Arbitration has emerged as a vital mechanism for resolving disputes in India, offering a quicker and more adaptable alternative to traditional court litigation. The integrity of this process hinges on judicial review, which enables courts to examine arbitral awards to ensure they meet legal standards. In India, this process is governed by Section 34 of the Arbitration and Conciliation Act, 1996.

However, the system's efficiency is often hampered by significant delays and an overburdened judiciary. To tackle these issues, the Indian government introduced the Draft Arbitration and Conciliation (Amendment) Bill, 2024, which proposes significant reforms, including the creation of Appellate Arbitral Tribunals (AATs) to handle applications to set aside awards, a role traditionally performed by courts. As of May 2025, the bill is still under consideration, with public consultations having concluded in November 2024. This article examines the current judicial review process, the proposed changes under the bill, their potential benefits and limitations, and provides insights into how these reforms could transform India's arbitration landscape.

Current System of Judicial Review

The Arbitration and Conciliation Act, 1996, under Section 34, establishes the framework for judicial review of arbitral awards in India. Courts have the authority to set aside awards on specific grounds to ensure the arbitration process remains fair and legally sound.

These grounds include cases where a party was under some incapacity, rendering the arbitration agreement invalid; where the arbitration agreement is not valid under the applicable law; when a party was not properly notified of the arbitrator's appointment or the proceedings, or was unable to present their case; if the award addresses a dispute not covered by the arbitration agreement or exceeds its scope; when the tribunal's composition or procedure did not align with the parties' agreement; if the dispute's subject matter is not arbitrable under Indian law; if the award conflicts with India's public policy, including instances of fraud, corruption, or violation of fundamental legal principles; and, for domestic arbitrations, if the award exhibits patent illegality on its face, though not merely due to an erroneous application of law or reappreciation of evidence.

Parties must file an application to set aside an award within three months of receiving it, with a possible 30-day extension. Courts play a supervisory role, ensuring awards adhere to legal and procedural norms, as illustrated in cases like

Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India, which clarified the scope of public policy and patent illegality.

Benefits of the Current System

The judicial review process under Section 34 plays a critical role in maintaining the credibility of arbitration. It ensures that arbitral awards comply with legal standards, preventing the enforcement of awards that violate fundamental legal principles or public policy. Additionally, it safeguards parties' rights by providing a mechanism to challenge awards resulting from procedural unfairness or bias, thereby upholding justice. By allowing courts to intervene in exceptional cases, the system reinforces the integrity and reliability of arbitration as a dispute resolution mechanism.

Limitations of the Current System

Despite its strengths, the current judicial review system faces significant challenges. The Indian judiciary's backlog causes substantial delays, with the Delhi High Court, as of September 1, 2023, having 2,106 pending Section 34 petitions and an average disposal time of approximately 3.5 years, which undermines arbitration's goal of swift resolution.

Judicial overreach is another concern, as seen in cases like ONGC v. Saw Pipes, where courts expanded the scope of review beyond intended limits, leading to excessive interference and uncertainty. Furthermore, the high volume of arbitration-related cases strains judicial resources, diverting attention from other critical matters.

The Arbitration Bill 2024

Introduced on October 18, 2024, the Draft Arbitration and Conciliation (Amendment) Bill, 2024, seeks to modernize India's arbitration framework by promoting institutional arbitration, reducing court intervention, and ensuring timely dispute resolution. A central feature is the introduction of Appellate Arbitral Tribunals (AATs) under the proposed Section 34-A, enabling arbitral institutions to handle applications to set aside arbitral awards, a function traditionally reserved for courts.

Parties opting for AATs would be barred from filing set-aside applications in court, marking a significant shift. The bill also restricts courts from granting interim measures during arbitration proceedings, except in specific cases, and mandates that arbitration commence within 90 days of an interim measure application. It introduces provisions for emergency arbitrators to grant interim relief before a tribunal is constituted, with their orders enforceable like civil court orders. Additionally, the bill imposes strict timelines, such as 60 days for courts to decide Section 8 applications (referral to arbitration) and 30 days for tribunals to address jurisdictional objections.

It also amends the definition of arbitration to include electronic proceedings, aligning with technological advancements, and removes conciliation provisions, now covered by the Mediation Act, 2023, renaming the Act as the Arbitration Act, 1996. These reforms, based on recommendations from an Expert Committee led by Dr. T.K. Viswanathan in February 2024, aim to align India's arbitration practices with global standards).

