Regulatory Delay: Arbitration Council of India Still Not Constituted

News Context

1. Issue Overview and Source

• Documenting the legislative stalemate. Despite the passage of the Arbitration and Conciliation (Amendment) Act in 2019, the Union government has yet to establish the **Arbitration Council of India (ACI)**.
• Accessing the report. Detailed insights into the delay and its impact on India’s legal landscape can be found here: https://epaper.thehindu.com/ccidist-ws/th/th_international/issues/165840/OPS/GMFFD491C.1+GS9FE7HLI.1.html
• Identifying the current status. As of early 2026, the council remains non-functional, prompting the Supreme Court of India to seek a response from the Centre regarding the six-year delay.

2. The Mandate of the Arbitration Council (ACI)

• Regulating institutional arbitration. The ACI was designed as an independent statutory body to promote and regulate institutional arbitration, shifting away from the dominant, often slower, *ad-hoc* model.
• Grading and Accreditation. Its core functions include:
• Grading arbitral institutions based on infrastructure, quality of arbitrators, and performance.
• Accrediting individual arbitrators to ensure professional standards and neutrality.
• Maintaining a depository. The council is tasked with creating an electronic depository of all arbitral awards made in India to enhance transparency and analysis.

3. Government’s “Chicken-and-Egg” Defense

• Waiting for the market to mature. Union Law Ministry officials argue that the council’s delay was due to the slow adoption of institutional arbitration by corporates and Public Sector Undertakings (PSUs).
• The “Regulatory Gap” argument. Officials stated that until institutional arbitration took root, there was “nobody to regulate.”
• Promising a 2026 launch. The government now claims that because institutional arbitration is gaining traction, the ACI will finally be set up within the current year.

4. Expert and Judicial Criticism

• Disputing the delay. Former Union Law Secretary P.K. Malhotra argued that the lack of an institutional mechanism is actively sabotaging India’s goal of becoming an international arbitration hub.
• Supreme Court Intervention. In **January 2026**, the Supreme Court issued a notice on a writ petition challenging the government’s inaction, questioning if the delay violates statutory and constitutional obligations.
• Highlighting the “Unregulated Ecosystem.” Critics point out that trade association-led arbitrations are currently operating without any uniform regulatory oversight or professional standards.

5. Proposed Composition of the ACI

6. Impact on “Ease of Doing Business”

• Deterring foreign investment. Global investors often prefer institutional arbitration in hubs like Singapore (SIAC) or London (LCIA). The absence of a similar regulatory framework in India keeps disputes moving to foreign centers.
• Encouraging “Forum Shopping.” Without a central regulator to grade local institutions, parties often bypass Indian venues in favor of more established international jurisdictions.
• Stalling legal reforms. The delay has also put a hold on the implementation of the **2024 Draft Arbitration Bill**, which seeks to further reduce judicial intervention.

7. Global Benchmarking vs. Indian Reality

• Ad-hoc dominance. Unlike global hubs, Indian arbitration is still largely *ad-hoc*, which often mimics the slow pace of court litigation.
• Institutional growth. While the **India International Arbitration Centre (IIAC)** has been established as a model body, it cannot fulfill the regulatory role intended for the ACI.
• The “Hub” ambition. For India to compete with Singapore or Dubai, the ACI’s grading system is considered the “missing link” that would provide global credibility to Indian arbitral institutions.

8. Looking Ahead: 2026 Timeline

• Legislative Pressure. The Supreme Court’s deadline for the Centre’s response is expected to force a concrete timeline for the first appointments to the ACI.
• Infrastructure Readiness. The ACI’s head office is designated to be in Delhi, and the government is expected to finalize the budget for its initial operational phase by mid-2026.
• Transitioning PSUs. Major PSUs like ONGC and BPCL have recently started adopting institutional arbitration clauses, providing the “market” the government says it was waiting for.