What Happened
- Supreme Court Justice B.V. Nagarathna, speaking at the 5th Edition of the Indian Council of Arbitration International Conference, highlighted a significant structural lacuna in India's arbitration framework
- She noted there is no dedicated forum where complaints against arbitrators — many of whom are retired judges — can be formally lodged and adjudicated
- Courts are reluctant to remove arbitrators who are former judges, creating an accountability gap where misconduct goes unaddressed
- The remarks come in the context of India's push to become a global arbitration hub, making institutional accountability a prerequisite for international credibility
- Justice Nagarathna called for institutional safeguards and a dedicated oversight mechanism for arbitrators
Static Topic Bridges
Arbitration and Conciliation Act, 1996: Arbitrator Accountability Provisions
The Arbitration and Conciliation Act, 1996 is India's primary statute governing domestic and international commercial arbitration. It is based on the UNCITRAL Model Law on International Commercial Arbitration (1985) and the UNCITRAL Conciliation Rules (1980).
- Section 12 (Grounds for Challenge): An arbitrator may be challenged if circumstances exist giving rise to justifiable doubts about independence or impartiality, or if the arbitrator lacks agreed qualifications. The Fifth Schedule (added by 2015 Amendment) lists specific grounds based on IBA Guidelines on Conflict of Interest
- Section 13 (Challenge Procedure): A party must raise a challenge within 15 days of becoming aware of the ground; the arbitral tribunal itself rules on the challenge — creating a self-regulatory paradox
- Section 14 (Failure or Impossibility to Act): Mandate of an arbitrator terminates if they become de jure or de facto unable to perform their functions
- Section 15 (Termination and Substitution): Provides for appointment of substitute arbitrators following termination under Sections 13 or 14
- Section 34 (Setting Aside Awards): Courts can set aside awards on grounds of arbitrator bias — but this is a post-award remedy, not a real-time disciplinary mechanism
- The Seventh Schedule (2015 Amendment) lists categories where persons are ineligible to act as arbitrators altogether (based on IBA Red List)
Connection to this news: The existing legal framework under Sections 12-15 requires the party to raise challenges before the tribunal itself or approach courts — there is no independent disciplinary authority. Justice Nagarathna's observation precisely targets this gap.
Arbitration Reform Trajectory in India
India's arbitration law has undergone significant amendments to reduce court intervention and enhance efficiency, but accountability of arbitrators has remained unaddressed.
- Arbitration and Conciliation Act, 1996: Based on UNCITRAL Model Law; original version had limited grounds for challenge
- 2015 Amendment: Introduced Fifth and Seventh Schedules for conflict of interest; imposed time limits (12 months for award delivery, extendable by 6 months); made Section 12(5) mandatory — persons with relationships listed in Seventh Schedule ineligible unless parties expressly waive in writing after dispute arises
- 2019 Amendment: Created the Arbitration Council of India (ACI) as a statutory body to grade arbitral institutions, accredit arbitrators, and promote India as an arbitration hub — but ACI's disciplinary powers over individual arbitrators remain limited
- 2021 Amendment: Amended Section 36 to allow automatic stay of arbitral awards in cases of fraud or corruption — a backward step from 2019's pro-enforcement stance, according to critics
- Key arbitral institutions: Mumbai Centre for International Arbitration (MCIA), Delhi International Arbitration Centre (DIAC), Indian Council of Arbitration (ICA), and NITI Aayog's India International Arbitration Centre (IIAC)
Connection to this news: The 2019 Amendment's Arbitration Council of India was conceived partly to address credibility, but falls short of providing a real-time complaint forum for arbitrator misconduct — the gap Justice Nagarathna identified remains open.
Mediation Act, 2023 and ADR Ecosystem
Justice Nagarathna also noted that arbitration and mediation are vital to a modern justice system. India enacted the Mediation Act, 2023 to provide a statutory framework for mediation, previously governed only by court-annexed schemes.
- Mediation Act, 2023: Provides for pre-litigation mediation (mandatory in commercial disputes before suits), online mediation, community mediation, and enforceability of mediation settlement agreements
- The Act established the Mediation Council of India — a statutory body to register and regulate mediators, address complaints, and set standards
- This contrasts with the arbitration space: mediators now have a statutory regulatory body (Mediation Council), but arbitrators — who handle far larger commercial disputes — still lack an equivalent complaint mechanism
- India's courts dispose of over 5 crore pending cases; ADR (Alternative Dispute Resolution) is central to reducing judicial pendency
- The Law Commission's 246th Report (2014) recommended comprehensive arbitration reforms including institutional accountability
Connection to this news: The irony highlighted by the judgment is that mediators now have a statutory disciplinary body under the 2023 Act, while arbitrators — handling high-value commercial disputes and often drawn from the judiciary — do not.
Key Facts & Data
- Arbitration and Conciliation Act, 1996: based on UNCITRAL Model Law on International Commercial Arbitration (1985)
- 2015 Amendment: introduced Fifth Schedule (Orange List) and Seventh Schedule (Red List) based on IBA Guidelines; Section 12(5) made mandatory
- 2019 Amendment: created Arbitration Council of India (ACI); set 12-month default award timeline
- Mediation Act, 2023: established Mediation Council of India as statutory regulator for mediators
- Section 34: grounds for setting aside award include incapacity, invalid agreement, bias, or public policy violation
- India's pending court cases: over 5 crore as of recent estimates; ADR critical for decongesting dockets
- ACI has not yet become fully functional as of 2026 despite the 2019 statutory basis