Supreme Court and the Arbitration Council of India A long pending mandate

A statutory body that exists only on paper

The Supreme Court has formally sought the Union government’s response to a petition highlighting the continued absence of the Arbitration Council of India, a body that Parliament mandated through amendments to the Arbitration and Conciliation Act in 2019.

Hearing a plea filed by a cotton trader, the Court issued notice to the Centre, observing that Sections 43A and 43B of the amended law clearly envisage the establishment of the Arbitration Council of India but remain unimplemented more than five years later.

The petition contends that this institutional vacuum has allowed trade associations and private bodies to conduct arbitrations without uniform standards, meaningful oversight, or consistent procedural safeguards.

During the brief hearing, the bench noted that the legislature had consciously created the Arbitration Council of India to improve the credibility of arbitration in the country, yet the mechanism has not materialized.

Why the cotton trader approached the Court

The petitioner is a cotton trader involved in commercial disputes routinely referred to arbitration under trade association rules. According to the plea, these arbitrations often operate in a largely self regulated manner, with little transparency in appointment of arbitrators, fee structures, or procedural fairness.

The petition argues that without the Arbitration Council of India in place, there is no central authority to:

• Set minimum professional standards for arbitrators.

• Lay down model guidelines for arbitral institutions.

• Monitor ethical practices in private arbitration forums.

• Recommend accreditation or training frameworks.

The trader’s grievance is not about one specific dispute but about a systemic gap that affects thousands of businesses relying on arbitration as a faster alternative to courts.

What the 2019 amendments promised

In 2019, Parliament amended India’s arbitration law with the explicit aim of making the country a more reliable hub for commercial dispute resolution. A key reform was the creation of the Arbitration Council of India.

Sections 43A and 43B envisioned a statutory regulator tasked with promoting institutional arbitration, improving quality of arbitral processes, and reducing ad hoc practices.

Among its proposed functions were:

• Grading arbitral institutions.

• Maintaining a repository of arbitral awards.

• Framing norms for professional conduct of arbitrators.

• Advising the government on policy reforms.

However, while the legal provisions were inserted into the Act, the actual body has never been constituted, leaving the Arbitration Council of India as a concept rather than a functioning institution.

What the Supreme Court has done for now

By issuing notice to the Centre, the Supreme Court has signaled that it will examine why the Arbitration Council of India has not been operationalized. The Court has not yet issued directions, but its intervention places fresh judicial pressure on the government.

The case now requires the Centre to explain:

• Whether steps have been taken to constitute the Arbitration Council of India.

• If not, what has caused the delay.

• Whether interim mechanisms exist to regulate arbitration.

The matter remains pending, but the notice itself has reignited debate over stalled arbitration reforms.

The problem of unregulated trade arbitrations

In India, many sectors rely heavily on arbitration conducted by trade bodies such as commodity exchanges, industry associations, and merchant guilds. While these forums offer speed and familiarity, critics argue they often lack neutrality.

Common concerns include:

• Arbitrators being linked to dominant market players.

• Limited avenues for appeal or review.

• Inconsistent procedures across institutions.

• Lack of standardized training for decision makers.

The petitioner claims that the absence of the Arbitration Council of India has allowed such practices to continue unchecked, creating uncertainty for smaller traders and businesses.

Why neutrality matters in arbitration

Arbitration is meant to be an impartial process where disputes are resolved outside courts by independent experts. If parties suspect bias or procedural unfairness, confidence in the system erodes.

The Arbitration Council of India was intended to address exactly this concern by creating a national framework for standards and accountability.

Without it, each arbitral institution sets its own rules, leading to uneven quality and inconsistent outcomes. The petition argues that this undermines India’s broader goal of becoming a trusted arbitration destination.

Government’s position so far

The Centre has not yet publicly responded to the latest petition, as the matter is still at the notice stage. However, officials in the past have cited administrative and procedural complexities in setting up the Arbitration Council of India.

Some government statements have suggested that existing mechanisms, such as court oversight and arbitral institutions themselves, provide sufficient checks for now. The petitioner disputes this, calling such safeguards fragmented and inadequate.

The Supreme Court’s notice now compels the government to clarify its stance formally.

