The Legal Department begins to fill gaps in arbitration law as directed by the Supreme Court

One said the Supreme Court's instructions would be followed, adding that legal research on the judgment would begin this week.

This is because the ministry is engaged in the Arbitration and Reconciliation (Amendment) Act, which was published in 2024 and its draft was released in October 2024 for comment and feedback. The bill aims to promote institutional arbitration, reduce court arbitration intervention and ensure a timely end of the arbitration process.

“The Law Department has also received ongoing feedback on the bill it is working on. Public consultation is also for the Arbitration and Mediation Act (Amendment) Act. Now, the Honorable Supreme Court has directed the department to resolve the issue and start working immediately.”

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The Supreme Court urged the ministry to resolve the gap in a process where there is no law at all. This is part of a judgment on the power of the arbitral tribunal to include in dispute litigation the power of the non-signer of the arbitration agreement.

In case ASF Buildtech Pvt Ltd v. Shapoorji Pallonji and Company Pvt LtdJudges JB Pardiwala and R Mahadevan said that despite decades of practice under the Arbitration and Mediation Act of 1996, these actions continue in domestic arbitration laws, despite decades of practice.

“It is indeed very sad to note that even after years of procedural issues such as the current case involvement continue to plague India's arbitration system,” Judge Padivara said in his judgment.

“A disgust of business”

“What is clearly missing in the bill… Despite the decisions made by this court and the decisions of various High Courts, it is still missing in the Arbitration and Settlement Act of 2024, which underscores the need for statutory recognition of such powers to eliminate all the possibility of confusion,” the top court said.

The Supreme Court also said it emphasized in its decision to amend the arbitration award last week that any uncertainty in the arbitration law would be “a disgust for business and business.”

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However, policy experts say that amending the arbitration law to fill all such gaps will only increase interventions from the judiciary.

“Arbitration should involve limited judicial intervention, and the arbitration law can only help in procedural issues related to the courts – appointing an arbitrator or appealing an arbitral award,” said Alok Prasanna. “The issue highlighted by the Supreme Court is a problem with general procedural law. However, the arbitration law in the country (i.e. legislation) cannot resolve all such issues of procedural law, as arbitration should be conducted in accordance with the procedures set by the parties in the arbitration agreement and the arbitrator application, rather than by following a complete procedure.”

For decades, the Arbitration and Reconciliation Act of 1996 has been the most critical arbitration law in India. It was revised in 2015, 2019 and 2021. Under the 2019 Amendment, the government aims to establish the Arbitration Commission of India (ACI) to develop standard procedural rules and is also a regulatory framework for arbitrators and arbitration institutions. However, the ACI has not yet been formed.

In February 2024, the Senior Arbitration Reform Commission, chaired by former Lawyer Minister TK Viswanathan, concluded that large-scale reforms are needed in the field. The panel proposed a technical legal reform in arbitration that was implemented to some extent in the draft amendment of 2024. For example, arbitration is allowed electronically, without legislative support.

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However, key recommendations regarding appointing arbitrators and disclosures have not found any legislation to exist. The Viswana Hill Commission recommends that arbitrators should disclose the number of arbitration matters they handle and should not exceed 15.

The committee also proposed a unified model rule for the rules of arbitration proceedings to help arbitrators who are technical experts and have no legal background.