International Arbitration In India 2026: Beyond The Obvious — Key Procedures & Insights For Global Businesses And Lawyers

Executive Summary

• This document explains how international arbitration operates in the Indian context, from drafting arbitration clauses to recognition and enforcement of foreign awards.
• Covers key procedures including interim reliefs (Sections 9 and 17), appointment of arbitrators (Section 11), jurisdiction challenges (Section 16), and setting aside of awards (Section 34).
• Highlights how Indian courts interact with India-seated and foreign-seated arbitrations, with a focus on pro-enforcement trends and limits on judicial intervention.
• Clarifies what is and is not arbitrable in India, including specialised areas like consumer, employment, insolvency, fraud, and rights in rem versus rights in personam.
• Designed for foreign investors, global businesses, and counsel navigating contracts with Indian parties, India-seated arbitrations, or enforcement of foreign awards in India.

R & D Law Chambers is a research-driven dispute resolution and advisory practice serving clients across India and internationally. We operate at the intersection of arbitration, commercial litigation, regulatory disputes, and cross-border tax and transactional issues, helping businesses and legal teams navigate high-value matters involving India. To know more about our services, you may click our services.

FRAMEWORK

1. What is the primary legislation governing arbitration in India, and what is it based on?

The primary legislation governing arbitration in India is the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act"). This Act provides a comprehensive legal framework for domestic arbitration, international commercial arbitration, and conciliation in India. It was enacted to modernize Indian arbitration law and align it with global standards, making arbitration a preferred mode of dispute resolution.

The Act is largely based on the UNCITRAL Model Law on International Commercial Arbitration, 1985, with modifications to suit India's legal and commercial environment. It incorporates key principles of the Model Law, such as minimal court intervention, party autonomy, the competence-competence principle, and recognition and enforcement of arbitral awards. The grounds for setting aside an arbitral award under Section 34 of the Act closely follow those under Article 34 of the Model Law.

Despite its foundation in the UNCITRAL Model Law, the Act has some notable deviations. It includes specific provisions for domestic arbitration, which the Model Law does not address. Additionally, India initially had an automatic stay on arbitral awards upon challenge under Section 34, a provision removed by the 2015 amendment. The interpretation of "public policy" as a ground for challenging enforcement is also broader in India compared to the Model Law.

Overall, the Act of 1996, while inspired by the UNCITRAL Model Law, has been adapted to meet India's specific legal and economic needs, ensuring both efficiency and fairness in arbitration proceedings.

2. What conventions have India ratified on the Recognition and Enforcement of Foreign Arbitral Awards?

India is a signatory to the Geneva Convention on the Execution of Foreign Arbitral Awards, 1927 (Geneva Convention), and Recognition and Enforcement of Foreign Arbitral Awards, 1958 (New York Convention). Below is a combined overview that outlines the scope of each convention along with the reservations or qualifications India has attached to them:

1. Geneva Convention (1927)

India is a party to the Geneva Convention on the Execution of Foreign Arbitral Awards, 1927. The framework for its implementation was originally established under the Arbitration (Protocol and Convention) Act, 1937, and later the relevant provisions were incorporated into the Arbitration and Conciliation Act, 1996.

Although India remains a party to the Geneva Convention, in practice its significance has diminished because the New York Convention's broader acceptance and more streamlined mechanisms for enforcement have largely superseded it.

2. New York Convention (1958)

India signed the New York Convention on June 10, 1958, ratified it on July 13, 1960, and it came into force in India on October 11, 1960.

India has attached two primary reservations under the New York Convention:

• Reciprocity Reservation: India applies the Convention only to the recognition and enforcement of awards made in the territories of contracting states that have been officially notified as reciprocating under the Indian Official Gazette. As a result, only awards from these recognized countries are enforceable. It is relevant to add that the Government of India has notified all key international arbitration hubs such as Switzerland, China, the United States, Sweden, Singapore, the United Kingdom, and France.
• Commercial Reservation: The Convention is limited to disputes arising out of legal relationships, whether contractual or not – that qualify as commercial under Indian law. This ensures that only commercial arbitral awards are recognized and enforced.

These qualifications are codified in PART-II of the Arbitration and Conciliation Act, 1996, which governs the enforcement of foreign arbitral awards in India.

In essence, while India remains bound by both conventions, the New York Convention, with its reciprocity and commercial reservations, is the primary instrument for enforcing foreign arbitral awards. The Geneva Convention, although still in force, is subject to similar commercial restrictions and specific territorial exclusions, and is now of lesser practical relevance compared to the New York Convention.

GENERAL INTRODUCTION

3. How does Indian legislation distinguish domestic arbitration from international commercial arbitration?

The Arbitration and Conciliation Act, 1996, is divided into several parts. PART-I governs the conduct and procedures of arbitration and is primarily directed toward domestic arbitration, while PART-II lays down the regime for the enforcement of foreign awards.

