As a consent-based system of dispute resolution, arbitration places autonomy at the heart of its design and operation. A recent petition alleging institutional overreach by a trade association administering arbitrations under its own procedural rules has prompted the Supreme Court of India to issue notice to the Union government on the constitution of the Arbitration Council of India (ACI). In doing so, it has also rekindled a broader debate on the contours of regulation in India’s arbitration framework.
It is true that the ACI remains to be constituted despite the passage of several years since its statutory conception and that the draft Arbitration and Conciliation (Amendment) Bill, 2024 - intended to rationalise institutional arbitration - awaits legislative approval. The premise advanced in the petition, however, appears to suggest that all arbitral institutions, regardless of how they are engaged, must operate under the supervision of the ACI. Such a view, far from advancing the objective of institutional development, risks undermining party autonomy and constraining the diversity and innovation essential to India’s aspiration of becoming a credible global arbitration hub.
The 2019 amendment to the Arbitration and Conciliation Act introduced a framework for the designation and regulation of arbitral institutions performing functions under Section 11 - namely, the appointment of arbitrators in cases where a party would typically have to approach the court. In such circumstances, where an institution effectively discharges a role earlier vested in the courts, regulatory recognition is both logical and necessary to safeguard neutrality and procedural integrity.
A different position obtains, however, where disputing parties have, by agreement, chosen an arbitral institution operating under its own rules. In such cases (one of which forms the subject of the petition presently before the Supreme Court), prior recognition or regulatory sanction is neither contemplated nor warranted. To impose such requirements would be to intrude upon the foundational principle of party autonomy that underpins arbitration itself.
Significantly, the draft Arbitration and Conciliation (Amendment) Bill, 2024 clarifies this distinction by redefining an arbitral institution as an organisation conducting arbitration under its own rules, while retaining the requirement of recognition only for institutions discharging functions under Section 11. This legislative refinement reflects a considered acknowledgment that not all institutions perform identical roles and, therefore, need not be subject to uniform regulatory treatment.
The distinction underscores a basic but critical principle: the authority of an arbitral institution chosen by agreement flows from the contract between the disputants, not from antecedent regulatory approval. Institutions performing the functions erstwhile reserved for courts may justifiably be subject to oversight; institutions administering arbitrations pursuant to party choice merit deference to that choice. The latter, it bears emphasis, provide administrative and secretarial support rather than adjudicatory functions - an activity for which regulatory sanction is unnecessary.
India’s arbitration jurisprudence, shaped by consistent pronouncements of the Supreme Court, has long affirmed party autonomy as its cornerstone. When parties select an institution in their arbitration agreement, they do so with knowledge of its procedural framework and operational standards. That informed choice ought not to be displaced by regulatory mechanisms designed for different institutional contexts.
Concerns regarding institutional overreach must be addressed within the architecture of the arbitration law itself. Once it is recognised that a party-chosen institution is confined to administrative functions and that adjudicatory authority rests exclusively with the arbitral tribunal, many apprehensions dissolve at the threshold.
The Act already provides adequate safeguards. It permits challenges to arbitrator appointments, mandates disclosure obligations and allows judicial review of awards on specified grounds. Parties are neither remediless nor unprotected. Indeed, the expectation is that rational actors will select institutions that empanel competent and experienced arbitrators, thereby ensuring procedural fairness through informed choice rather than regulatory compulsion.
India’s ambition to emerge as a preferred seat for international arbitration must be informed by comparative experience. Mature arbitration jurisdictions such as the United States, England, France and Singapore have succeeded precisely because they respect party autonomy in the selection of arbitral fora. Parties in these systems freely choose among institutions such as the American Arbitration Association, the LCIA, the ICC, and the SIAC, without any requirement of prior governmental approval.
What these jurisdictions emphasise instead are transparency, procedural fairness and effective post-award remedies - not gatekeeping through mandatory recognition. The draft 2024 Bill moves in this direction by calibrating regulation to function rather than form.
India’s competitiveness depends on inspiring confidence among commercial actors that their contractual choices will be respected. Dismissing party-selected institutions for want of prior sanction conveys unwarranted distrust of informed choice, thereby diminishing India’s attractiveness as an arbitration-friendly jurisdiction.
A principled and balanced approach would prioritise the early constitution of the ACI to facilitate arbitrator appointments under Section 11 and thereby reduce the burden on courts, while preserving a clear doctrinal distinction between such institutions and those chosen directly by agreement. This balance - reflected in the architecture of the draft 2024 Amendment Bill - holds the key to fostering institutional credibility without eroding the autonomy that lies at the heart of arbitration.
Justice AK Sikri is a former judge of the Supreme Court of India.
Rajendran Nair Karakulam is the Founder and Director of Karakulam Consulting, a government relations and public policy firm based in Delhi.