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Draft Arbitration Bill's Reliance on Missing Raises Governance Concerns
India's long-awaited arbitration reform has hit a paradoxical snag: the very institution meant to oversee modernisation remains a phantom. The , introduced to update the country's arbitration framework, repeatedly delegates critical functions to the (ACI)—a body that was legislated into existence in but has never been constituted. This contradiction has not gone unnoticed by the legal community, which now questions whether the government-dominated Council can ever serve as a credible regulator when the state itself is the nation's largest litigant.
The ACI was envisioned as a central coordinating body to grade arbitral institutions, accredit arbitrators, and promote uniform standards. Yet, nearly five years after the amendments to the , the Council remains a paper entity. Its absence has become an accepted part of India's arbitration landscape, but the latest reform proposals have thrust the vacuum into sharp relief.
The Phantom Regulator
The Draft Bill proposes a new Section 9A, which empowers arbitral institutions to appoint
, but mandates that such proceedings be conducted
"in the manner as may be specified by the Council."
Similarly, the proposed Section 34A introduces
, leaving their procedure to be "prescribed by the Council." Both provisions effectively hand over operational control to a body that does not exist.
's next phase of reform, therefore, rests on an institutional assumption that its previous phase never fulfilled.
This legislative blind spot stands in stark contrast to the ground reality. India's arbitration ecosystem has not stood still. Courts have continued to facilitate , and private institutions such as the have developed their own procedural rules and institutional practices without any central coordination. The result is an unusual duality: the law expects a regulator, but the market has learned to function without one.
The Credibility Conundrum
Critics have questioned the ACI's design since before the amendments were enacted. The central concern is whether a government-dominated regulator can impartially grade institutions and accredit arbitrators when the government itself is a party in a vast number of disputes. Similar concerns were recently echoed by retired Justice Badar Durrez Ahmed, who has publicly questioned the composition of the proposed Council. In his view, the government's dual role as both litigant and regulator creates an inherent that undermines the Council's credibility from the outset.
Justice Ahmed's remarks strike at the heart of the issue. Independent arbitration thrives on the . If the regulator is seen as an extension of the state, foreign parties and domestic litigants alike may view its decisions with suspicion. This is particularly damaging for India's aspirations to become a global arbitration hub, as institutional trust is a cornerstone of international commercial arbitration.
The Impact on
The ACI's absence has not prevented the growth of in India. Bodies like the MCIA, the , and the have carved out their own reputations. However, they operate in a . Without a , there is no uniform benchmark for quality or ethical standards. The Draft Bill attempts to address this by giving the ACI the power to set standards, but the irony is that the Council must first be constituted before it can do anything.
Legal practitioners note that the current uncertainty creates a . Parties considering Indian seats for arbitration may be hesitant if the oversight framework remains incomplete. The proposed appellate arbitral tribunal, for instance, is a welcome innovation aimed at reducing court intervention, but its viability depends entirely on the ACI prescribing its procedure. As long as the Council remains unconstituted, the provision is a .
The Bureaucracy vs. Reform Debate
Defenders of the government's approach argue that the ACI's delay is a matter of bureaucratic inertia rather than design. Setting up a new regulatory body involves inter-ministerial coordination, budget approvals, and personnel appointments—all of which take time. However, the fact that the Draft Bill continues to rely on the ACI suggests that the government sees the Council as essential, yet it has not prioritised its constitution.
This has led to criticism that the reform process is being driven by legislative ambition without corresponding administrative follow-through. The absence of the ACI is not a minor oversight; it is a structural flaw that could undermine the entire edifice of the proposed amendments. For the Bill to be effective, the Council must be operational before the new provisions take effect. Otherwise, the law will create obligations that cannot be fulfilled.
Wider Implications for the Legal Profession
For legal professionals, the ACI's absence represents both a challenge and an opportunity. On the one hand, the lack of a central regulator means that arbitral institutions currently self-regulate, which can lead to inconsistent practices. On the other hand, it gives the legal community a chance to shape the Council's design through advocacy. The , law firms, and arbitration practitioners have a vested interest in ensuring that the ACI is independent, transparent, and equipped with the right expertise.
The government's role as a major litigant also raises questions about the Council's composition. If the ACI is to have credibility, it must include representatives from the judiciary, the bar, and the private sector, not just bureaucrats. Justice Ahmed's critique highlights the need for a balanced composition that insulates the Council from executive influence. The Draft Bill, as it stands, does not provide sufficient safeguards.
A Crossroads for Indian Arbitration
India's arbitration reform is at a crossroads. The Draft Bill contains several progressive features, such as emergency arbitration and appellate tribunals, that could significantly reduce court congestion and attract international arbitration. However, these features are tethered to an institution that does not exist. The government must now decide whether to constitute the ACI swiftly or to decouple the new provisions from the Council's framework.
Either course has implications. Constituting the ACI without addressing its composition risks perpetuating the credibility problem. Decoupling the provisions, on the other hand, would require a fundamental rethinking of the Bill's architecture. What is clear is that the status quo is untenable. The legal community, represented by bodies like the and various high courts, has repeatedly emphasised the need for to thrive. The absence of the ACI is a bottleneck that must be resolved.
Looking Ahead
The continued absence of the is more than a bureaucratic delay; it is a symptom of deeper governance issues in India's arbitration landscape. The , for all its ambition, cannot succeed if it relies on a body that has never been brought to life. Legal professionals will be watching closely as debates the Bill, hoping that the lessons of the amendments are not repeated.
Ultimately, the credibility of India's arbitration framework depends on the independence of its regulator. As the government pushes forward with reform, it must ensure that the ACI is not just a statutory creation but a functional, impartial institution capable of commanding the trust of all stakeholders. Until then, the Draft Bill's reliance on the missing Council will remain a governance concern that cannot be ignored.