So, the said Act distinguishes domestic arbitration from international commercial arbitration primarily by the nationality of the parties to the arbitration. While, there is no specific definition in the act to define Domestic Arbitration, Section 2(f) defines Internation Commercial Arbitration as –

This clear definition underscores that if any party to the arbitration falls within one of the above categories, the arbitration is classified as international.

Additionally, to distinguish an international commercial arbitration and from domestic arbitration, the deciding factor to be looked at is - whether the parties involved in disputes are Indian? If yes, the same would come under the umbrella of domestic arbitration. This means that such arbitration process, which includes the appointment of arbitrators, obtaining interim relief and the enforcement of awards before the concerned court, might change depending on whether the arbitration is considered to be 'domestic arbitration' or 'international commercial arbitration'.

It is also pertinent to note that in India-seated arbitrations, whether domestic or international, only PART-I of the Act of 1996, applies. This encompasses provisions related to arbitrability, appointment of arbitrators, obtaining evidence through court assistance, interim relief, and other aspects.

On the other hand, international commercial arbitration is subject to additional procedural safeguards and the framework of international conventions such as the New York Convention, to ensure that awards are recognized and enforced across borders, while domestic arbitration remains within the purview of India's internal legal system.

4. Is foreign-seated arbitration distinct and different from international commercial arbitration under Indian legislation?

Yes, under the Act of 1996, there is a difference between foreign-seated arbitration distinct international commercial arbitration depending upon the facts of the case. The primary difference lies in the applicability of different parts of the Act.

The term "international commercial arbitration" as defined under Section 2(f) is in PART-I of the Act, which governs arbitrations where the seat/place of arbitration is in India.

While, if the arbitration is foreign-seated i.e. seat/place of arbitration is outside India, then only PART-II of the Act applies. Thus, once an award is passed in such foreign-seated arbitration, the powers of the Indian Courts are limited to only its enforcement in India, governed solely by PART-II, in accordance with the New York Convention or Geneva Convention, as the case may be. The Supreme Court judgement in BALCO v. Kaiser Aluminum; Civil Appeal No. 7019 of 2005, overruled the earlier decisions in Bhatia International v. Bulk Trading S.A. (2002) and Venture Global Engineering v. Satyam Computer Services Ltd. (2008), which had permitted Indian courts to exercise jurisdiction over foreign-seated arbitrations under PART-I of the Arbitration and Conciliation Act, 1996. In BALCO case, the Supreme Court clarified that PART-I applies exclusively to arbitrations seated in India, thereby limiting the intervention of Indian courts in foreign-seated arbitrations.

So, even if one of the parties to the arbitration is a foreign entity, and the arbitration thereby qualifies as an international commercial arbitration, it would not be considered a foreign-seated arbitration if the seat of arbitration is in India.

It is further pertinent to note that on the other hand, the nationality or origin of the parties i.e. whether Indian or foreign, has no bearing on the applicability of PART-II of the Act. If the parties have agreed to a foreign-seated arbitration, then, the arbitration will be governed by PART-II of the Act.

5. What provisions under the Arbitration and Conciliation Act, 1996, will apply to the foreign-seated arbitration?

As pointed-out above, the Act of 1996 is broadly divided into several parts. PART- I governs the conduct and procedures of arbitration (covering Sections 2 to 43) and is primarily directed toward arbitrations conducted in India, while PART-II (Sections 44–60) lays down the regime for the enforcement of foreign awards. Although the foundational definitions in Section 2 are found in PART-I, many of these terms such as "arbitration," "arbitration agreement," "arbitral award," "arbitral tribunal," "court," and "international commercial arbitration", may set the interpretive framework for the entire Act depending upon the facts.

Furthermore, the several provisions under the Act i.e. Section 9 - Interim measures, etc., by Court, Section 27 - Court assistance in taking evidence and, Section 37(a)(1) - Appeal against Order of refusing to refer the parties to arbitration & Section 37(3) - No second appeal, shall also apply to foreign-seated arbitration i.e. place of arbitration is outside India, and an arbitral award made under such arbitration is enforceable and recognised under the provisions of PART-II of this Act.

PART-II of the Act is dedicated to the enforcement of foreign awards. Here, a separate definition under Section 44 & Section 53, is introduced with respect to interpretation of the term 'foreign award'.

Unlike the definitions of other core terms (which though continue to influence interpretation in PART-II), the definition of "foreign award" is unique to PART-II. This demarcation reflects the fact that while PART-I governs the conduct and formation of arbitration proceedings within India, PART-II is structured around the recognition and enforcement of awards rendered by tribunals outside of India in international commercial arbitration.

