Abstract
This research paper scrutinises the effectiveness and role of institutional arbitration in India, predominantly in the background of cross-border commercial disputes. It traces the historical evolution of arbitration in India, highlighting the shift from court-centric litigation to alternative dispute resolution mechanisms, with a focus on institutional frameworks such as the Mumbai Centre for International Arbitration (MCIA) and the Indian Council of Arbitration (ICA). Drawing comparisons with internationally acclaimed institutions like the Singapore International Arbitration Centre (SIAC) and the London Court of International Arbitration (LCIA), the paper identifies key challenges that impede the growth of institutional arbitration in India. These include limited awareness, lack of procedural uniformity, judicial interference, and infrastructural inefficiencies.
The study adopts a qualitative research methodology based on secondary sources, including legislative texts, institutional reports, and scholarly commentary. It explores how established arbitration centres like SIAC have successfully leveraged government policy, global trust, and technological adaptation to become preferred venues for Indian and international parties alike. The paper concludes with targeted reform suggestions aimed at positioning India as a competitive hub for international arbitration. These include incentivising arbitrators, enhancing institutional autonomy, adopting pro-enforcement judicial practices, and promoting awareness among Indian corporates.
Key Words
Arbitration; Institutional Arbitration; Cross-Border Disputes; Commercial Disputes; Singapore International Arbitration Centre (SIAC); Mumbai Centre for International Arbitration (MCIA); Indian Council of Arbitration (ICA)
Introduction
Arbitration, as a form of alternative dispute resolution (ADR), has emerged as a cornerstone of modern commercial dispute resolution—especially in the context of cross-border transactions. The term ‘Institutional Arbitration’ refers to arbitration administered by a specialized arbitral institution, such as the Singapore International Arbitration Centre (SIAC), London Court of International Arbitration (LCIA), or India’s Mumbai Centre for International Arbitration (MCIA). These institutions provide a structured procedural framework, administrative support, and enforceable rules, which contribute to the efficiency, predictability, and finality of arbitration proceedings.
Historically, India had adopted a court-centric approach to dispute resolution, leading to prolonged delays and inefficiencies. Although the Arbitration Act of 1940 was an early attempt to formalize arbitration, it was heavily criticized for excessive judicial intervention and lack of procedural clarity. This prompted the enactment of the Arbitration and Conciliation Act, 1996, based on the UNCITRAL Model Law, which marked a significant shift towards party autonomy and minimal court interference. However, ad hoc arbitration remained predominant in India for many years, and institutional arbitration was largely underutilized despite its success abroad.
In the context of cross-border commercial disputes, arbitration has become a preferred mode of resolution due to its inherent advantages: neutrality, confidentiality, enforceability of awards under the New York Convention, and procedural flexibility. Cross-border disputes often involve parties from diverse legal, linguistic, and cultural backgrounds, making a neutral and efficient dispute resolution mechanism imperative. Furthermore, multinational corporations and foreign investors increasingly seek dispute forums that ensure predictability, reduced timelines, and limited judicial interference, all of which institutional arbitration can provide.
Globally, institutions like Singapore International Arbitration Centre (SIAC), London Court of International Arbitration (LCIA), and the International Chamber of Commerce (ICC) have built a reputation for trustworthy, independent, and expedient dispute resolution. Their popularity is reflected in caseload statistics, with SIAC alone recording over 1000 new cases in recent years, many involving Indian parties. These institutions offer not only efficient administration but also maintain strict standards for confidentiality, neutrality, and enforceability of awards. In contrast, India’s institutional arbitration framework, though improving, still faces challenges in adoption, awareness, and procedural infrastructure. The establishment of the Mumbai Centre for International Arbitration in 2016 and recent legislative reforms are aimed at positioning India as a hub for institutional arbitration, particularly for resolving cross-border commercial disputes involving Indian corporates.
