India’s arbitration framework has undergone a significant evolution in the last two decades, driven by a legislative push toward institutionalising arbitration and judicial pronouncements aimed at fostering a pro-arbitration jurisprudence. However, the tension between judicial oversight and arbitral autonomy has remained a persistent concern. The Indian Supreme Court, in a series of landmark decisions, has both expanded and curtailed the scope of judicial intervention, especially under Section 34[1] and Section 37[2] of the Arbitration and Conciliation Act, 1996 (“A&C Act”). This article reflects upon whether India is finally finding the right balance in judicial intervention, analysing recent rulings that recalibrate the role of courts in arbitral proceedings.
The Historical Pendulum: Between Excess and Restraint
For a considerable period, India’s arbitration landscape was shaped, and arguably hindered, by a broad and intrusive interpretation of the “public policy” ground for setting aside arbitral awards. This expansive approach found its most prominent judicial endorsement in the landmark case of ONGC v. Saw Pipes Ltd.[3], which continues to cast a long shadow over arbitral jurisprudence. The dispute in Saw Pipes arose from a contractual arrangement for the supply of casing pipes for offshore oil exploration. Delivery delays caused by a general strike in European steel mills led ONGC to impose liquidated damages, despite granting an extension for supply. The arbitral tribunal, however, ruled in favour of Saw Pipes, holding that ONGC was not entitled to such deductions in the absence of proof of actual loss.
ONGC challenged the award under Section 34 of the A&C Act, contending that the tribunal’s reasoning violated Indian public policy and the underlying contractual terms. The Supreme Court set aside the award, observing that the tribunal’s failure to enforce the liquidated damages clause, despite its presence in the contract, constituted a patent error of law. It held that “public policy” includes not only fundamental policy and morality but also compliance with the terms of the contract and the legal principles governing them, thereby introducing patent illegality as a ground for judicial interference.
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This decision marked a turning point: it widened the doorway for courts to interfere with arbitral awards on the basis of legal misinterpretation, even where no perversity or procedural irregularity was alleged. The consequence was a blurring of the line between supervisory jurisdiction under Section 34 and appellate scrutiny on merits, contrary to the very ethos of finality that arbitration is designed to promote. Although later decisions sought to curtail this interventionist approach, Saw Pipes remains symbolic of an era in which arbitral autonomy was subordinated to expansive judicial review.
This interventionist approach was partially moderated in Associated Builders v. Delhi Development Authority[4], where the Court attempted to define the contours of “public policy” by introducing tests such as “fundamental policy of Indian law”[5], “interest of India”, and “justice or morality”. Yet, the ambiguity remained fertile ground for frequent challenges.
The Supreme Court’s decision in Ssangyong Engineering & Construction Co. Ltd. v. National Highway Authority of India[6] marked a clear pivot towards minimal judicial interference. The Court emphasised that post-2015 Amendment, the “patent illegality” ground was confined to domestic awards, and “public policy” was to be construed narrowly. The judgment reaffirmed the sanctity of arbitral autonomy and warned against a merits-based review disguised under public policy. This decision brought India in closer alignment with UNCITRAL Model Law standards and boosted confidence among foreign investors and international contracting parties.
Recent Developments: Signs of Coherence?
The Supreme Court has, in recent years, adopted a more restrained and structured approach. Notable decisions include:
- Delhi Metro Rail Corporation v. Delhi Airport Metro Express Pvt. Ltd[7]:
This case is a striking example of the increasingly blurred boundary between judicial oversight and arbitral finality. In a marked departure from precedent, the Supreme Court, for the first time in a commercial dispute, invoked its curative jurisdiction to re-examine the merits of an arbitral award that had already been upheld at multiple judicial stages.
The dispute arose under a public-private partnership between DMRC (the public utility) and Delhi Airport Metro Express Pvt. Ltd. (the concessionaire), concerning shared responsibilities for the design, construction, and operation of the airport metro line. Following technical difficulties, particularly defects in the viaduct bearings, the Concessionaire terminated the contract, citing DMRC’s failure to cure or take effective steps to cure the defects. Arbitration ensued.
A tribunal of engineers awarded the Concessionaire approximately ₹7,500 crores. A Single Judge of the Delhi High Court rejected DMRC’s Section 34 challenge, upholding the award as reasoned and grounded in evidence. On appeal, however, a Division Bench under Section 37 partially overturned the award, prompting the Concessionaire to approach the Supreme Court under Article 136.
