Reimagining Arbitration In India: Key Features Of The Draft Arbitration And Conciliation (Amendment) Bill, 2024

The formal introduction of the concept of “seat” as distinct from “venue” in domestic arbitration, accompanied by an amended definition of “court” under the proposed Section 2A, is one of the most significant modifications suggested under the Draft Bill.

India’s arbitration regime has undergone multiple rounds of legislative reform over the years, all of which have attempted to increase procedural effectiveness and align the legal system with global norms. The Draft Arbitration and Conciliation (Amendment) Bill, 2024 (“Draft Bill”) is another step towards improving and modernizing India’s arbitration practices. This article discusses the primary ideas in the Draft Bill and how they fit into the larger legislative and policy processes affecting arbitration practice in the country.

Clarifying the “Seat” of Arbitration

The formal introduction of the concept of “seat” as distinct from “venue” in domestic arbitration, accompanied by an amended definition of “court” under the proposed Section 2A, is one of the most significant modifications suggested under the Draft Bill. The Draft Bill further bifurcates the definition of “court” into two distinct categories, one for domestic arbitration and another for international commercial arbitration (“ICA”). For domestic arbitrations where the seat has been designated or determined by the arbitral tribunal as per Section 20, “court” is defined to mean the court having pecuniary and territorial jurisdiction over the seat of arbitration. In all other cases, jurisdiction would lie with the court having pecuniary and territorial jurisdiction over the subject-matter of the dispute. Similarly, for ICAs, where the seat is designated or determined by the arbitral tribunal as per Section 20, the “court” would mean the High Court having territorial jurisdiction over the seat; or otherwise over the subject matter. This clarification is likely to reduce procedural ambiguities, particularly in light of conflicting decisions that have emerged when jurisdiction was claimed either on the basis of the cause of action or the seat.

In addition, under Section 20, the Draft Bill suggests two alternative formulations for choosing the seat in domestic arbitration. Option I affirms party autonomy, while Option II introduces a statutory fallback based on the place of contract execution or the cause of action. It seems that the dual-option model aims to strike a compromise between contractual freedom and forum certainty, allowing for both complicated and standardised commercial arrangements.

Statutory Recognition to Emergency Arbitration

The Draft Bill seeks to include Section 9A, which recognizes emergency arbitration and empowers arbitral institutions to select emergency arbitrators in addition to using inherent powers or specific provisions of the Specific Relief Act of 1963. This codifies the principle established by the Hon’ble Supreme Court in Amazon.com NV Investment Holdings LLC v. Future Retail Ltd., (2022) 1 SCC 209, which held that an emergency award under the SIAC Rules was enforceable under Section 17(2) of the Act despite the fact that it was not expressly recognised in the statute. Under the new provision, orders by emergency arbitrators under Section 9(2) would be enforceable like any arbitral tribunal’s order under Section 17(2). However, the Draft Bill limits this system to institutional arbitration exclusively, leaving out ad hoc arbitration, which remains a popular practice in India.

Further, if an emergency arbitrator’s order is enforced under Section 17(2) and is later vacated or modified by the constituted tribunal, the status of such partially executed reliefs remains unclear. The Draft Bill also does not specify whether such emergency orders are appealable under Section 37, thereby leaving a gap.

A Structural Innovation through Appellate Arbitral Tribunals and Remand of Awards

A significant structural feature of the Draft Bill is the proposed insertion of Section 34A, which establishes an Appellate Arbitral Tribunal (‘AAT’). This mechanism allows parties to mutually agree that challenges to an arbitral award under Section 34 be adjudicated by arbitral tribunal rather than the court. Where such an agreement exists, recourse to courts would be excluded. This innovation builds upon the Hon’ble Supreme Court’s approval of multi-tier arbitration in Centrotrade Minerals & Metal Inc. v. Hindustan Copper Ltd., (2017) 2 SCC 228.

While this change could reduce judicial backlog and enable specialised review, the Draft Bill does not prescribe further procedural safeguards such as timelines or grounds of challenge beyond what is already present in Section 34. Further, Section 36 has not been correspondingly amended, which may result in situations where stay of enforcement lies with the court while the challenge is pending before the AAT.

Simultaneously, the Draft Bill contemplates the partial setting aside of arbitral awards through the bifurcation of Section 34 into sub-sections 34(2) and 34(2A), now affirmed by the Hon’ble Supreme Court in Gayatri Balasamy v. ISG Novasoft Technologies Ltd., (2025) SCC OnLine SC 986. The recognition of partial annulment enables courts to maintain untainted sections of an award while returning specific matters to the arbitral panel for reconsideration. According to the proposed Section 34(7), such remand must be done either on the existing record or in the manner specified, with the tribunal bound by the findings that are not set aside. While the process may raise practical issues, such as addressing connected findings or reconstituting the tribunal as needed, it also provides a defined pathway for targeted rectification without invalidating the entire verdict.

Timelines, Interim Measures, and Institutional Empowerment

The Draft Bill includes or amends various provisions aimed at promoting expediency in arbitration-related proceedings. Section 9(1) is proposed to be amended to remove the words “or during” arbitral proceedings, effectively limiting court-ordered interim relief to the pre- and post-arbitration stages. In parallel, Section 9(3) is proposed to be deleted, removing the exception that allowed courts to entertain interim applications even after a tribunal is constituted where Section 17 relief was deemed inefficacious.

The Draft Bill also introduces clear timelines for how quickly certain arbitration-related matters must be decided. For instance, courts would need to decide applications under Section 8 within 60 days, make jurisdictional rulings under Section 16 within 30 days, and hear appeals under Section 37 within 60 days. These changes align with the Commercial Courts Act’s need for speedy adjudication and reflect the time-bound processes emphasized in cases such as Borse Brothers Engineers v. State of Maharashtra (2021) 6 SCC 460.

The Draft Bill further strengthens the function of arbitral institutions by changing the definition of “arbitral institution” and giving them the authority to extend mandates (Section 29A), determine arbitrator fees (post-omission of the Fourth Schedule), and appoint emergency arbitrators. This may help formalise India’s institutional arbitration framework and bring it closer to jurisdictions like Singapore or the UK.

Conclusion

The Draft Bill marks a promising step in India’s journey to strengthen and modernise its arbitration system. With key proposals like recognising emergency arbitration, clarifying court jurisdiction, and introducing an appellate arbitral tribunal, the Draft Bill sets the stage for a more structured and efficient framework. While some provisions may need further interpretation, especially through court decisions, the overall direction is encouraging. The impact of the Draft Bill will ultimately depend on how effectively courts, arbitral institutions, and legal professionals embrace and implement these changes.

Disclaimer – The views expressed in this article are the personal views of the authors and are purely informative in nature.