Why this case matters beyond cotton traders

Although the petitioner is a cotton trader, the implications extend across multiple sectors including construction, real estate, infrastructure, manufacturing, and finance, where arbitration is the preferred mode of dispute resolution.

If the Arbitration Council of India is finally constituted, it could reshape how arbitration functions nationwide by introducing uniformity and transparency.

For businesses, this could mean:

• More predictable procedures.

• Clearer rules for appointment of arbitrators.

• Better confidence in awards.

• Reduced litigation over arbitral irregularities.

Arbitration as India’s preferred dispute mechanism

Over the past decade, India has actively promoted arbitration to reduce the burden on courts and attract foreign investment. Several legislative amendments and judicial rulings have supported this push.

Yet the absence of the Arbitration Council of India has been widely seen as a missing institutional piece in this reform puzzle.

Critics argue that without a central regulator, India’s arbitration ecosystem remains fragmented, limiting its global competitiveness.

How the petition frames the issue

The petitioner does not ask the Supreme Court to decide individual disputes. Instead, the plea seeks structural compliance with the law.

It requests the Court to direct the government to:

• Constitute the Arbitration Council of India within a fixed timeline.

• Issue interim guidelines to regulate trade body arbitrations.

• Ensure greater transparency in arbitral processes.

The focus is on institutional reform rather than case specific relief.

What Sections 43A and 43B actually say

Section 43A mandates the establishment of the Arbitration Council of India as a statutory body to grade arbitral institutions and accredit arbitrators.

Section 43B outlines its functions, including:

• Promoting arbitration in India.

• Maintaining a data bank of arbitral awards.

• Reviewing performance of arbitral institutions.

These provisions were meant to modernize arbitration governance, but remain largely dormant without the actual council in place.

Why the delay is controversial

Five years is a significant gap between legislation and implementation. For many in the legal and business community, the non constitution of the Arbitration Council of India reflects policy inertia.

Opponents argue that creating such a body requires political will, administrative coordination, and budgetary support, none of which have materialized fully.

Supporters of the government counter that rushed institution building could be worse than delay, but the Supreme Court’s intervention suggests that the status quo is no longer acceptable.

Potential outcomes of the case

Several scenarios are possible as the case progresses.

The Supreme Court could:

• Simply seek a detailed explanation and close the matter.

• Direct the Centre to set up the Arbitration Council of India within a timeline.

• Ask for interim regulatory measures while the council is formed.

Any of these outcomes would mark a significant judicial role in shaping arbitration policy.

Trade bodies under the spotlight

If the Arbitration Council of India becomes operational, many trade associations may have to align their arbitration practices with national standards.

This could affect:

• How arbitrators are appointed.

• How hearings are conducted.

• How awards are reasoned and recorded.

For some bodies, this may increase compliance costs but also enhance credibility.

Balancing speed and fairness

One of the recurring criticisms of arbitration in India is that speed often comes at the cost of fairness. The proposed Arbitration Council of India was meant to balance both.

By setting benchmarks, the council could ensure that faster dispute resolution does not compromise justice or neutrality.

The current petition argues that this balance cannot be achieved without a functioning regulatory framework.

A test for arbitration reform

This case has now become a litmus test for India’s commitment to its own arbitration reforms. Passing amendments without building institutions risks hollow legislation.

The Supreme Court’s involvement signals that legislative intent must be matched by executive action.

What businesses will watch for

Companies, especially foreign investors, will closely follow how the Centre responds. A clear timeline for the Arbitration Council of India could boost confidence in India’s dispute resolution ecosystem.

Conversely, continued delay may reinforce perceptions that reforms exist more on paper than in practice.

Where things stand today

For now, the Supreme Court has taken the first step by issuing notice. The government must now justify why the Arbitration Council of India remains unconstituted and outline its plan, if any, to operationalize it.

Until then, trade body arbitrations will continue under existing frameworks, with all their strengths and limitations.

Why this moment matters

The case is not just about one trader or one law. It is about whether India will complete the institutional architecture it promised for modern arbitration.

The Arbitration Council of India, if created, could mark a turning point in how commercial disputes are resolved across the country.

The Supreme Court’s notice has placed that unfinished promise back under the spotlight.