The Supreme Court, in its SLP ruling, reiterated that arbitral awards are immune from interference unless afflicted by patent illegality or perversity, reaffirming Associated Builders and Ssangyong. It found that the tribunal had properly distinguished between “curing” and “taking effective steps,” and had evaluated the CMRS certificate. The Review Petition was summarily dismissed.
Yet, DMRC filed a curative petition, which the Supreme Court astonishingly entertained. The Court reopened the matter, holding that the tribunal failed to define “effective steps” and did not sufficiently engage with the CMRS certificate. This reasoning is troubling for several reasons:
- The tribunal’s findings on both curative actions and CMRS implications were specifically addressed in the Section 34 ruling;
- The Court’s expectation of judicial-style articulation from a technical tribunal of engineers imposes an impractical standard, undermining the role of domain experts in arbitration;
- The use of “miscarriage of justice” as a curative ground, despite lacking an objective definition, reintroduces uncertainty and subjectivity into an already unsettled area.
Traditionally, as per Rupa Ashok Hurra v. Ashok Hurra, curative jurisdiction is confined to violations of natural justice, jurisdictional errors, or bias. None of these were present in DMRC. Instead, the Court relied on a broad notion of “manifest injustice,” without a defined threshold. Compounding this, Article 142, intended for causes pending before the Court, was arguably misapplied to reopen a fully concluded matter, raising questions about constitutional boundaries.
This decision risks destabilising the core tenets of arbitral finality. While curative jurisdiction serves as a safeguard against extraordinary injustice, its invocation in DMRC lacks the necessary rigour. If courts can reopen arbitral awards long after adjudication under loosely defined standards, the goal of speedy and binding resolution under the A&C Act is compromised.
Finally, DMRC casts a long shadow over technical arbitral tribunals, particularly in infrastructure disputes. If experts are expected to draft awards with the meticulousness of appellate courts, the viability of domain-driven arbitration could be seriously undermined.
In this landmark Constitution Bench ruling, the Supreme Court addressed the contentious issue of whether Indian courts possess the power to modify arbitral awards under Section 34 of the A&C Act. The case arose from a long-running employment dispute where an arbitral tribunal awarded ₹2 crore to the claimant, Ms. Gayatri Balasamy. The award was later modified by the Madras High Court, prompting an appeal.
By a 4:1 majority, the Court held that courts have a limited power to modify arbitral awards, including:
- Severing invalid portions of an award;
- Correcting clerical, computational, or typographical errors;
- Adjusting post-award interest in appropriate cases;
- Exercising its constitutional power under Article 142 to ensure complete justice.
However, the majority clarified that these powers are narrowly confined and must be exercised with judicial caution, without entering into a reappreciation of facts.
In a strong dissent, Justice K.V. Viswanathan rejected the majority’s view, asserting that the Arbitration Act does not permit modification of awards, and that such powers would violate the Act’s core principle of minimal judicial interference. He emphasized that courts may only set aside or remit an award, not alter its substance.
The judgment attempts to balance finality and fairness in arbitration, but has sparked debate over whether it inadvertently expands judicial oversight, potentially affecting the autonomy of the arbitral process in India.
- OPG Power Generation Pvt. Ltd. v. Enexio Power Cooling Solutions India Pvt. Ltd.[9]:
In a notable reaffirmation of judicial restraint in arbitral review, the Supreme Court upheld an arbitral award in favour of Enexio Power Cooling Solutions, reiterating that courts may interfere only when an award is patently illegal or devoid of intelligible reasoning.
The dispute arose from a contract between OPG Power Generation and Enexio for the design, supply, erection, and commissioning of air-cooled condensers at a thermal power plant in Tamil Nadu. Enexio claimed approximately ₹6.75 crores for unpaid dues, asserting full performance, while OPG denied liability, citing alleged lapses and delays.
Pursuant to the arbitration clause, the matter was referred to a tribunal, which, after examining the evidence and contract, ruled in favour of Enexio and directed both OPG and its holding company, Gita Power, to discharge the outstanding dues, rejecting OPG’s counterclaims.
OPG challenged the award under Section 34, which was allowed by a Single Judge of the High Court. However, the Division Bench reversed this finding and reinstated the award. OPG then approached the Supreme Court by way of a Special Leave Petition.
The Supreme Court declined to interfere, holding that there was no perversity or patent illegality in the award. It stressed that Section 34 does not permit appellate review, and the tribunal’s role in appreciating evidence and interpreting performance under the contract must be respected. The Court particularly rejected the argument of insufficient reasoning, clarifying that so long as the award discloses a coherent rationale, even if concise, it passes muster under Section 34. It held that only a complete absence of reasoning or non-application of mind can warrant interference.