This paper aims to evaluate the effectiveness of institutional arbitration in India, assess its comparative standing against international arbitral institutions like the SIAC and the LCIA, and analyse adoption trends among Indian corporates, with a view toward identifying gaps and suggesting reforms to enhance India’s role in the global arbitration ecosystem.
Research Methodology
The research methodology adopted in this paper is one of qualitative analysis through secondary research into the institutional arbitration centres in India and around the globe, highlighting the challenges faced by Indian arbitral institutions in terms of efficiency in timely resolution of commercial disputes.
While India has made significant strides in institutional arbitration through reforms and the establishment of centres like the MCIA, challenges persist in matching the efficiency, global trust, and adoption levels of established institutions like SIAC and LCIA. This paper critically evaluates India’s institutional arbitration landscape, comparing it with SIAC and LCIA, and analysing adoption trends among Indian corporates.
Literature Review
Comparative Analysis of Institutional Arbitration between India and Singapore by Ayushi Maheshwari
The research paper titled “Comparative Analysis of Institutional Arbitration between India and Singapore” by Ayushi Maheshwari explores the evolution, current framework, and challenges of institutional arbitration in India, juxtaposing it against Singapore’s internationally acclaimed arbitration system.
In contrast, Singapore is portrayed as a successful arbitration hub with a dual legal regime (Arbitration Act and International Arbitration Act), limited judicial intervention, and strong institutional backing through SIAC. SIAC’s growth is attributed to proactive government policies, international credibility, and efficient case management procedures. The comparative section highlights India’s deficits in arbitrator diversity, tax incentives, and institutional strength, which make Indian corporates prefer SIAC over domestic institutions like MCIA. The paper concludes with reform suggestions, including creating a national grading system for arbitral institutions, incentivizing expert arbitrators, and fostering greater autonomy and professionalism to make India a global arbitration destination.
2024 PAW: The Rise of Arbitration in Asia by Youssef Ben Khamsa
The blog post titled “2024 PAW: The Rise of Arbitration in Asia” by Youssef Ben Khamsa, published on April 12, 2024, provides a comprehensive overview of Asia’s burgeoning role in the global arbitration landscape.
The panellists highlighted the significant strides made by Asian jurisdictions, particularly Singapore and Hong Kong, in establishing themselves as premier arbitration hubs. According to the Queen Mary University of London International Arbitration Survey 2021, for the first time, SIAC has been ranked alongside LCIA as the most preferred arbitration seat. Hong Kong follows closely.
In conclusion, the article underscores Asia’s ascension in the arbitration arena, attributing it to a combination of legal reforms, infrastructural investments, and strategic policy decisions. The insights from the panellists collectively paint a picture of a region poised to play a pivotal role in shaping the future of international arbitration.
India continues work to modernise arbitration landscape by Mohammed Talib
The blog post titled “India continues work to modernise arbitration landscape” by Mohammed Talib, published on March 19, 2025, discusses India’s ongoing efforts to enhance its arbitration framework.
In June 2024, the Indian government introduced new guidelines promoting mediation as the preferred method over arbitration for resolving large public procurement disputes. These guidelines aim to make dispute resolution involving government entities more efficient and streamlined. Arbitration will no longer be automatically included in procurement contracts, particularly for high-value disputes. Instead, arbitration will be limited to disputes valued below ₹10 crore (around US$1.2 million), while disputes exceeding this amount will require careful evaluation and approval from senior officials. When arbitration is employed, institutional arbitration will be favored to maintain consistency and quality in the process. Additionally, disputes that fall outside arbitration clauses and where alternative resolution methods fail will be resolved through the courts.
This blog highlights the recent developments in both the arbitration and mediation mechanisms for resolving disputes including the scope of the Arbitration Amendment Bill, 2024.
Online Arbitration in Theory and in Practice: A Comparative Study of Cross-Border Commercial Transactions in Common Law and Civil Law Countries by Dr Ihab Amro
This book provides a comprehensive overview of online arbitration and electronic contracting on a global scale, exploring their national and international frameworks and evaluating their continuing significance. It addresses key challenges faced by both online arbitration and electronic contracting, focusing primarily on online arbitration as a method of online dispute resolution for both traditional and e-commerce disputes arising from breaches of contractual obligations in international commercial contracts. The book also delivers a comparative analysis between civil law and common law jurisdictions.
