In a significant observation regarding India’s arbitration framework, the Supreme Court on Friday highlighted that procedural hurdles continue to persist despite several legislative amendments aimed at streamlining the arbitration process. The bench comprising Justices J B Pardiwala and R Mahadevan called upon the Centre to revisit and revise the proposed Arbitration and Conciliation Bill, 2024, to address lingering legal ambiguities.
The remarks came while dismissing an appeal against a July 2024 order of the Delhi High Court in an arbitration matter. The High Court had upheld an arbitral tribunal’s decision rejecting a challenge raised by a non-signatory party questioning the tribunal’s jurisdiction. The appellant contended it could not have been impleaded in the proceedings without being a signatory to the arbitration agreement.
In its detailed 191-page judgment, the apex court noted, “It is indeed very sad to note that even after these many years, procedural issues such as the one involved in the case at hand, have continued to plague the arbitration regime of India.”
The bench criticized the Arbitration and Conciliation Bill, 2024, for failing to address key procedural gaps, particularly on the power of impleadment or joinder of parties to arbitral proceedings. “What is expressly missing in the Act, 1996 is still missing in the Arbitration and Conciliation Bill, 2024, despite a catena of decisions of this Court as well as the various High Courts,” the Court stated.
The justices traced the evolution of arbitration laws in India, from the Arbitration Act of 1940 to the current 1996 Act, and noted that while amendments were introduced to expedite proceedings, critical procedural issues remain unresolved. The bench stressed that uncertainty in arbitration law can be detrimental to business and commerce, citing a recent five-judge Constitution Bench ruling on the same theme.
“We urge the Department of Legal Affairs, Ministry of Law and Justice to take a serious look at the arbitration regime that is prevailing in India and bring about necessary changes while the Arbitration and Conciliation Bill, 2024 is still being considered,” the Court urged.
The apex court also directed its registry to circulate a copy of the judgment to all High Courts and the principal secretary of the Ministry of Law and Justice. While dismissing the appeal, the Court clarified that all other legal contentions between the parties remain open for adjudication before the arbitral tribunal.
