The India International Arbitration Centre Act, 2019 was meant to promote institutional arbitration. However, in practice, its bureaucratic design contradicts arbitration’s market-driven nature and weakens India’s global ambitions.
New Delhi (ABC Live): For more than three decades, India has repeatedly said it wants to become a global hub for international arbitration. Over time, many laws, policies, and court rulings have repeated this goal. As a result, commercial disputes must move out of crowded courtrooms and into faster and more efficient arbitral forums.
However, ambition alone does not build arbitration systems.
Instead, design does.
At its core, arbitration is not like courts. Rather, it is a private, contract-based, and market-driven process. Moreover, it depends on party choice, competition between institutions, and user trust. Around the world, strong arbitration centres did not grow because governments created them by law. Instead, they grew because businesses trusted them more than courts.
Against this background, India enacted the India International Arbitration Centre Act, 2019, later amended in 2022, to create a flagship arbitration centre. On paper, the Act looks progressive. Yet, in reality, it copies the structure of courts and regulators.
Therefore, this basic mismatch explains why the IIAC Act undermines the cause of arbitration.
What Changed in the 2022 Amendment — And Why It Did Not Fix the Core Problem
In 2022, Parliament mainly:
- Changed the name from NDIAC to IIAC
- Made related wording changes
- Added small drafting fixes
However, it did not change:
- Government control over appointments
- State-led governance
- Lack of recognition for private institutions
- No legal timelines
- No performance standards
In short, the name changed. But the design did not.
1. Arbitration Is a Market Service, Not a State Function
Under modern practice and the Arbitration and Conciliation Act, 1996, arbitration is:
- Party-driven
- Contract-based
- Flexible
- Speed-focused
- Lightly regulated
Therefore, arbitration works as a private service chosen by consent, not as a function of the State.
By contrast, the IIAC Act treats arbitration as a state-run administrative activity.
Importantly, ABC Live has earlier explained why predictability and trust now decide arbitration choice in an age of trade and tariff uncertainty:
👉 https://abclive.in/2025/12/30/arbitration-predictability-tariffs-era/
In that setting, institutions are judged by track record, timelines, and neutrality. So, any law that puts state control above market trust weakens India’s appeal as an arbitration seat.
2. From Party Choice to State Control
Arbitration thrives on choice. Parties choose the institution, rules, and arbitrators. They also select the seat and procedure.
Yet, the IIAC Act raises one institution as a statutory flagship. At the same time, it offers no system to recognise private arbitral institutions.
Importantly, the Act does not ban private institutions. In fact, private institutions may continue to operate under the Arbitration and Conciliation Act, 1996.
However, the problem is not a legal ban. Rather, it is structural sidelining.
Because the Act gives special status to IIAC but none to private institutions, a practical hierarchy is created.
As a result, government bodies and public sector companies naturally choose IIAC. Consequently, private institutions lose space, even though they remain lawful.
Thus, private arbitration is permitted by law but discouraged in design.
3. State as Frequent Litigant and Institutional Controller
Moreover, most large commercial disputes in India involve government-owned or government-funded businesses, such as public sector undertakings and infrastructure agencies.
Consequently, when IIAC is state-controlled, these bodies are pushed—directly or indirectly—to take disputes to IIAC.
As a result, many arbitrations involving the State will be handled by an institution that the State itself controls.
This goes against arbitration’s basic idea.
Arbitration depends on neutral and independent administration. However, when one party controls the institution, even the appearance of neutrality is damaged.
Therefore, the IIAC framework conflicts with arbitration’s foundation.
4. Court Mindset Built into Arbitration Design
The Act copies court-style structures. For example, it relies on committees and layered approvals.
More importantly, the Act sets no legal timelines for:
- Tribunal formation
- Arbitrator appointment
- Case handling
- Award scrutiny
In arbitration, speed is essential. Instead, delay becomes normal.
Therefore, arbitration loses its main benefit over courts.
5. Government Appointments Reduce Trust
The Central Government appoints IIAC’s leadership.
Globally, strong arbitration institutions are run by professional boards, not governments.
Consequently, doubts arise about independence. Moreover, foreign users avoid institutions that appear close to state power.
6. No Competition, No Discipline
Worldwide, arbitration works as a competitive market. Many institutions compete. Weak ones fade. Good ones grow.
India, however, has created one statutory centre.
Without competition:
- Innovation slows
- Costs rise
- Efficiency drops
Hence, arbitration becomes another public service, not a competitive product.
Competition Architecture
| Jurisdiction | Competing Institutions |
|---|---|
| India | 1 statutory centre |
| Singapore | Many |
| UK | Many |
| Hong Kong | Many |
| France | Many |
7. Grant Dependence Weakens Incentives
The IIAC Act allows government funding.
By contrast, global institutions live on user fees.
Therefore, user-funded institutions must perform well. Meanwhile, grant-funded institutions face weaker pressure.
Funding Structure
| Institution Type | Depends Mainly on Users |
|---|---|
| IIAC | No |
| Global Leaders | Yes |
8. No Mandatory Transparency
The Act does not require IIAC to publish:
- Number of cases
- Time to award
- Costs
- Success of enforcement
As a result, users cannot compare institutions. Likewise, Parliament cannot judge performance. Ultimately, accountability remains weak.
Transparency Snapshot
| Institution | Publishes Case Data | Publishes Time-to-Award |
|---|---|---|
| IIAC | No | |
| SIAC | Yes | |
| LCIA | Yes | |
| ICC | Yes | |
| HKIAC | Yes |
What This Means for India
- Arbitration needs choice, speed, and competition.
- The IIAC Act brings control, centralisation, and bureaucracy.
- Therefore, the law weakens India’s arbitration ecosystem.
Conclusion
The India International Arbitration Centre Act, 2019 (as amended in 2022) creates an institution, but does not create an arbitration market.
It builds a statutory body.
However, it does not build trust.
Ultimately, until India shifts to a market-led, competitive, and independent arbitration system, it cannot become a true global arbitration hub.
