Arbitration in India : From Reluctance to Reform

According to the World Intellectual Property Organization (WIPO), arbitration is defined as” A procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court. ” In Alternative Dispute Resolution, Arbitration has long been celebrated for its promise of speed, neutrality, and finality in resolving commercial disputes outside the traditional court system. However, the promise remained largely unfulfilled for decades in India, neither due to ambiguous wordings in the statute nor because of any inherent flaw in the concept itself, but because of the judiciary that repeatedly extended its reach into arbitral proceedings, particularly those seated outside India. The story of arbitration in India is, in many ways, the story of a gradual and arduous process of rectification, culminating in one of the most significant and consequential judgments in the history of Indian commercial law: Bharat Aluminium Company v. Kaiser Aluminium Technical Services Inc. (2012), famously known as the BALCO judgment. This article comprehensively analyses the evolution of arbitration law in India, by examining the judicial overreach that hindered the growth of International Commercial Arbitration, the pivotal role of the BALCO decision in making India from arbitration hostile to arbitration friendly, and the legislative reforms that followed in its wake.