India

• Introduction

• Courts' willingness to intervene in the arbitration process
• International commercial arbitration, foreign seats & contracting with Indian counterparties
• Appeals, setting aside and enforcement of domestic & foreign awards
• Consolidation
• Mandatory provisions
• Further details

Introduction

The Arbitration and Conciliation Act, 1996 (“Arbitration Act”), which is based on the UNCITRAL Model Law on International Commercial Arbitrations, governs arbitrations in India, the enforcement of foreign arbitral awards and other alternate dispute resolution mechanisms like conciliation and mediation.

Part I of the Arbitration Act governs arbitrations seated in India. Part I addresses procedural matters relevant to arbitrations in India, including the involvement of courts (support to appoint arbitrators, taking evidence etc.), timelines for arbitration proceedings and the scope of appeals and enforcement of domestic awards. Unless the parties have agreed otherwise, certain provisions of Part I of the Arbitration Act apply to international commercial arbitrations with a foreign seat (see further below).

Part II of the Arbitration Act governs the enforcement of foreign arbitral awards under the New York Convention and the Geneva Convention. If the seat of arbitration is a non convention jurisdiction, then the award can only be enforced by filing a separate suit.

The Arbitration Act was first amended in 2015 (“2015 Amendment Act”) with the intent to expedite arbitration proceedings in India and reduce court intervention. While it was initially uncertain whether the amendments were to apply retrospectively or prospectively, the Supreme Court clarified that the new amendments would be applicable retrospectively as well. 

Courts' willingness to intervene in the arbitration process

The Indian courts have historically been heavily involved in arbitral proceedings held in and outside India.

The approach adopted by the Indian courts has contributed to long delays and high costs of arbitration involving India and has been considered as being contrary to the intent and purpose of the Arbitration Act. The Supreme Court has actively encouraged the lower courts to adopt a less intrusive approach through a series of judgments. Whilst there has been a change in attitude of the courts, the various lower courts have been slow and inconsistent in following and implementing this guidance.

The amendments made to the Arbitration Act from time to time have been an active attempt to reduce court involvement in the arbitration process.

A court may be involved in various stages of the arbitration process as set out below (these provisions are in Part 1 of the Arbitration Act):

• Interim measures: a party can seek interim relief from a court at any time during the arbitration process (section 9). Courts cannot entertain applications in cases where the arbitral tribunal has already been set up. The power of the arbitral tribunal to pass interim orders has also been expanded and the Supreme Court has further reaffirmed the position that interim measures ordered by the tribunal are enforceable as if they were orders of a civil court;
• Appointment of arbitrators: a party can approach the court to appoint and constitute an arbitral tribunal if the contractually agreed appointment mechanism fails. The amendments made in the 2019 Amendment Act will empower graded arbitral institutions designated by the Supreme Court or High Courts to appoint arbitrators (section 11) once they are notified;
• Evidence: the arbitral tribunal, or a party with the approval of the arbitral tribunal, may apply to a court and seek assistance for taking evidence in the arbitral proceedings (section 27);
• Renewal of mandate: extension of the mandate of the arbitral tribunal beyond one year (six months for fast track arbitrations) has to be approved by the court (sections 29-A and 29-B);
• Setting aside an award: an arbitral award can be set aside by the courts on specified grounds (section 34) – refer to Appeals and setting aside awards below for more details;
• Appeals: a party can file an appeal (section 37) against (i) an order of the court refusing to refer parties to arbitration, granting / refusing interim protections and setting aside / refusing to set aside an arbitral award; and (ii) the arbitral tribunal’s determination of its jurisdiction or authority and its grant / refusal of interim protection; and
• Enforcement: interim orders and final awards (including under the New York and Geneva Convention) can be enforced through execution proceedings filed in an appropriate court (sections 17(2), 36, 48 and 57).

By extending the power of procedural review to arbitral tribunals and vesting arbitral tribunal with ancillary inherent powers, the Supreme Court has taken a positive step towards empowerment of arbitral tribunals.

