At the latest edition of the Delhi Arbitration Weekend (DAW), Union law minister Arjun Ram Meghwal remarked that “it is time to revisit Section 34 of the Arbitration and Conciliation Act, 1996”. The observation could not be more timely. If India is serious about its ambition of becoming a global arbitration hub, the autonomy of arbitral proceedings must be reinforced and judicial interference curtailed.
The institutional framework already exists. The Delhi International Arbitration Centre (DIAC), the Mumbai Centre for International Arbitration (MCIA), and the GIFT City International Arbitration Centre have been established to provide modern facilities and align Indian arbitration with international standards. Yet India has not secured the confidence of the international business community. The problem lies not in infrastructure but in the interpretation and application of the Act, particularly Section 34.
Section 34 was conceived as a narrow safeguard. It empowers courts to set aside arbitral awards only in exceptional circumstances such as fraud, incapacity, or breaches of natural justice. The provision reflects the principle of minimal judicial intervention, which is central to the UNCITRAL Model Law. In practice, however, this principle has been diluted. Section 34 petitions have become routine and are often treated as disguised appeals. Proceedings stretch for years, undermining the speed and finality that arbitration promises.
The Supreme Court has on several occasions sought to rein in this trend. In McDermott International Inc. v. Burn Standard Co. Ltd. (2006), the Court held that a court cannot correct errors of the arbitrators and that its role is confined to setting aside an award, not substituting its own reasoning. In Kinnari Mullick v. Ghanshyam Das Damani (2018), the Court reaffirmed that Section 34 does not empower courts to modify or rewrite arbitral awards. The 2015 amendment to the Act was intended to codify this philosophy by narrowing the definition of “public policy” and introducing timelines for disposal of petitions. The Supreme Court in Ssangyong Engineering & Construction Co. Ltd. v. NHAI (2019) gave effect to this intent, holding that post-2015, courts cannot revisit the merits of a dispute under the pretext of “public policy” or “patent illegality”. In Delhi Airport Metro Express Pvt. Ltd. v. DMRC (2022), the Court stressed that judicial interference must be limited to rare cases of extreme perversity that shock the conscience.
{{/usCountry}}The Supreme Court has on several occasions sought to rein in this trend. In McDermott International Inc. v. Burn Standard Co. Ltd. (2006), the Court held that a court cannot correct errors of the arbitrators and that its role is confined to setting aside an award, not substituting its own reasoning. In Kinnari Mullick v. Ghanshyam Das Damani (2018), the Court reaffirmed that Section 34 does not empower courts to modify or rewrite arbitral awards. The 2015 amendment to the Act was intended to codify this philosophy by narrowing the definition of “public policy” and introducing timelines for disposal of petitions. The Supreme Court in Ssangyong Engineering & Construction Co. Ltd. v. NHAI (2019) gave effect to this intent, holding that post-2015, courts cannot revisit the merits of a dispute under the pretext of “public policy” or “patent illegality”. In Delhi Airport Metro Express Pvt. Ltd. v. DMRC (2022), the Court stressed that judicial interference must be limited to rare cases of extreme perversity that shock the conscience.
{{/usCountry}}Despite these authoritative rulings, the reality remains very different. Section 34 petitions continue to evolve into extended battles, followed by Section 37 appeals and sometimes even special leave petitions before the Supreme Court. Arbitration thus risks becoming the first step of litigation rather than an alternative to it. For businesses, the result is predictable. High-value arbitrations continue to be seated in Singapore or London rather than in Delhi or Mumbai.
The comparison with Singapore is instructive for our growth. The Singapore International Arbitration Centre (SIAC) has emerged as Asia’s leading arbitral seat not only because of modern facilities but also because of the legal culture in which it operates. Singapore courts adopt a restrained approach. Awards are final except in rare cases involving fraud or breach of natural justice. Challenges are resolved swiftly, timelines are respected, and outcomes are predictable.
If India is to advance its vision of becoming an arbitration hub, reform of Section 34 is imperative. First, the “public policy” exception should be statutorily confined to exceptional grounds such as fraud, corruption, or fundamental breaches of natural justice. Vague categories like “morality” or open-ended “patent illegality” should be eliminated. Second, the statutory timeline for the disposal of Section 34 petitions must be enforced with real discipline. The one-year period introduced by the 2015 amendment is rarely followed in practice. Unless courts adhere to deadlines, arbitration will remain hostage to delay. Third, the structure of appeal requires rationalisation, Section 34 challenges followed by Section 37 appeals and further escalation through special leave petitions undermine finality. A single-tier, fast-track challenge mechanism, similar to the model in Singapore, would restore confidence in Indian arbitration.
India’s aspiration to be an arbitration hub is both laudable and necessary. With increasing cross-border transactions and foreign investment flows, the demand for credible dispute resolution frameworks will only rise. Institutions and infrastructure, however modern, cannot achieve this vision on their own. Unless arbitration in India is shielded from judicial enthusiasm, investors will continue to look elsewhere. Arbitration ultimately rests on trust: Trust that the process will be efficient and trust that an award, once rendered, will be respected.
Kumar Kartikeya is an advocate at the Supreme Court of India. The views expressed are personal