On the merits, the Court found that although minor delays occurred, Enexio had substantially fulfilled its obligations, and OPG had failed to establish any quantifiable financial loss resulting from such delays.
This ruling is significant for two reasons. First, it reinforces the finality and autonomy of arbitral awards, limiting court oversight to truly exceptional circumstances. Second, it underscores the importance of maintaining clear contractual terms and substantiating claims with documentary evidence, particularly in complex infrastructure disputes.
For contracting parties, especially in the construction and energy sectors, the judgment serves as a reminder that claims for deductions or damages must be evidence-based, and that tribunals need only provide clear and coherent, not judicially exhaustive, reasoning for their awards to be upheld.
Together, these decisions signal a maturing of Indian arbitral jurisprudence and a conscious shift towards minimalism in judicial scrutiny.
Draft Arbitration and Conciliation (Amendment) Bill, 2024: A Step Forward?
The Draft Arbitration and Conciliation (Amendment) Bill, 2024 (“Bill”) is a bold legislative proposal that reflects India’s intent to recalibrate its arbitration framework in line with global standards. It marks a continued effort to make India a more arbitration-friendly jurisdiction by addressing procedural inefficiencies, reducing reliance on courts, strengthening institutional arbitration, and embracing digital processes. The Bill introduces a wide spectrum of reforms aimed at improving the conduct and enforceability of arbitral proceedings, while also striving to enhance transparency, procedural predictability, and user accessibility.
The Bill is a part of the government’s ongoing agenda to transform India into a preferred seat for both domestic and international arbitration. It seeks to address longstanding challenges under the A&C Act by:
- Imposing strict timelines to expedite arbitral and related judicial proceedings;
- Strengthening the role of institutional arbitration through formal recognition and court-backed delegations;
- Introducing digital-friendly mechanisms, including remote hearings and electronic records;
- Granting statutory recognition to emergency arbitrators, a feature long adopted by leading global arbitral institutions.
These reforms aim not only to modernise procedural law but also to create a level playing field that is accessible, efficient, and responsive to commercial realities, especially in high-value cross-border disputes.
Key Features of the Draft Bill
Introduction of Appellate Arbitral Tribunals (“AATs”)
The Bill proposes the creation of AATs, allowing a party in institutional arbitration to appeal against an arbitral award before a second-tier arbitral body, thereby potentially reducing recourse to the courts under Sections 34 and 37. While this mechanism may help decongest the judiciary and provide a more specialised form of review, it raises critical concerns around:
- The cost implications for parties navigating multiple layers of arbitration and judicial scrutiny;
- Procedural clarity, especially for ad hoc arbitrations, which remain prevalent in India;
- And the binding value and transparency of AAT decisions, given that such rulings may not be publicly available or treated as precedent.
Moreover, the scope of appellate review has been confined to limited grounds akin to Section 34, making it unclear whether the added layer of adjudication meaningfully enhances finality or simply delays enforcement.
Expansion of the ‘patent illegality‘ Ground to International Awards
The draft bill proposes to extend the ground of patent illegality to awards arising out of international commercial arbitrations seated in India, reversing the earlier position under the 2015 amendments. This move could erode the sanctity of arbitral autonomy in international matters, potentially deterring foreign parties from selecting India as the seat of arbitration.
Limiting Court Intervention Under Section 9[10]
The Bill suggests that once a tribunal is constituted, parties must seek interim measures under Section 17[11] from the tribunal itself, effectively curtailing access to courts under Section 9. While intended to streamline procedures and reinforce tribunal autonomy, this proposal raises serious concerns:
- Arbitrators may not always be available to respond to urgent interim applications;
- In cases of appointment disputes, conflicts, or bias, parties may be left without an effective remedy;
- And it may not be feasible to rely exclusively on Section 17, where enforcement and coercive powers lie solely with courts.
Thus, a blanket exclusion of Section 9 may prove counterproductive and leave parties vulnerable in time-sensitive scenarios.
Recognition of Emergency Arbitration
The Bill finally gives statutory recognition to emergency arbitrators, enabling interim orders issued before the constitution of the tribunal to be enforced like regular tribunal orders. This reform aligns with international best practices and promotes confidence among parties requiring urgent relief. However, the Bill does not address the enforceability of interim measures issued by foreign-seated tribunals, a notable lacuna in an otherwise progressive provision.