Arbitrability of fraud has been a contentious issue in Indian arbitration. The Supreme Court has settled the debate by holding that: (a) allegations of fraud are arbitrable if the fraud does not “vitiate and invalidate the arbitration clause” or raise questions which affect rights in rem and therefore necessitate adjudication in the public domain; and (b) unless fraud is alleged against the arbitration agreement directly, it will not otherwise undermine the arbitration agreement itself.

The Supreme Court has also observed that all disputes relating to rights in personam are generally amenable to arbitration. Matters which are not arbitrable, however, include disputes relating to rights in rem, (including matters statutorily required to be adjudicated in a public or specialised forum, such as the debt recovery tribunal), crimes, matrimony, insolvency, winding up, guardianship, tenancy, (where the tenant enjoys special statutory protection), testamentary matters, trusts, and consumer protection.  

International commercial arbitration, foreign seats & contracting with Indian counterparties

An important point under the Arbitration Act which has been clarified in recent years has been the applicability of Part I of the Arbitration Act and the jurisdiction of the Indian courts in relation to arbitrations seated outside India. 

While the Supreme Court (in Bhatia International) initially held that Part I of the Arbitration Act did apply to arbitrations seated outside of India, its 2012 decision (in BALCO) held that Part I of the Arbitration Act was not applicable to arbitrations seated outside of India. The Arbitration Act now strikes a balance by providing that sections 9, 27, 37(1)(a) and 37(3) discussed above will apply to international commercial arbitrations seated outside India, unless the parties have excluded their application by mutual agreement (proviso to section 2(2)).

This optionality now means that parties to a contract involving an Indian counterparty which contains an arbitration clause with a foreign seat may wish to consider whether they should exclude those provisions by express language in their arbitration clause. However, not having the option of court intervention under the relevant sections where the subject matter of the investment is located in India could be a potential disadvantage.

The Supreme Court (in PASL Wind Solutions) has also further clarified that two Indian entities can agree to a foreign seated arbitration, which was thought to not be permitted, and that the arbitration would be an international commercial arbitration for the purpose of the proviso to section 2(2) above and that the award rendered would be a foreign award for the purposes of Part II of the Arbitration Act.

Appeals, setting aside and enforcement of domestic and foreign awards

A party may approach a court to set aside a domestic arbitral award within three months of receiving the award. A domestic arbitral award can be set aside by the court only if the following grounds specified in the Arbitration Act (section 34) are proved: (i) incapacity of a party; (ii) invalidity of the arbitration agreement; (iii) arbitral tribunal acting beyond its authority; or (iv) the award is in conflict with the public policy of India.

When the time limit to seek setting aside of a domestic award has passed, the award will be enforced in accordance with the provisions of the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the court. Further, even in a scenario where an application to set aside an award has been filed, the award will be enforceable unless the court that is entertaining the setting aside application has granted an order of stay on the operation of the relevant award (section 36).

Part II of the Arbitration Act regulates the enforcement of foreign arbitral tribunal awards under the New York Convention and the Geneva Convention. A party may approach an Indian court for the enforcement of a foreign arbitral award and submit before it: (i) the original award or its duly authenticated copy; (ii) the original agreement for arbitration or its duly certified copy; and (iii) evidence as may be necessary to prove that the award is indeed a foreign award.

The enforcement of a foreign arbitral award may be refused if the grounds specified in sections 48 and 57 are proved (respectively, for the New York Convention and the Geneva Convention). The grounds can be broadly classified into procedural irregularities of the award (including the incapacity of a party, inability of a party to present its case and the award being beyond the scope of the arbitration agreement) and substantive grounds of the award conflicting with Indian law (including that the subject matter is not capable of being settled by arbitration under Indian law or the award is in conflict with the public policy of India). 

The Arbitration Act has narrowed down the scope of the phrase “in conflict with the public policy of India” for Part I and Part II to awards that are: (i) induced / affected by fraud, corruption or breach of confidentiality of a conciliation proceeding; (ii) contravening the fundamental policy of law in India; or (iii) conflicting with the most basic notion of morality or justice. The Supreme Court has held that a two-tier appellate arbitration mechanism (parties providing for an appeal from the first-tier arbitration to another arbitral tribunal thereby giving two opportunities of arbitration to resolve their disputes) does not violate the public policy of India.

