The Chief Justice of India, Surya Kant, recently highlighted the ongoing absence of the Arbitration Council of India (ACI) as a significant impediment to India’s aspiration of becoming a preferred hub for arbitration. Six years have elapsed since the Arbitration and Conciliation (Amendment) Act, 2019, laid the foundation for the ACI, yet the Council remains unconstituted, raising concerns about India’s credibility in the global arbitration arena.
The Legislative Vision and Its Reality
The ACI was envisioned as a pivotal institution to bolster India’s transition to institutional arbitration, aiming to establish India as a leading international arbitration seat. However, despite this legislative intent, the Council’s absence persists, leaving a void in regulatory oversight. This issue has resurfaced in the legal discourse, notably through the pending Supreme Court case, Anil Kalyandas Thanvi v. Union of India. The case highlights the regulatory gap in trade-association arbitrations that the ACI was meant to address.
Parliament’s Original Objective
The ACI was conceived following recommendations from a High-Level Committee led by Justice BN Srikrishna in 2017, which identified India’s fragmented arbitration infrastructure as a barrier to institutional arbitration growth. The Council was intended to be the central body to ensure uniform quality standards and shift certain judicial functions to arbitration institutions. Whether this model remains suitable six years later is an open question, especially as the legislative framework continues to anticipate a Council that doesn’t exist.
Lessons from Unintended Developments
During this period, institutional arbitration in India has evolved independently of the ACI. The Draft Arbitration and Conciliation (Amendment) Bill, influenced by the TK Viswanathan Committee’s recommendations, remains unintroduced, yet it still assumes the ACI’s existence. Meanwhile, local arbitral bodies have independently developed procedural frameworks without the anticipated oversight.
Insights from Singapore’s Success
The Chief Justice’s comparison to Singapore’s arbitration success story underscores the importance of consistent institutional practice over mere legislative action. Singapore’s standing as an arbitration center stems from its well-established institutions and procedural integrity, built over decades rather than through a single legislative act. This highlights a key challenge for the ACI: it cannot simply be a legislative body but must cultivate trust and procedural consistency.
Rethinking the Council’s Structure
The stalled constitution of the ACI raises questions about its design, particularly its governmental dominance. Critics have long doubted whether a government-led body can impartially regulate arbitration, especially when the government is a major litigant. Section 43C of the Act centralizes power with the Union government, raising concerns about the Council’s credibility.
Potential for Redesign
Alternative models, like Singapore’s SIAC, offer insights into separating governance from adjudicative functions, with broader representation from the legal and business community. Revising Section 43C to balance government influence with input from arbitration practitioners and institutions could enhance the ACI’s legitimacy and effectiveness.
The delay in constituting the ACI exposes deeper institutional disagreements predating the 2019 amendments. Moving forward requires addressing whether the current design can adequately support India’s move toward institutional arbitration.
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Likhith Umesh is pursuing a B.B.A., LL.B. at MS Ramaiah College of Law, Bengaluru.
