to stop document denial and evidence destruction which can seriously damage the outcome. To develop into an international arbitration centre, India needs ‘emergency arbitration’ systems first. In 1990 the International Chamber of Commerce initiated the idea of emergency arbitration when officials recognized major court and tribunal limitations in issuing urgent rulings.[11] Over time international arbitration entities including Singapore International Arbitration Centre [“SIAC”], London Court of International Arbitration  [“LCIA”], and Hong Kong International Arbitration Centre [“HKIAC”] followed suit and brought emergency arbitration into their practice. You can start an emergency arbitration process only after meeting all the required conditions for a valid arbitration agreement. Lawful parties can choose emergency arbitration except when they avoid this remedy in advance. The emergency tribunal does not have the power to protect parties from legal action so they can use regular courts for help.[12]

Emergency arbitration helps protect privacy while offering urgent results at lower overall costs through one unified process. By delegating full authority for relief to the emergency arbitrator this system simplifies proceedings and keeps outcomes consistent across multiple courts. Emergency arbitration offers important advantages yet struggles, mainly because India does not have specific laws to recognize and enforce these decisions. Judges in each legal area approve emergency arbitrator orders differently because courts lack standard enforcement rules. Basic rules about emergency arbitration need development since Indian laws do not specify this practice specifically.[13]

Recommendations

International arbitration demands three crucial components for India to establish itself as a leading arbitration centre. India requires fundamental changes in these three aspects to maintain parity with established international arbitration hubs. India requires five fundamental standards to maintain parity with top international arbitration sites.[14]

Those are:

Recognition of party autonomy:

In international arbitration party freedom stands as the main principle.

In what terms exactly do we define party autonomy? Party autonomy extends to granting control over dispute arbitration and selection of arbitration forum and governing legal framework to parties involved. It also means recognising that parties should maintain complete discretion in arbitrator selection as well as this fundamental freedom to choose their representatives, and indeed, advocates. The proper establishment of trust between parties depends on this foundation because it drives necessary confidence-building practices.

The Supreme Court ruling in PASL Wind Solutions Pvt Ltd v. GE Power Conversion India Pvt Ltd.[15] now allows Indian parties to select arbitration venues outside their borders. Additionally, this ruling enables the enforcement of foreign awards between Indian parties when seated outside of India. Outside India, any award serves as a foreign award subject to enforcement under the New York Convention.

Strong home-grown arbitral institution(s):

India counts above 35 arbitral institutions within its borders. Institutional arbitration has The Indian judiciary firmly endorsed institutional arbitration by officially creating High Court centres. Justice BN Sri Krishna gave insights through his significant 2017 report which highlighted that the quality of these institutions varies in terms of:

• Both efficiency and speed as the arbitration process should prioritize the quick and seamless resolution of disputes;
• Facilities and resources must support a smooth and professional arbitration experience;
• qualified arbitrators; and
• High quality awards.[16]

The activity of selecting a seat of arbitration proves challenging for India as numerous nations designate different locations as arbitration centres. Multiple Indian cities exist which have the potential to become centres for arbitration but most of these locations require standardization. They need standardized benchmarks along with unification processes. Through its operations, the Arbitration Council has the potential to positively shape legal processes for businesses. These benchmarks require establishment as a first step toward achieving harmonization. Executives conducting business should expect more certainty from arbitration institutions under these benchmark procedures. Various Indian arbitral institutions.

Arbitrators’ independence and impartiality

Global leadership in commercial arbitration depends on the arbitration community having access to independent and trained arbitrators of high quality standards. The calibre of an arbitrator exists somewhat in how different observers interpret it. India aims to attract parties who will choose Indian arbitration facilities but these same entities seek arbitrators located across the worldwide network. The world contains high-quality arbitrators who operate from locations worldwide. As with India’s potential, the growth potential for India to become an international arbitration hub extends to Indian lawyers. Ex-judges and former judges can now establish themselves as arbitrators who attract clients beyond Indian borders. This opportunity remains unfulfilled to date.[17]

To wrap up, let me leave you with three focal points: two to reflect on, and one prospective.

Firstly, India possesses a comprehensive base that allows it to pursue its target of becoming an international arbitration centre. The country is well-positioned to take its place as a top international arbitration hub.

Secondly, the nation stands at its closest point in history to establishing itself as an international arbitration hub. Dialogue with mutual interaction at events like the Delhi Arbitration Weekend, NITI Ayog, etc provides a foundation to increase development foundation.

Lastly, it can be confidently said that recent amendments assure their ability to attract international parties toward arbitration choices in India. The amendments encourage international stakeholders to select India as their arbitration location. The Arbitration Council needs substantial attention during the implementation process to achieve its objectives.

As rightly said,

“An enabling alternate dispute resolution ecosystem is a national priority for India. We need to promote India globally as an arbitration hub.

As Roscoe Pound famously remarked- The law must be stable but it must not stand still.”

Hon’ble Prime Minister of India

Mr. Narendra Modi

[1] Ian Thomas, ‘ Weighed Down’ (Indian Business Law Journal, 9 September 2024), <https://law.asia/indian-arbitration-hub-progress/#>.

[2] Arbitration and Conciliation Act 1996, s 2(1)(a).

[3] Supra 1.

[4] (2023) 15 S.C.R. 1081.

[5] N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2023) 7 SCC 1.

[6] Arbitration and Conciliation Act 1996, ss 8 & 11.

[7] Saloni Jaiswal, ‘The Way Forward: An Analysis of India’s New Guidelines for Arbitration and Mediation in Contratcs of Domestic Public Procurement’ (The American Review of International Arbitration- Columbia Law School, 24 September 2024) <https://aria.law.columbia.edu/the-way-forward-an-analysis-of-indias-new-guidelines-for-arbitration-and-mediation-in-contracts-of-domestic-public-procurement/?utm_source=chatgpt.com&cn-reloaded=1>.

[8] DMRC Ltd. v. Delhi Airport Metro Express (P) Ltd., 2021 SCC OnLine SC 3613.

[9] Somesh Dutta, ‘How Realistic is India’s Dream of Becoming a Global Arbitration Hub?’ (The Wire, 30 April 2018) <https://thewire.in/law/india-global-arbitration-hub-modi-government>.

[10] Arbitration and Conciliation Act 1996, s 34.

[11] Tanisha Arora, ‘The Way Forward for Emergency Arbitration in India’, (NLIU Law Review, 11 June 2024), <https://nliulawreview.nliu.ac.in/blog/the-way-forward-for-emergency-arbitration-in-india/>.

[12] Supra 11.

[13] ibid.

[14]‘Establishing-India-as-a-Leading-Hub.Pdf’<https://www.debevoise.com/-/media/files/insights/publications/2023/03/establishing-india-as-a-leading-hub.pdf> accessed 24 January 2025.

[15] Pasl Wind Solutions (P) Ltd. v. GE Power Conversion (India) (P) Ltd., (2021) 7 SCC 1.

[16] Supra 14.

[17] Supra 14.