Sun Jan 11 17:24:35 UTC 2026: ### Headline: Arbitration Council of India Still Unformed Six Years After Law Amendment, Hindering India’s International Arbitration Hub Ambitions

The Story:

Despite amendments to the Arbitration Act in 2019, the Union Government has yet to constitute the Arbitration Council of India (ACI), intended to regulate and promote institutional arbitration. This delay is hindering India’s ambition to become a hub for international arbitration. Senior officials suggest institutional arbitration was underdeveloped, justifying the delay, but a former Union Law Secretary, P.K. Malhotra, argues the ACI’s absence is perpetuating the reliance on ad-hoc arbitration, prompting even government departments to explore mediation instead. The Law Ministry has been considering reforms, including empowering courts to modify arbitration awards, but progress appears stalled.

Key Points:

  • The Arbitration Council of India (ACI) was mandated to be established following the 2019 amendment to the Arbitration Act.
  • Six years after the amendment, the ACI has not been constituted.
  • Former Union Law Secretary P.K. Malhotra asserts the delay is adversely impacting India’s potential as an international arbitration hub.
  • The prevalence of ad-hoc arbitration is leading government departments to prefer mediation.
  • In February last year, an expert committee recommended giving courts the power to alter arbitration awards, a move opposed by industry representatives.
  • The Law Ministry floated a draft Bill in October last year to amend the arbitration law, but the amendments are stalled.
  • Union Law Minister Arjun Ram Meghwal has expressed concern that India has lost its way in arbitration.

Key Takeaways:

  • The delayed establishment of the Arbitration Council of India (ACI) points to bureaucratic hurdles and possibly a lack of prioritization within the government.
  • The preference for ad-hoc arbitration and the exploration of mediation suggest a lack of confidence in the current arbitration system.
  • Proposed amendments granting courts power over arbitration awards could potentially undermine the autonomy and efficiency of the arbitration process, contrary to promoting an international arbitration hub.
  • The situation highlights a disconnect between the government’s stated ambition to become an international arbitration hub and its actions (or lack thereof) in implementing necessary reforms.

Impact Analysis:

The continued absence of the ACI and the proposed changes to arbitration laws have several significant implications:

  • Economic Impact: Hindering the growth of institutional arbitration could deter foreign investment, as businesses seek predictable and efficient dispute resolution mechanisms. A functioning arbitration system is crucial for contract enforcement and investor confidence.
  • Legal Certainty: Granting courts greater power to modify arbitration awards introduces uncertainty and could lead to protracted litigation, undermining the purpose of arbitration as a quicker and more cost-effective alternative to court proceedings.
  • International Reputation: The lack of progress on arbitration reform could damage India’s reputation as a reliable and efficient destination for international commercial disputes.
  • Government Efficiency: The move toward mediation by government departments underscores inefficiencies within the current system and a potential increase in government costs to solve disputes, as mediation may have different requirements than arbitration.

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