The Role of AATs

The introduction of AATs represents a significant departure from the current system. Supported by precedents like Centrotrade Minerals & Metal Inc. v. Hindustan Copper Ltd., which upheld the validity of two-tier arbitration clauses, AATs allow parties to opt for a specialized arbitral body over courts for reviewing awards. This aligns with international practices, such as those of the Singapore International Arbitration Centre (SIAC) and the International Chamber of Commerce (ICC), where appellate mechanisms exist within institutional rules.

How Judicial Review Helps

The current judicial review system under Section 34 ensures arbitration remains a credible and fair process. By allowing courts to intervene in cases of procedural unfairness, fraud, or public policy violations, it protects parties from unjust outcomes. For example, in Amazon.com NV Investment Holdings LLC v. Future Retail Ltd., the Supreme Court reinforced the enforceability of emergency arbitration awards, highlighting the judiciary's role in supporting arbitration while maintaining oversight.

Shortcomings of the Current System

Despite its benefits, the system faces significant challenges. Protracted delays, with the Delhi High Court taking an average of 3.5 years to dispose of Section 34 petitions, undermine arbitration's efficiency. Judicial overreach, as seen in ONGC v. Saw Pipes, where courts broadened the public policy ground, leads to excessive interference and uncertainty. Additionally, the high volume of arbitration cases burdens the judiciary, diverting resources from other matters.

How the Arbitration Bill 2024 Addresses These Issues

The bill's introduction of AATs aims to alleviate these issues by reducing the burden on courts, as set-aside applications would be handled by specialized arbitral bodies, potentially resolving disputes faster than the current judicial process. AATs, composed of experienced arbitrators or legal experts, are expected to deliver more informed and consistent decisions. The bill's restrictions on interim measures and support for emergency arbitrators further minimize court involvement, while the inclusion of digital arbitration enhances accessibility and efficiency.

Potential Concerns about the Arbitration bill 2024

While the bill offers promising reforms, concerns remain. The impartiality of AATs is a potential issue, as they are part of arbitral institutions that may have administered the original arbitration, raising perceptions of bias (Kluwer Arbitration Blog). Ensuring AATs adhere to consistent legal standards, particularly on public policy and patent illegality, is critical, as the absence of judicial oversight could lead to inconsistent decisions.

There is also a risk that AATs could be used to delay enforcement, as some institutional rules suspend awards during appeals, potentially undermining arbitration's goal of swift resolution (NLSBLR). Some commentators warn that AATs could revert to the expansive judicial intervention seen in ONGC v. Saw Pipes. To address these, the bill should include clear guidelines for AAT impartiality, a defined scope adhering to Section 34 grounds, and provisions for limited judicial oversight in exceptional cases.

Rationale for Enactment

The enactment of the 2024 Arbitration Bill is indispensable for a myriad of compelling reasons that collectively promise to revolutionize India's dispute resolution framework. Primarily, the bill's proposal to relegate the adjudication of set-aside applications to Appellate Arbitral Tribunals (AATs) portends a substantial diminution in the protracted timelines that currently beset Section 34 petitions, which often languish for over three years within the judicial system. This expedited resolution mechanism would not only augment the allure of arbitration for businesses but also elevate India's stature in global ease of doing business rankings.

Furthermore, the constitution of AATs, comprising seasoned arbitrators and retired judicial officers, ensures that decisions are rendered with a profundity of expertise and consistency that generalist courts may lack, thereby enhancing the integrity and reliability of award reviews. On the international stage, harmonizing India's arbitration framework with exemplary jurisdictions such as Singapore would fortify its reputation as a hospitable venue for arbitration, thereby magnetizing foreign investment and fostering a robust ecosystem for commercial dispute resolution.

The bill's advocacy for digital arbitration resonates with contemporary global trends, facilitating a more accessible and efficient process, particularly in the post-pandemic era where remote proceedings have become de rigueur.

Additionally, by diverting a significant caseload to AATs, the legislation offers respite to India's overburdened judiciary, enabling courts to focus on other pressing judicial matters. However, to actualize these benefits, it is incumbent upon the legislation to meticulously address apprehensions regarding the impartiality of AATs, ensure legal uniformity, and preserve avenues for judicial intervention where necessary.

The establishment of lucid guidelines, transparent mechanisms for selecting tribunal members, and a balanced approach to judicial oversight are paramount to assuaging these concerns and ensuring the bill's triumphant implementation.
 