An important point to note in relation to enforcing foreign arbitration awards under the New York Convention in India is that Indian courts will only enforce an arbitration award from a New York Convention jurisdiction if that country has also been notified in India's Official Gazette as being one to which the New York Convention applies. Although most major seats of international arbitration have been gazetted (such as the UK, France, Sweden, Switzerland, Hong Kong and Singapore), not all New York Convention jurisdictions are gazetted. Therefore, if enforcement of a foreign arbitration award in India is likely to be required relying on the New York Convention, it is important to check that the seat of arbitration is in a jurisdiction which has been gazetted.

While the Arbitration Act is silent on the enforcement of a foreign arbitral award passed in a foreign seated arbitration in a non-convention country, the Supreme Court (in BALCO) clarified that a party may file a suit before an Indian court under Orders VI and VII of the Code of Civil Procedure, 1908 to enforce the arbitral award.

Consolidation

• a party cannot by agreement waive its right to: (i) object (section 4); (ii) file an appeal against certain orders of the court or arbitral tribunal (section 37); (iii) challenge the ineligibility of an arbitrator on specified grounds (section 12); and (iv) challenge competence of arbitral tribunal on grounds of lack of jurisdiction or authority (section 16(2) and (3)).

• the parties cannot exclude the power of a court to: (i) refer the parties to arbitration (section 8); (ii) appoint an arbitrator (section 11(4) and (6)); (iii) grant interim measures (section 9); (iv) determine costs (except if the parties have agreed to share the costs after the dispute has arisen) (section 31A); (v) assist in taking evidence (section 27); (vi) set aside an award (section 37); and (vii) enforce an award (section 36).
• the arbitral tribunal must comply with certain mandatory requirements including (i) have an odd number of arbitrators (section 10); (ii) have the power to pass interim orders (section 17); (iii) pass the award within specified time limit (section 29A and 29B); (iv) pass the award in the form specified in the Arbitration Act (section 31); (v) have the power to decide costs (except if the parties have agreed to sharing the cost after the dispute has arisen) (section 31A); (vi) have the power to fix the amount of deposits or supplementary deposits as advance for costs of arbitration (section 38(1)); (vii) have the power terminate the proceedings under specified circumstances (section 32); and (viii) have the power to correct its award (section 33).

The applicability of the extra-territorial provisions of Part I can be excluded by an agreement between the parties in the case of a foreign seated arbitration – refer to International commercial arbitration, foreign seats & contracting with Indian counterparties, above, for more details.

All the provisions of Part II of the Arbitration Act are mandatory.

Further details

For further details on Indian arbitration law please see the Arbitration and Conciliation Act, 1996 as amended from time to time (available to view online on the website of the Indian Institute of Arbitration & Mediation (follow “About Us/Resource Centre”)

Our special thanks go to Talwar Thakore & Associates (“TT&A”), a leading Indian law firm, for contributing these sections on Indian arbitration law and Indian arbitrators.

• Arbitrators' attitude to procedure
• Arbitrators' role in settlement
• Costs of arbitrations
• Arbitration institutions in India
• Availability of arbitrators

Arbitrators' attitude to procedure

The Arbitration Act does not specify any procedure that has to be followed for arbitration proceedings in India. The parties are free to agree to the procedure of the arbitral proceedings failing which, the arbitral tribunal may conduct the proceedings in a manner it deems appropriate (section 19).

Unless agreed by the parties, Indian arbitrators are not bound by the rules of evidence and may give weight to the documents submitted as they deem appropriate. They typically act in accordance with accepted legal principles.Arbitrators have generally been retired judges from the higher judiciary and senior lawyers; and their approach has been to follow the various formal rules of evidence resulting in detailed written pleadings and many oral hearings.

