Arbitration Has Become The Disease It Was Meant To Cure. Why India’s Reforms Aren’t Working

Arbitration and other forms of alternative dispute resolution mechanisms (ADR) are a substitute for litigants so that they are not met with procedural complexities. Originally, the mechanisms were meant to positively serve parties involved, so that they could avoid conventional litigation.  The enactment of the Arbitration and Conciliation Act, 1996 and multiple rounds of legislative “reform”, concerns over cost, delay and court intervention continues to dominate discussions around arbitration in India, primarily attributable to the issues that have seeped into the "alternative" pathway to dispute resolution.

Recently, the Chief Justice of India Surya Kant observed at the 4th International Conference of the Indian Council of Arbitration that arbitration was becoming "the disease it was meant to cure".

The experience of the last decade dictates that since 2015, Parliament has amended the Arbitration and Conciliation Act with the objective of reducing judicial intervention, streamlining arbitral appointments and improving efficiency. Yet the Union Government's Expert Committee on Arbitration Law, constituted in 2023 to review the working of the arbitration regime, observed in its 2024 report that there remains an "overwhelming prevalence" of ad hoc arbitrations over institutional arbitration in India. The Committee also noted continuing concerns surrounding arbitration-related court proceedings and the overall effectiveness of the arbitration ecosystem.

Amar Gupta, Joint Managing Partner at JSA Advocates & Solicitors rejects the idea that legislative reform can solve arbitration's delays. In his view, those looking for answers in the text of the Arbitration Act are searching in the wrong place.

"The laws are only as good as the people who administer them," Gupta says.

According to him, delays arise from two distinct sources. The first lies within arbitration proceedings themselves. Despite arbitration's promise of speed and flexibility, inefficiencies in case management often undermine those objectives. To address this problem, Gupta advocates greater reliance on institutional arbitration.

His view finds support in the Government's 2024 Expert Committee on Arbitration Law, which observed that ad hoc arbitration continues to predominate despite sustained efforts to promote institutional mechanisms. Unlike ad hoc proceedings, institutional arbitration places parties and tribunals within a framework administered by an arbitral institution, which can oversee timelines, appointments and procedural compliance. The premise is straightforward: stronger institutional oversight produces greater procedural discipline.

The second source of delay, Gupta argues, lies at the arbitration-court interface. Arbitration remains dependent on courts for appointment proceedings, interim measures, challenges to awards and enforcement. Consequently, the efficiency of arbitration is often shaped by the efficiency of the judicial system itself.

Here, Gupta identifies both capacity and capability concerns. According to him, overburdened courts and a lack of specialised commercial expertise can result in delayed adjudication and poor-quality judgments, which in turn generate further challenge proceedings. The solution, he argues, lies not in further amendments to the Arbitration Act but in systemic reform, including a hierarchy of courts staffed by judges with adequate commercial and arbitration expertise.

"Unless we address these problems, no amount of legislative reform will bring about any significant change in arbitration in India," Gupta says.

Dr. Abhimanyu Chopra, Partner at AZB & Partners, identifies a recurring problem at the very threshold of arbitration. According to him, Sections 13 (procedure for challenging the arbitrator), 14 (termination of an arbitrator's mandate because the arbitrator cannot or should not continue), and 15 (substitute arbitrator appointed), often become sources of prolonged procedural litigation. More importantly, he points to Section 11 (appointment of arbitrators) proceedings as a major bottleneck.

Chopra emphasises that the law is now settled that courts exercising powers under Section 11 are ordinarily required to undertake only a prima facie examination of the existence of an arbitration agreement, leaving broader jurisdictional questions to the arbitral tribunal under the principle of kompetenz-kompetenz. Yet parties frequently raise objections relating to arbitrability, limitation, novation, validity of the arbitration agreement and other threshold issues, transforming what ought to be a summary exercise into extended litigation.

The significance of Dr. Chopra's observation lies not in what it says about Section 11, but in what it says about arbitration culture. The provision itself was designed to facilitate the commencement of arbitration. The delay arises because parties increasingly litigate procedural and jurisdictional questions before arbitration can even begin.

In that sense, the problem is not legislative. It is behavioural.

That is precisely the point made by Vyapak Desai, Counsel, India and Associate Member, 4 Pump Court, London.

"India does not need amendments to its law," Desai says. "What is required is to implement the existing law and procedures in letter and spirit with an intention to resolve the dispute".

His observation reflects a broader concern within arbitration circles that reform efforts have become excessively focused on statutory change. The Arbitration Act has been amended repeatedly. Courts have clarified the law on arbitral appointments, jurisdiction and enforcement. Yet parties continue to approach arbitration with a litigation mindset, treating every procedural issue as a matter requiring extensive contestation.

Desai therefore argues that arbitration now requires legitimacy rather than legislation.

Thus, the principal challenge confronting arbitration in India is no longer the text of the Arbitration and Conciliation Act but the the gradual migration of litigation practices into arbitral proceedings.

Importantly, that concern is echoed internationally. The 2025 Queen Mary University of London International Arbitration Survey identified excessive proceduralisation, adversarial conduct, extensive document production and weak case management as leading causes of inefficiency in arbitration proceedings.

Arbitration's difficulties today appear to stem less from what the law says than from how the system functions. The next phase of reform may have to move beyond legislation and focus instead on the ecosystem within which arbitration operates.