Reasons for Delay in Passing the Bill

The Arbitration and Conciliation (Amendment) Bill, 2024, introduced in draft form on October 18, 2024, represents a pivotal effort to modernize India's arbitration framework by reducing judicial intervention, promoting institutional arbitration, and ensuring expeditious dispute resolution. However, as of May 2025, the bill remains in the draft stage, with no evidence of its formal introduction in Parliament.

This delay can be attributed to a confluence of procedural, substantive, and strategic factors that underscore the complexity of the proposed reforms and the government's commitment to crafting a robust legislative framework. Below is a detailed examination of the reasons contributing to this delay, presented in a cohesive narrative to elucidate the multifaceted challenges involved.

A critical factor contributing to the delay is the government's ongoing engagement with stakeholders. The Department of Legal Affairs invited public comments on the draft bill until November 3, 2024, as part of a public consultation exercise Public Feedback.

The government is likely still assimilating feedback from a diverse array of stakeholders, including legal scholars, commercial entities, and arbitral institutions, to refine the bill's provisions and ensure they address practical concerns. This inclusive approach, while time-consuming, is essential to crafting a bill that garners broad acceptance and effectively addresses the needs of India's arbitration ecosystem.

Stakeholder criticisms further complicate the legislative process, as several provisions have sparked debate. For instance, the proposed restrictions on court interim measures under Section 9 have raised concerns about limiting judicial support in arbitration, particularly in international commercial disputes. Similarly, the lack of clarity surrounding the constitution and operational procedures of AATs has prompted apprehensions about potential disputes or biases, given that AATs are to be established by arbitral institutions with possible commercial interests.

Additionally, the removal of the patent illegality distinction in Section 34(2-A) has been flagged as a potential deterrent to international investors, as it may broaden the grounds for challenging arbitral awards Draft Bill Analysis. Addressing these criticisms requires careful revisions to ensure the bill's provisions are both effective and equitable, further extending the timeline for its finalization.

Finally, the strategic ambition to position India as a preeminent global arbitration hub necessitates that the bill be meticulously benchmarked against international best practices. This likely involves consultations with international arbitration experts and institutions, such as those associated with the Singapore International Arbitration Centre (SIAC) or the International Chamber of Commerce (ICC), to ensure the bill's provisions align with global standards Future of Arbitration.

This process, while critical to enhancing India's global competitiveness, adds another layer of complexity and time to the legislative journey, as the government seeks to balance domestic requirements with international expectations.

In conclusion, the delay in enacting the Arbitration and Conciliation (Amendment) Bill, 2024, reflects a deliberate and measured approach to ensure the bill's provisions are robust, practical, and aligned with both domestic and international expectations. While the legislative process is protracted due to parliamentary scheduling, the complexity of the reforms, ongoing stakeholder consultations, the need to address critical feedback, and the pursuit of global alignment, these efforts are essential to crafting a legislative framework that will enhance India's arbitration ecosystem.

By addressing these challenges thoughtfully, the government aims to deliver a bill that not only streamlines dispute resolution but also positions India as a leading destination for international arbitration, fostering greater investor confidence and facilitating the ease of doing business.
 
Conclusion
The Draft Arbitration and Conciliation (Amendment) Bill, 2024, represents a transformative opportunity to modernize India's arbitration ecosystem, addressing longstanding challenges such as procedural delays and excessive judicial intervention. By introducing innovative mechanisms like Appellate Arbitral Tribunals, emergency arbitrators, and digital arbitration, the bill aligns India's dispute resolution framework with global best practices, positioning the country as a potential hub for international arbitration.

The delay in its passage, likely due to ongoing stakeholder consultations, the complexity of reforms, and the need to address criticisms regarding provisions like AAT constitution and court interim measures, underscores the government's commitment to crafting a robust and effective law. These delays, while extending the legislative timeline, are necessary to ensure the bill's provisions are practical, fair, and widely accepted.

The bill's enactment is imperative to enhance the efficiency, credibility, and global competitiveness of India's arbitration system. By reducing dispute resolution timelines through AATs, leveraging specialized expertise, and embracing digital advancements, the bill can make arbitration more accessible and appealing to both domestic and international businesses. This, in turn, will bolster investor confidence, facilitate the ease of doing business, and attract more commercial disputes to India.

However, the bill's success hinges on addressing stakeholder concerns through clear guidelines, transparent AAT selection processes, and balanced provisions that preserve party autonomy and judicial support where necessary. With meticulous implementation and continuous monitoring, the Arbitration and Conciliation (Amendment) Bill, 2024, has the potential to revolutionize India's dispute resolution landscape, fostering a more conducive environment for commercial transactions and reinforcing India's position in the global arbitration arena.

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