From a legal theory perspective, the book examines the international legal framework governing e-commerce and its influence on electronic contracting. It further explores the applicability of the 1980 UN Convention on Contracts for the International Sale of Goods (CISG) to e-commerce contracts. Additionally, it thoroughly investigates the enforceability of online arbitration agreements and awards under the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Method
Role of Arbitration in Cross-Border Commercial Disputes
There are three primary reasons why parties opt for arbitration to resolve disputes in cross-border transactions. Firstly, arbitration simplifies dispute resolution by avoiding the complexities of determining which legal system will govern the process—that is, which country’s courts will have jurisdiction and which procedural and substantive laws will apply—especially when the parties are unfamiliar with the local laws of the countries involved in the transaction. Secondly, arbitration saves both time and money, while allowing the parties to set the procedural rules themselves, all within the framework of fundamental legal principles. Thirdly, dispute resolution methods such as arbitration, mediation, and conciliation emphasize neutrality and impartiality, rather than diverting attention, enabling parties to reach fair and objective outcomes that support the ongoing health of their business relationships.
In international business agreements, parties often choose an arbitration “seat” in a country unrelated to their business operations to ensure freedom from both actual and anticipated bias. Commercial contracts typically specify that arbitration will follow established institutional rules of procedure. Moreover, the parties usually identify and firmly agree upon the substantive law that will govern any disputes arising from the transaction.
As Sir Michael John famously stated in his influential work, Transnational Arbitration in English Law, “The core of the theory of ‘transnational arbitration’ is that the institution of international commercial arbitration is an autonomous juristic entity independent of all national courts and legal systems.” One of the key aims of the trans-nationalist approach is to sever the connection between the arbitration process and the national courts of the country where arbitration takes place.
Indian Arbitral Institutions
Establishment and Objectives of the Indian Council of Arbitration (ICA)-
Founded in 1965, the Indian Council of Arbitration (ICA) was established as a leading national arbitral institution through the joint efforts of the Government of India, the Federation of Indian Chambers of Commerce and Industry (FICCI), along with other prominent business organisations. It also stands as one of the oldest institutions overseeing arbitration proceedings within India. Headquartered in New Delhi, the ICA was created with the principal aim of facilitating the amicable, efficient, and cost-effective resolution of commercial disputes through arbitration and conciliation, irrespective of the geographical location of the disputing parties.
Recognizing the adverse financial and operational impact that prolonged and expensive business disputes can have on companies, a growing number of commercial entities—both domestic and international—are increasingly seeking the services of ICA. The institution has earned a reputation as a dominant force in the field of dispute resolution in India, and it is widely acknowledged as a leading arbitral body across the Asia-Pacific region.
Currently, the ICA handles over 400 arbitration cases annually, encompassing a wide spectrum of both domestic and cross-border commercial disputes. One of its notable areas of specialisation is in Maritime Arbitration, where it offers tailored dispute resolution services to the shipping and logistics sectors.
In addition to case administration, the Indian Council of Arbitration is also deeply engaged in the promotion of education and training in Alternative Dispute Resolution (ADR) mechanisms, thereby contributing to the development of arbitration expertise in India. Through its comprehensive administrative support, a vast and experienced panel of arbitrators, and adherence to global best practices, the ICA stands as a one-stop solution for commercial entities seeking expedient, reliable, and professionally organised dispute resolution services.
Establishment and Objectives of the Mumbai Centre for International Arbitration (MCIA)-
India’s judicial system demonstrates strength, autonomy and considerable authority while maintaining impartiality toward international businesses. Nevertheless, significant challenges persist regarding court delays and ineffective case management. Combined with unrealistic cost awards, legal proceedings often become frustratingly lengthy and costly. Consequently, incorporating arbitration clauses in all commercial agreements is essential for amicable and efficient dispute resolution.