Enhanced Role of Institutional Arbitration
The Bill places greater reliance on arbitral institutions, with courts empowered to designate recognised bodies to manage appointments and case administration. Disclosures are mandated in cases involving pending arbitrations between parties, aiming to avoid conflicts of interest and reinforce procedural integrity. These provisions reflect a clear push toward structured arbitration and greater institutional accountability.
Digital Adaptation and Model Rules
Reflecting modern commercial needs, the Bill endorses electronic arbitration, allowing for video conferencing, digital submissions, and remote hearings. The Arbitration Council of India (“ACI”) will be authorised to issue model rules to facilitate electronic filing, streamline case management, and enhance accessibility for parties operating from remote or overseas locations.
Areas of Concern
Despite the Bill’s forward-looking agenda, several structural concerns remain:
- The absence of clear provisions on cost regulation and fee structures, especially in the context of multiple appellate stages, could escalate costs for parties and undermine arbitration’s cost-efficiency.
- No framework is proposed for appellate tribunals in ad hoc arbitrations, which continue to dominate the Indian arbitration landscape. This omission risks bifurcating the arbitration regime and creating procedural asymmetry.
- The Bill does not clarify the manner in which the ACI will be constituted or operationalised, nor how it will exercise its expanded regulatory functions effectively.
- The strict procedural timelines, such as the 60-day limit for certain applications, lack flexibility and do not provide for condonation of delay, raising the risk of meritorious claims being shut out on procedural technicalities.
The Bill reflects a significant and welcome effort to modernise India’s arbitration regime. By endorsing institutional arbitration, recognising emergency relief mechanisms, and embracing digital infrastructure, the Bill represents a thoughtful step toward aligning India with global arbitration hubs. However, several practical ambiguities and policy inconsistencies, especially concerning appellate structures, cost implications, and limits on judicial recourse, require careful reconsideration before the Bill is enacted.
Its ultimate success will depend not merely on the robustness of its provisions but also on their implementation, judicial interpretation, and the clarity of executive policy. If the areas of concern are addressed with precision, the Bill could indeed serve as a transformative instrument in India’s journey toward becoming a global arbitration destination.
Conclusion: A Cautious Optimism
While judicial intervention remains a necessary check on arbitral excesses, excessive oversight can be fatal to the efficiency and finality that arbitration promises. The Supreme Court’s recent pronouncements indicate an evolving maturity, acknowledging past inconsistencies and striving toward restraint. If courts consistently apply the narrow construction of Section 34 and uphold arbitral autonomy, India may well consolidate its position as a preferred arbitral seat in Asia. For parties drafting dispute resolution clauses or pursuing enforcement in India, this trend provides a welcome signal: the courts are increasingly supportive of the arbitral process, not as overlords, but as guardians of fairness and finality.
FOOT NOTES…………………………………………………….
[1] Under Section 34 of the A&C Act, an arbitral award may be set aside only by a court upon limited grounds, such as incapacity of a party, invalidity of the arbitration agreement, procedural unfairness, or the award exceeding the scope of reference. Additionally, an award may be set aside if it is in conflict with the public policy of India, which includes instances of fraud, contravention of fundamental legal policy, or violation of basic notions of justice. In domestic arbitrations (other than international commercial arbitrations), an award may also be set aside if it is vitiated by patent illegality appearing on its face. However, mere errors of law or reappreciation of evidence do not warrant interference.
[2] Section 37 of the A&C Act provides for a limited right of appeal against specific orders, including orders under Section 34, either setting aside or refusing to set aside an arbitral award. It also permits appeals against certain interim measures granted or refused under Sections 9 and 17, and against decisions on jurisdiction under Section 16. No second appeal lies under this provision, except a constitutional appeal to the Supreme Court.
[3] 2003 (4) SCALE 92
[4] AIR 2015 SC 620
[5] The Supreme Court held that the “fundamental policy of Indian law” under the public policy ground includes (i) the adoption of a judicial approach, (ii) adherence to principles of natural justice, and (iii) avoidance of perversity or irrationality in arbitral decisions. Any award that violates these elements or disregards superior court orders would be contrary to the fundamental policy of Indian law.
[6] AIR 2019 SC 5041
[7] 2024 INSC 292
[8] 2025 INSC 605
[9] 2024 INSC 711
[10] “Interim measures, etc., by Court.”
[11] “Interim measures ordered by arbitral tribunal.”
