By strengthening its legal and institutional framework, India has risen to the position of world leader in international business arbitration. In an effort to streamline, neutralise, and finalise the settlement of disputes, the Arbitration and Conciliation Act of 1996 adhered to the UNCITRAL Model Law. A reduction in judicial authority, an increase in institutional arbitration, and simplification of enforcement were the goals of the revisions made in 2019, 20, and 2015. The fundamental problem with India's arbitration system is the disconnect between theory and reality.
Participation from the judiciary is a big problem. Arbitration decisions become subjective when courts use the public policy exception under Section 34, which hinders decision-making. Concerns about abuse arise since the 2021 amendment permits courts to postpone arbitral decisions in situations involving fraud or corruption, in contrast to other pro-enforcement measures. Institutional arbitration is non-existent due to the prevalence of ad hoc arbitration, rendering many firms inefficient and unjust.
If India wants to bridge the policy-reality gap, it needs to simplify its institutional arbitration procedures, minimise the length of time it takes to reach a judgement, and diminish the involvement of the court. India has the ability to better its business climate, pull in more investors, and preserve its reputation as a top international commercial arbitration venue if it constantly embraces these changes and respects international arbitration rule.