The Mumbai Centre for International Arbitration functions as an independent organisation established to provide alternative dispute resolution mechanisms and serve as arbitrator or mediator for international commercial transactions. This channel enables individuals to exercise their rights under section 89 of the Civil Procedure Code, 1908, pursuing out-of-court settlements when feasible. Established in 2016, the Mumbai International Arbitration Centre addresses international commercial disputes, excluding those related to taxation and intellectual property, through arbitration and mediation processes.
The Mumbai International Arbitration Centre was created with several objectives:
- Facilitating resolution of international disputes involving Indian companies
- Enhances the ease of conducting business within the country
- Providing cost-effective dispute resolution by handling cases domestically
- Offering cities as neutral venues with arbitrators possessing exceptional professional experience meeting international standards
- Ensuring disputes are resolved within 12 months from filing date
Arbitration institutions are vital in supporting dispute resolution on a global scale. Established international arbitral bodies such as the ICC, LCIA, and SIAC are renowned for their efficiency and expertise. Meanwhile, Indian institutions like the ICA, MCIA, and DIAC are progressively advancing their services and building international recognition. A comparative analysis reveals both the strengths and challenges faced by Indian and international arbitration institutions, emphasizing the importance of ongoing development and alignment with global best practices to strengthen the overall arbitration framework.
Trends Adopted by Indian Corporates of Institutional Arbitration
In recent years, Indian corporations have increasingly embraced institutional arbitration, signaling a shift from the traditional preference for ad hoc proceedings. This trend is illustrated by the Mumbai Centre for International Arbitration (MCIA), which reported a 48% rise in new cases from 2023 to 2024, rising from 23 to 34 cases. Notably, 98% of these cases were initiated from contracts encompassing model MCIA clauses, indicating a expanding trust among Indian businesses in institutional arbitration’s mechanisms, rules and frameworks. Furthermore, the MCIA achieved a commendable efficiency rate, with 91% of awards delivered within 18 months and none set aside by courts, enhancing its credibility among corporate users.
Notwithstanding these progressions, a survey by PwC in 2019 revealed that while 91% of Indian companies with a dispute resolution policy included arbitration clauses, a majority still favoured ad hoc arbitration (47%) over institutional arbitration (40%). This preference was attributed to factors such as perceived flexibility and cost considerations. However, the landscape is evolving. The Singapore International Arbitration Centre (SIAC) reported that Indian parties were its top users in 2022, reflecting a growing openness to international institutional arbitration.
The increasing adoption of institutional arbitration by Indian corporates is further supported by strategic initiatives. For instance, the directive of the Maharashtra State Government, requiring all contracts crossing the threshold of INR 5 crore to include institutional arbitration clauses has reinforced the MCIA’s eminence. Additionally, the establishment of representative offices by international arbitral institutions like SIAC and the International Chamber of Commerce (ICC) in Indian cities underscores the country’s growing significance in the global arbitration arena.
In conclusion, while ad hoc arbitration has historically dominated India’s dispute resolution landscape, there is a discernible shift towards institutional arbitration among Indian corporates. This transition is driven by factors such as increased efficiency, credibility of arbitral institutions, and supportive governmental policies. As institutional arbitration continues to gain traction, it is poised to play a pivotal role in shaping India’s dispute resolution framework.
Challenges Faced by Arbitrators and Disputing Parties in Indian Institutional Arbitration
Despite legislative reforms and the establishment of arbitral institutions like the Mumbai Centre for International Arbitration (MCIA), both arbitrators and disputing parties in India continue to encounter significant challenges that obstruct the efficiency and integrity of institutional arbitration.
1. Judicial Intervention and Procedural Ambiguities
One of the foremost challenges is the frequent intervention of courts in arbitration proceedings. While the Arbitration and Conciliation Act, 1996, aims to minimise judicial interference, in practice, courts often entertain challenges to arbitral awards under Section 34, leading to delays and uncertainty. Additionally, ambiguities in procedural aspects of the Act have resulted in inconsistent interpretations by various courts, further complicating the arbitration process.
