International commercial arbitration has become a preferred method for resolving cross-border disputes, offering parties a neutral forum, procedural flexibility, and enforceability of awards across jurisdictions. India, as a significant player in the global economy, has seen substantial developments in this area, reflecting its commitment to fostering a favorable environment for international arbitration.
The Indian judiciary has been instrumental in shaping the country’s arbitration landscape. In the landmark case of Centrotrade Minerals and Metals Inc. v. Hindustan Copper Ltd. (2006), the Supreme Court upheld the pro-enforcement stance of the New York Convention, ruling that an award from international commercial arbitration conducted in any Convention country would be considered a foreign award, regardless of the governing law of the arbitration agreement. This decision reinforced India’s commitment to party autonomy and minimal judicial intervention in international arbitrations. However, the subsequent judgment in Venture Global Engineering v. Satyam Computer Services Ltd. (2008) raised concerns by allowing Indian courts to set aside foreign awards on the same grounds as domestic awards, such as “patent illegality.” This decision was criticized for potentially undermining the finality and enforceability of foreign arbitral awards in India. To address these concerns, the Indian judiciary has gradually embraced the “seat theory,” which recognizes the supervisory jurisdiction of courts at the seat of arbitration over the arbitral proceedings. This approach aligns with international best practices and aims to balance party autonomy with judicial oversight.
India’s Arbitration and Conciliation Act, 1996, based on the UNCITRAL Model Law, was a significant step towards establishing a modern arbitration regime. However, the Act faced challenges in providing interim measures, enforcing awards, and addressing issues related to arbitral subject matter and biased arbitrators. To address these concerns, the Indian government introduced several amendments, including the Arbitration and Conciliation (Amendment) Act, 2019. The 2019 Amendment Act aimed to promote institutional arbitration by establishing the Arbitration Council of India (ACI) and designating graded arbitral institutions. The ACI is mandated to grade arbitral institutions based on their infrastructure, quality of arbitrators, and adherence to timelines, among other factors. This move is expected to enhance the quality and efficiency of institutional arbitration in India, making it more attractive for international commercial disputes.
In line with the global trend of establishing specialized arbitration centers, India has taken steps to establish the New Delhi International Arbitration Centre (NDIAC). The NDIAC aims to provide a world-class institutional framework for conducting international arbitrations, with state-of-the-art facilities and a panel of experienced arbitrators. The establishment of the NDIAC is a significant development, as it addresses the need for a dedicated institution to handle international commercial arbitrations in India. By providing a neutral and efficient forum, the NDIAC is expected to attract parties from around the world, further enhancing India’s position as a preferred arbitration hub.
India’s approach to Bilateral Investment Treaties (BITs) and Investor-State Dispute Settlement (ISDS) has undergone a significant transformation in recent years. Faced with a surge in investor-state disputes, India terminated close to 60 BITs and adopted a new Model BIT in 2015. The new Model BIT aims to strike a balance between investment protection and the host state’s right to regulate, while providing a detailed mechanism for dispute resolution, including arbitration. This shift in India’s BIT practice reflects its commitment to attracting foreign investment while safeguarding its regulatory powers and ensuring fair treatment of investors. The new Model BIT is expected to provide greater clarity and predictability in the resolution of investment disputes through arbitration.
As the landscape of international commercial arbitration in India continues to evolve, several emerging trends and challenges warrant attention. The COVID-19 pandemic has accelerated the adoption of technology in arbitration proceedings, with virtual hearings and electronic submissions becoming more prevalent. India must adapt to these technological advancements to ensure efficient and cost-effective arbitration processes. The concept of third-party funding, where an external entity finances the arbitration costs in exchange for a share of the potential award, is gaining traction globally. India’s approach to regulating and governing third-party funding in international commercial arbitration remains to be defined. As environmental and sustainable development issues gain prominence, investment arbitration tribunals are increasingly called upon to interpret treaty provisions in light of these concerns. India’s approach to incorporating environmental considerations in its BITs and arbitration practice will be crucial. While India has made strides in enforcing foreign arbitral awards, challenges persist in ensuring timely and effective enforcement, particularly in cases involving public entities. Addressing these challenges is essential to maintain India’s credibility as an arbitration-friendly jurisdiction.
India’s journey in the realm of international commercial arbitration has been marked by significant developments and reforms. The country’s commitment to creating a conducive environment for arbitration is evident through its legislative efforts, judicial pronouncements, and the establishment of specialized arbitration centers. However, challenges remain, and India must continue to adapt to emerging trends and global best practices. By embracing technology, addressing environmental and sustainable development concerns, and ensuring effective enforcement of awards, India can solidify its position as a preferred destination for international commercial arbitration. As India continues to play a pivotal role in the global economy, its ability to provide an efficient and reliable dispute resolution mechanism through international commercial arbitration will be crucial in attracting foreign investment and fostering cross-border trade and commerce.
