Challenging Arbitral Institution Decisions: Time for India to Draw the Line?

[Shubham is a student at National Law University Odisha.]

India is striving to develop its arbitration framework through institutional mechanisms. In June 2025, the Hon’ble Chief Justice of India, Justice BR Gavai, stated that institutional arbitration should be the norm rather than the exception. While institutional arbitration is seen as the future of arbitration in India, for this transition from ad hoc to institutional arbitration to become a trend, the law must be clear and supportive of the arbitral institutions. One likely outcome of the growing adoption of institutional arbitration in India is the emergence of challenges to the quasi-judicial or administrative decisions of arbitral institutions before Indian courts. 

Keeping the above thought in mind, this article analyzes and determines whether the Indian legislation and the judiciary are prepared to address arbitral institutions and the challenges to their quasi-judicial or administrative decisions. Furthermore, it will explore the legal approaches adopted by other countries to understand their perspectives and assess how India can draw inspiration from them to strengthen its own arbitration regime. Let us first examine India's stance on this topic.

Current Status of India

Indian legislation currently does not provide any guidance regarding arbitral institutions and their decisions. It does not address whether, or how, a party can challenge the decision of an arbitral institution. Since the Arbitration and Conciliation Act 1996 (A&C Act) is silent on this issue, parties tend to file writ petitions as a means to challenge institutional decisions. Let us examine the case laws to see how Indian courts have attempted to address this gap.

In the case of Steel Authority of India Limited v. Indian Council of Arbitration (Steel Authority of India) the Delhi High Court (DHC) held that a writ petition would not lie against an appointment made by the Indian Council of Arbitration (ICA), as the institution was not performing a public or statutory function, but rather a purely contractual one.

In JEPH Bev Private Limited v. Delhi International Arbitration Centre (DIAC) and Others, the petitioner challenged DIAC’s jurisdiction, alleging a procedural violation because the Coordinator, not the Chairperson, had rejected their objection under Rule 20. The DHC held that the Chairperson had approved the decision and clarified that DIAC’s role was administrative. Jurisdictional issues must be decided by the tribunal under Section 16. The petition was dismissed.

In CS Construction Company Private Limited v. Excelling Geo and Engineering Consultant, a party challenged the revised arbitration fees for claims and counterclaims. The DHC upheld the change, noting that DIAC rules allowed it, and rejected the argument that DIAC couldn’t modify fees once set by the tribunal.

In Ms Evolve Marketing Services Private Limited v. Aircel Limited and Another, the arbitrator directed both parties to pay DIAC fees. When one party defaulted, the other was asked to pay the full amount as per DIAC rules. Despite complaints about the rule’s fairness, the DHC held that once parties agree to DIAC rules, they are bound by them.

In Corrtech International Private Limited v. DIAC and Others, the issue was DIAC’s revival of arbitration after a 1.5-year delay. The petitioner claimed the proceedings had lapsed, violating the Micro, Small and Medium Enterprises Development Act 2006 (MSMED Act) and Section 29A of the A&C Act. The DHC held that the petitioner misinterpreted the MSMED Act and clarified that Section 29A timelines must be determined within the arbitration framework, not unilaterally.

In Velankani Information Systems Limited v. Singapore International Arbitration Centre (SIAC), the petitioner objected to the Vice President's appointment of an arbitrator instead of the President. The Karnataka High Court ruled that this was valid under SIAC rules and advised the petitioner to raise such objections before the tribunal under Section 16 of the A&C Act.

In Food Corporation of India (FCI) v. Indian Council of Arbitration (FCI case), FCI’s contract contained an ICA arbitration clause. However, ICA refused to proceed without fresh consent from both parties, citing its rules that required mutual agreement for arbitration to commence. The DHC upheld this, finding that there was no fresh written agreement between the parties. The Supreme Court (SC) reversed the decision, holding that a valid arbitration clause was sufficient and ICA could not demand new consent. It ruled that under Section 16 of the A&C Act, only the arbitral tribunal can decide issues of jurisdiction or validity.

Observations from the Above Rulings

The rulings demonstrate that Indian courts have sought to preserve the essence of arbitration by adopting an arbitration-friendly approach and generally avoiding interference with institutional decisions, except in cases involving fundamental contractual elements such as consent (as seen in the FCI case). A common thread across these cases is that the arbitral tribunal holds the authority to decide on such objections.