6. Are the provisions prescribed in Indian arbitration law mandatory, or do they allow for contractual flexibility, freedom, and separability?

The Act of 1996, incorporates both mandatory provisions that parties must follow and non-mandatory provisions that allow flexibility and contractual freedom. This approach aligns with international arbitration standards while ensuring procedural fairness and efficiency.

1. Mandatory Provisions in Indian Arbitration Law
   
   • Equal Treatment of Parties (Section 18) – Ensures that both parties are treated fairly and given a full opportunity to present their case.
   • Judicial Intervention (Section 5) – Courts are restricted from intervening in arbitration matters except where explicitly permitted by the Act.
   • Grounds for Challenge of an Arbitral Award (Section 34) – Provides the exclusive grounds for setting aside an arbitral award, such as violation of public policy or lack of proper notice. To read more about section 34 click here.
   • Enforcement of Awards (Section 36) – Specifies that an arbitral award shall be enforced as if it were a court decree unless set aside under Section 34.
   • Appointment of Arbitrators (Section 11, post-2015 Amendment) – While parties can choose their arbitrators, the courts may intervene if there is a failure in the appointment process. To read more about Section 11 click here.
   • Independence and Impartiality of Arbitrators (Schedule V & VII) – Arbitrators must be impartial and free from conflicts of interest; certain relationships with parties or counsel disqualify them.
2. Flexible Provisions
   
   • Choice of Seat and Venue (Section 20) – Parties are free to decide whether arbitration will be conducted in India or abroad.
   • Procedure and Rules (Section 19) – Unless agreed otherwise, arbitrators are free to determine the procedure. Parties can also opt for institutional rules.
   • Number of Arbitrators (Section 10) – While the default is a sole arbitrator, parties can decide on any number of arbitrators (provided it is an odd number).
   • Language of Arbitration (Section 22) – The parties may decide the language in which proceedings will be conducted.
   • Interim Measures (Section 17) – Parties can agree on whether the arbitral tribunal should have the power to grant interim relief, instead of relying on courts under Section 9.
   • Fast-Track Arbitration (Section 29B) – If agreed, parties can opt for an expedited process with a single arbitrator, requiring an award within six months.

Doctrine of Separability

Under Section 16(1) of the Act, the arbitration agreement is treated as separate from the main contract. This means that even if the underlying contract is declared void or terminated, the arbitration clause remains valid unless specifically found to be invalid. This doctrine ensures that arbitration remains effective even in cases of contractual disputes.

Overall, the Arbitration and Conciliation Act, 1996, provides significant contractual freedom in arbitration proceedings while retaining essential mandatory provisions to uphold fairness and enforceability. This balance allows parties to customize their arbitration framework while ensuring procedural integrity under Indian law.

7. How does India's arbitration framework, including judicial intervention practices, measure up to those of other prominent arbitration-friendly jurisdictions?

India has made significant strides in becoming an arbitration-friendly jurisdiction, particularly with the amendments to the Arbitration and Conciliation Act, 1996 in 2015 & 2019. However, when compared to other major arbitration-friendly jurisdictions such as Singapore, the United Kingdom, France, and Hong Kong, there are some key differences in the legal framework and level of judicial intervention.

In jurisdictions like Singapore and the United Kingdom, arbitration laws are strongly aligned with international standards such as the UNCITRAL Model Law. These jurisdictions offer minimal court intervention, robust enforcement mechanisms, and specialized commercial courts that ensure arbitration-friendly judicial policies. Singapore's International Arbitration Act provides extensive party autonomy and limits judicial interference, making it one of the most preferred arbitration hubs. Similarly, the United Kingdom, under the Arbitration Act 1996, allows very limited scope for judicial review of arbitral awards.

India, through amendments in 2015 and 2019, has significantly reduced judicial intervention by restricting the scope of interference in arbitral proceedings and award enforcement. Provisions like those limiting court involvement to specific circumstances, fast-track procedures, and the promotion of institutional arbitration have aligned India with global arbitration standards. However, despite these improvements, Indian courts have occasionally been criticized for inconsistent interpretations of arbitration clauses and enforcement delays.

Another critical distinction lies in the role of institutional arbitration. Singapore and Hong Kong actively promote institutional arbitration through leading arbitral institutions such as SIAC and HKIAC, which ensure efficient dispute resolution. India has traditionally relied on ad hoc arbitration, which often leads to inefficiencies and delays. The establishment of the Arbitration Council of India aims to address this gap, but institutional arbitration is still developing compared to its global counterparts.

While India is moving towards a more arbitration-friendly framework, challenges such as judicial delays and inconsistent enforcement remain areas for improvement. In comparison, leading arbitration hubs have successfully implemented a pro-arbitration legal environment with limited court intervention, making them more attractive for international commercial arbitration.

To read this article in full, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.