The Arbitration Act did not impose any time limit for arbitration proceedings, initially. The absence of a time limit, coupled with a preference for ad hoc arbitration over institutional arbitration resulted in protracted proceedings and high costs. The various amendments to the Arbitration Act seek to reduce delays by specifying time limits within which the arbitral tribunal must pass its award.

A new fast track procedure has been introduced under Part I of the Arbitration Act. The parties to an arbitration agreement may, before or at the time of appointing an arbitral tribunal, agree in writing to resolve their dispute by the fast track procedure which contemplates passing the award by a sole arbitrator based on written arguments and documentary evidence only. Oral hearing would be limited to necessary cases only.

Arbitrators' role in settlement

There is no obligation on the arbitrators to force or recommend the parties to settle but the Arbitration Act recognises that disputes can be settled. The arbitral tribunal can encourage settlement and pass orders to give effect to the settlement (section 30).

Costs of arbitrations

The cost of arbitrations in India is relatively high. This is largely due to protracted proceedings, limited number of good arbitrators (so competing timetables), and court involvement which can result in a multiplicity of proceedings.

Arbitration institutions in India

The various amendments to the Arbitration Act and the growth and use of arbitration institutions aim to address some of the issues mentioned above in relation to costs. The ICC and SIAC have chapter houses in India and we are seeing a growth of domestic arbitration institutions like the Indian International and Domestic Arbitration Centre, the Council for National and International Commercial Arbitration and the IMC Suresh Kotak International ADR Centre.

Other international initiatives have met with more mixed results. For example, in 2009 the LCIA established a specific India based institution with its own rules. However, due to insufficient case load, it closed its operations on 1 June 2016. The LCIA continues to administer ongoing LCIA India arbitrations & mediations as of 1 June 2016 from London. The LCIA will also administer future LCIA India arbitrations & mediations based on existing contracts that were entered into on or before 1 June 2016 containing LCIA India arbitration or mediation agreements. However, it no longer recognises arbitration or mediation clauses referring to LCIA India in contracts concluded after 1 June 2016. Click here for more.

SIAC has maintained Indian offices in Mumbai since 2013, and in Gujarat International Finance Tec-City since 2017. The Federation of Indian Corporate Lawyers (“FICL”) signed a memorandum of understanding with SIAC on 26 November 2022 to promote international arbitration as a preferred method for resolving global disputes.

The Mumbai Centre for International Arbitration was established in October 2016 and has been set up in association with the government of Maharashtra and arbitration experts. Its rules became effective from 15 June 2016 and have been drafted based on international best practices. The Delhi International Arbitration Centre, under the aegis of the Delhi High Court, has also gained momentum and the 60 day suggestive time limit set under the Arbitration Act on courts for appointment of arbitrators is seen as a major driver for this. 

The New Delhi International Arbitration Centre (“NDIAC”) has been established by the New Delhi International Arbitration Centre Act 2019. It has been created to improve management of domestic and international arbitration in the country. The NDIAC has taken over the infrastructure and other facilities of the International Centre for Alternative Dispute Resolution (“ICADR”) and has been declared as an institution of national importance. While these institutions are growing in popularity, their case load is not close to those of well-established international arbitral institutions. The New Delhi International Arbitration Centre Act, 2019 was amended in 2022 to facilitate arbitration proceedings and other forms of international and domestic alternative dispute resolution mechanisms. The NDIAC was also renamed to India International Arbitration Centre (“IIAC”).

The IIAC notified the India International Arbitration Centre (Criteria for Admission to the panel of arbitrators) Regulations, 2023 in March 2023. These regulations envisage the creation of a chamber of arbitration and set out the procedure for empanelment of arbitrators

Availability of arbitrators

Arbitrators for ad-hoc arbitrations in India are generally appointed from a limited pool of retired judges of the higher judiciary and senior lawyers. Arbitration institutions maintain their own list of empanelled arbitrators which has increased the available pool of arbitrators.

Our special thanks go to Talwar Thakore & Associates (“TT&A”), a leading Indian law firm, for contributing these sections on Indian arbitration law and Indian arbitrators.