Arbitration Council of India

The Arbitration Council of India (ACI) is a delayed reform in India’s arbitration ecosystem. Nearly six years after its statutory creation, the ACI has yet to be constituted. Read here to learn more.

Arbitration has long been projected as a cornerstone of judicial reform in India, aimed at reducing court congestion, ensuring faster dispute resolution, and improving India’s attractiveness as a global investment destination.

The Arbitration and Conciliation (Amendment) Act, 2019, sought to institutionalise this vision by establishing the Arbitration Council of India (ACI) as a central regulatory authority for arbitration.

The Supreme Court’s recent direction to the Union government to respond to a petition seeking its establishment has revived concerns about regulatory inertia, judicial delays, and India’s failure to fully transition from ad hoc to institutional arbitration.

Arbitration Council of India

The Arbitration Council of India (ACI) is a statutory body envisaged under Part IA (Sections 43A-43M) of the Arbitration and Conciliation Act, 1996, introduced through the 2019 Amendment.

Its design draws heavily from the recommendations of the Justice B.N. Srikrishna Committee (2017), which highlighted that India’s arbitration system suffered from excessive court intervention, inconsistent standards, and weak institutional capacity.

Composition and Appointment:

• The ACI is to be chaired by a person appointed by the Union government in consultation with the Chief Justice of India, drawn from former Supreme Court judges, High Court Chief Justices, or eminent arbitration practitioners.
• Its membership includes arbitration experts, academicians, and ex officio government representatives.

Mandate and Functions

The Arbitration Council of India (ACI) was conceived as a central regulator to:

• Grade arbitral institutions
• Accredit arbitrators
• Maintain a repository of arbitral awards
• Promote institutional arbitration and other ADR mechanisms
• Frame uniform professional and ethical standards

In essence, the ACI was intended to bring predictability, credibility, and global confidence to India’s arbitration framework.

Why the Delay is significant

1. Institutional Vacuum in Arbitration Governance

• In the absence of the Arbitration Council of India (ACI), India continues to rely heavily on ad hoc arbitration, which often replicates the inefficiencies of litigation, high costs, procedural delays, and frequent court intervention.
• This undermines the core objective of arbitration as a swift and final dispute-resolution mechanism.

2. Independence and Conflict of Interest Concerns

• One of the most serious criticisms of the Arbitration Council of India (ACI) framework is its limited institutional independence.
• With significant government involvement in appointments, concerns arise regarding impartiality, especially since the government is the largest litigant in India.
• This risks eroding confidence among private and foreign investors.

3. Regulatory Overreach and Quality Dilution

• The ACI’s power to accredit an unlimited number of arbitral institutions may dilute quality rather than enhance it.
• Global arbitration hubs such as Singapore and Hong Kong rely on strong, independent flagship institutions (SIAC, HKIAC) rather than a state-controlled regulator overseeing multiple bodies.

4. Global Competitiveness and Exclusionary Policies

• India’s decision to restrict accreditation to Indian legal professionals limits its attractiveness as an international arbitration seat.
• Leading arbitration jurisdictions allow foreign arbitrators, which enhances neutrality, expertise, and investor confidence.

Draft Arbitration and Conciliation (Amendment) Bill, 2024: A Shift in Approach

The Draft Bill, 2024 attempts to modernise arbitration by strengthening arbitral institutions rather than courts:

• Redefines “arbitral institution” without requiring court designation
• Empowers institutions to extend timelines and adjust arbitrator fees
• Introduces emergency arbitration through a new Section 9-A
• Reduces judicial intervention during ongoing arbitral proceedings
• Aligns timelines to avoid delays caused by prolonged court hearings

While these reforms aim to enhance efficiency, their effectiveness depends heavily on a functional and credible regulatory ecosystem, precisely what the ACI was meant to provide.

Broader Implications

1. Judicial Decongestion and Ease of Doing Business

• Without strong institutional arbitration, courts continue to be burdened with commercial disputes.
• This directly affects India’s contract enforcement ranking and investor sentiment.

2. Rule of Law and Commercial Confidence

• A predictable arbitration regime reinforces the rule of law by ensuring contractual sanctity, time-bound justice, and minimal state interference.

3. Missed Opportunity in the Global Arbitration Market

• Despite being one of the world’s largest economies, India remains a marginal arbitration seat compared to Singapore or London, primarily due to regulatory uncertainty and institutional weakness.

Way Forward

• Immediate constitution of the Arbitration Council of India (ACI) with safeguards for institutional independence
• Reconsider government dominance in appointments to ensure neutrality
• Allow controlled participation of foreign arbitrators
• Focus on quality accreditation rather than numerical expansion
• Align arbitration reforms with global best practices (UNCITRAL, SIAC model)
• Ensure synergy between ACI, arbitral institutions, and courts

Conclusion

The prolonged delay in constituting the Arbitration Council of India reflects a deeper contradiction in India’s arbitration reforms: ambitious legislation without timely institutional follow-through.

While recent amendments signal a willingness to reduce court interference and empower arbitral institutions, their success hinges on an independent, credible, and professionally governed regulatory body.

Establishing the ACI is not merely a statutory obligation; it is essential for restoring confidence in arbitration, reducing judicial burden, and positioning India as a serious global hub for commercial dispute resolution.