However, despite the position taken in cases like Steel Authority of India, where it was held that writ petitions should not lie against arbitral institutions, courts have still entertained such petitions to hear arguments, even though they have ultimately dismissed them in most cases.

The concern is that courts entertaining such arguments is that writ petitions have been filed even on relatively minor issues, such as arbitration fees, appointment of arbitrators, fee structures, and other administrative or quasi-judicial decisions made by arbitral institutions. As a result, while the arbitration proceedings continue in parallel, litigation in the form of writ petitions also proceeds simultaneously.

Due to the lack of conclusive authority from the SC on this issue or from the legislation, High Courts may choose to entertain these petitions and conduct full hearings, which can be time-consuming. This creates uncertainty around the decisions of arbitral institutions, even when such issues are already within the arbitrator's domain, ultimately hampering the overall arbitration process.

This increasing court involvement poses a potential risk to the growth of institutional arbitration in India. First, it delays proceedings, undermining arbitration’s core promise of speed and efficiency. Second, it erodes institutional autonomy, as repeated court scrutiny may discourage institutions from exercising their rules decisively. Third, it damages user confidence, especially among foreign parties, who expect minimal judicial interference once an institution is agreed upon.

Now, let us explore other jurisdictions to understand the treatment of challenges against the arbitral institution’s administrative decisions or quasi-judicial decisions, and attempt to fill the gap and mitigate the risks mentioned above.

Finding Solutions

Looking at the global level, the United States (US), we can see that the US courts have consistently recognized arbitral immunity for arbitral institutions like the American Arbitration Association (AAA) and others, treating them as quasi-judicial bodies protected from lawsuits arising from their administrative actions in arbitration. In cases such as Rubenstein v. Otterbourg, New England Cleaning Services v. AAA, and Jason v. AAA, courts have held that arbitral institutions enjoy immunity for acts integral to arbitration, including the appointment of arbitrators, administration, and procedural decisions, even if flawed or challenged by the parties. This immunity extends to institutional misconduct claims, as seen in Brian L. Honn v. NASD and Timothy Owens v. AAA, where courts dismissed suits despite allegations of bias or procedural errors. Similarly, in Austern v. CBOE, courts reaffirmed that arbitral bodies are immune from liability for all essential arbitration functions, emphasizing that such immunity protects the integrity and finality of arbitration.

Furthermore, in the United Kingdom (UK), arbitral institutions are granted direct immunity, as explicitly stated in Section 74 of the Arbitration Act 1996. The only exception is bad faith.

In Singapore, the latest ruling of DMZ v. DNA helps us to understand their stance. DMZ challenged the SIAC registrar’s change of the arbitration commencement date, claiming it was wrongful and sought court review. The court held that under SIAC Rules 2016, particularly Rule 40.2, registrar decisions are not subject to judicial review, even if mistaken. It confirmed that arbitral institutions have discretion to reconsider procedural rulings, but courts should intervene only by setting aside an award under the International Arbitration Act. DMZ’s attempt at pre-award judicial review was deemed premature and abusive, resulting in indemnity costs.

From the above, we can see that while the US, through its courts, has provided arbitral immunity for institutions, the UK too, through its Arbitration Act, and Singapore, while not directly stating arbitral immunity for institutions, have bound the process by not allowing parties to jump over the walls of arbitration and approach the court during the proceedings, but only during set-aside proceedings, thereby stopping interference.

India must also streamline the process. The author suggests that while US case law provides full arbitral immunity, this approach may not be suitable for India as it is too rigid. The UK’s approach, which grants immunity except in cases of bad faith, appears more balanced and ethically sound for India. But it may create a loophole for parties to claim that a decision was made in bad faith, thereby allowing them to interfere with the arbitration process.

However, the author believes that the Singapore model is currently the most appropriate for India. It allows parties to challenge decisions, but only at the stage of setting aside proceedings, thus preventing disruption during the arbitration process. This minimizes delays and ensures that administrative or procedural decisions do not give rise to separate, parallel litigation. It strikes a balance by preserving the right to challenge without undermining the efficiency of arbitration.