2. Drafting Deficiencies in Arbitration Clauses
Poorly drafted arbitration clauses are a recurring issue, that often lead to disputes over the interpretation and scope of the arbitration agreement, further complicating the dispute resolution course. The Supreme Court of India has also emphasized the necessity in improving the drafting standards of arbitration clauses, encouraging the refutation of sloppily drafted clauses and even suggesting penalties against the drafters of such incomplete arbitration clauses.
3. Challenges to Arbitrators’ Impartiality and Independence
Arbitrators in India are frequently subjected to challenges concerning their impartiality and independence. The Arbitration and Conciliation Act incorporates provisions from the IBA Guidelines on Conflicts of Interest, allowing parties to challenge arbitrators on grounds that raise justifiable doubts about their neutrality. However, the lack of a standardized approach to such challenges can lead to inconsistent outcomes and undermine confidence in the arbitration process.
4. Enforcement of Arbitral Awards
The enforcement of arbitral awards remains a significant hurdle. Delays in the execution of awards can erode the benefits of arbitration as a time-efficient dispute resolution mechanism. The absence of dedicated courts for arbitration-related matters contributes to these delays, affecting the overall efficacy of the arbitration system.
5. Lack of Awareness and Institutional Support
There is a general lack of awareness among businesses, especially small and medium enterprises, about the benefits and procedures of institutional arbitration. This lack of knowledge, coupled with limited institutional support and resources, hampers the growth and acceptance of arbitration as a preferred dispute resolution method.
In conclusion, while India has made strides in promoting arbitration, addressing these challenges is crucial for enhancing the effectiveness and credibility of institutional arbitration in the country. Concerted efforts involving legislative clarity, judicial restraint, improved drafting practices, and increased awareness are essential to overcome these obstacles.
Conclusion
Institutional arbitration plays a pivotal role in the swift, impartial, and cost-effective resolution of cross-border commercial disputes, offering a viable alternative to traditional litigation, which is often protracted and jurisdictionally complex. India, with its strong economic trajectory and rising prominence in global trade, stands at a critical juncture in its journey to become a leading destination for international arbitration. Despite the establishment of institutions like the Indian Council of Arbitration (ICA) and the Mumbai Centre for International Arbitration (MCIA), India has not yet been able to position itself on par with global arbitration hubs like Singapore or London.
This paper has shown that while institutional frameworks exist in India, their adoption remains limited, particularly among Indian corporates. Factors such as judicial interference, lack of credible arbitrator panels, insufficient government incentives, and limited international credibility contribute to this underutilisation. In contrast, centres like SIAC and LCIA have succeeded by implementing strong governance structures, international outreach, technological innovation, and state support.
The comparative analysis reveals that India must move beyond symbolic institutional establishment and focus on substantive reform. These include the promotion of judicial non-interventionism, creation of a national grading system for arbitral institutions, reduction in tax burdens for arbitrators, and encouragement of foreign institutional partnerships. Furthermore, training programs and academic initiatives to build arbitration literacy among corporates and practitioners are vital for widespread acceptance of institutional arbitration.
Another key takeaway is the need for digital integration, especially in light of growing e-commerce and online dispute resolution (ODR) frameworks. Institutions like SIAC and HKIAC have already incorporated digital case management and remote hearings as a standard feature, enhancing their global appeal.
In conclusion, while India has laid down the foundational framework for institutional arbitration, significant progress remains to be made in implementation, enforcement, and globalisation. If India is to emerge as a credible global arbitration hub, its strategy must be multi-faceted—legal reform, capacity building, policy incentives, and global benchmarking. Only through such a concerted approach can institutional arbitration in India evolve into a globally preferred mechanism for resolving complex commercial disputes.
Submitted by:
Jochebed Bijesh Slater, 4th-Year student at School of Law, Presidency University