How Does Arbitration Work in India, and Where Does Online Dispute Resolution Fit?

Arbitration has become the default mechanism for resolving commercial disputes in India, offering a private, comparatively faster alternative to overburdened courts. The governing statute, the Arbitration and Conciliation Act, 1996, has been amended three times to push the system toward minimal court intervention, party autonomy and the finality of awards. This article traces the arbitration process from the arbitration agreement to enforcement, explains the limited points at which courts step in, and then addresses a question that has grown pressing since the pandemic: whether arbitration can be conducted online, and how far parties may choose online dispute resolution (ODR) where an arbitration agreement already exists.

The statutory framework

The Arbitration and Conciliation Act, 1996 (Act No. 26 of 1996) is India's principal legislation for domestic arbitration, international commercial arbitration and the enforcement of foreign awards. It is modelled on the UNCITRAL Model Law on International Commercial Arbitration. Part I deals with arbitration seated in India; Part II gives effect to the New York Convention and the Geneva Convention for the recognition and enforcement of foreign awards.

The Act has been amended three times: the 2015 Amendment Act (effective 23 October 2015), the 2019 Amendment Act (effective 30 August 2019) and the 2021 Amendment Act (effective 4 November 2020). Each amendment strengthened the pro-arbitration, minimal-intervention design of the statute. The 2015 Amendment introduced tight timelines and curtailed the automatic stay of awards; the 2019 Amendment added a statutory confidentiality obligation (Section 42A) and machinery to promote institutional arbitration; and the 2021 Amendment further restricted when enforcement of an award can be stayed.

Four principles run through the Act: party autonomy (parties may largely design their own procedure), minimal judicial intervention (courts act only at prescribed junctures, per Section 5), finality of awards (an award is enforceable like a court decree) and confidentiality of proceedings.

The stages of arbitration

The arbitration agreement (Section 7)

Arbitration begins with a valid arbitration agreement. Section 7 requires the agreement to be in writing, whether as a clause within a contract or as a separate agreement. Section 2 defines an arbitration agreement as:

"An agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not."

The writing requirement is generous: Section 7(4) recognises agreements contained in an exchange of letters, emails or other correspondence, so a formally signed document is not indispensable. The Supreme Court has held that non-stamping of an arbitration agreement is a curable defect, and that courts need not resolve stamping objections at the Section 8 or Section 11 stage.

Referral by the court (Section 8)

If one party ignores the arbitration clause and files a suit, the other party may ask the court to refer the matter to arbitration. Section 8 directs a judicial authority to refer the parties to arbitration:

"unless it finds that prima facie no valid arbitration agreement exists."

The 2015 Amendment narrowed this inquiry to a prima facie examination of whether an arbitration agreement exists; the court does not examine the merits. In Vidya Drolia v. Durga Trading Corporation (2020), the Supreme Court held that the scope of judicial review under Sections 8 and 11 is "identical but extremely limited and restricted." Once a valid agreement exists, the court must refer the parties.

Interim measures (Sections 9 and 17)

A party may apply to a court under Section 9 for interim protection, such as an injunction, attachment or security, before or during the arbitration. Once the tribunal is constituted, it may itself grant interim measures under Section 17. Section 9 relief is available where a party faces genuine apprehension of injury or dispossession; Section 17 provides practical interim relief without court delay.

Appointment of arbitrators (Sections 10-11)

Section 10 lets the parties agree on the number of arbitrators; failing agreement, a sole arbitrator is appointed. Under Section 11, if the parties cannot agree on an appointment or their agreed procedure fails, either party may apply to the Supreme Court (for international commercial arbitration) or the High Court (for domestic arbitration), or to an institution designated by such court, to make the appointment.

The pivotal change here is Section 11(6A), inserted by the 2015 Amendment, which confines the court, when appointing an arbitrator, to:

"the examination of the existence of an arbitration agreement."

The 2019 Amendment went further, enabling the Supreme Court and High Courts to designate independent arbitral institutions (such as the Delhi International Arbitration Centre or the Mumbai Centre for International Arbitration) as appointing authorities, professionalising the selection process. Section 11(8) requires an arbitrator, before appointment, to disclose any circumstances likely to give rise to justifiable doubts about independence or impartiality.

Challenge and independence of arbitrators (Sections 12-15)

Section 12 sets out the grounds for challenging an arbitrator: justifiable doubts about impartiality or independence, or the absence of qualifications agreed by the parties. Under Section 13, a challenge must be raised in writing within 15 days of learning of the appointment or of the grounds; the tribunal itself decides the challenge in the first instance, and if it rejects the challenge the party may raise it later before the court. Sections 14 and 15 address the failure or impossibility of an arbitrator to act and the termination of the mandate.

The Supreme Court has treated unilateral appointment by an interested party as incompatible with impartiality. In Perkins Eastman Architects DPC v. HSCC (India) Ltd. (2019), the Court held that a person with an interest in the outcome cannot appoint a sole arbitrator. In Voestalpine Schienen GmbH v. Delhi Metro Rail Corporation Ltd. (2017), it addressed arbitrator panels curated by a powerful party, holding that such arrangements must be properly counterbalanced to preserve equality and impartiality.

Jurisdiction of the tribunal (Section 16)

Section 16 embodies the doctrine of competence-competence: the tribunal may rule on its own jurisdiction, including objections to the existence or validity of the arbitration agreement. For this purpose, the arbitration clause is treated as an agreement independent of the rest of the contract, so that the invalidity of the main contract does not automatically defeat the arbitration clause (the doctrine of separability). It is the tribunal, not the court, that decides in the first instance whether it has jurisdiction.

Conduct of proceedings, seat and commencement (Sections 18-21)

Section 18 requires equal treatment of the parties and a full opportunity to present their case. Section 19 gives the parties freedom to agree on the procedure; absent agreement, the tribunal determines it. Section 20 addresses the seat: parties may agree on the place of arbitration, and failing agreement the tribunal fixes it. The seat is significant because it determines which national law governs the arbitration and which courts exercise supervisory jurisdiction. Under Section 21, arbitration commences when the respondent receives the notice invoking the arbitration agreement.

Pleadings, evidence and hearings (Sections 23-27)

The claimant files a statement of claim and the respondent a statement of defence within periods set by the tribunal (Section 23), and a preliminary meeting and terms of reference are customary under institutional rules. Section 24 gives the parties a right to an oral hearing unless they have agreed otherwise, and the tribunal controls the admissibility, relevance and weight of evidence. Where a party defaults, Section 25 allows the tribunal to continue or terminate proceedings as appropriate. Section 27 permits the tribunal to seek court assistance in taking evidence, for example to compel a reluctant witness.

The award (Sections 31-33)

Section 31 requires the award to be in writing and signed by the members of the tribunal, and to state the reasons on which it is based unless the parties agree that reasons are not required or the award records a settlement. Section 31A allows the tribunal to award costs, and Section 31(7) governs interest. The award is final and binding. Unlike a court judgment, there is no appeal on the merits; the only recourse is a challenge on the limited grounds in Section 34.

Termination, enforcement and challenge (Sections 32-37)

Section 32 governs termination of proceedings, including on settlement. Section 35 makes a domestic award enforceable "as if it were a decree of the court," and Section 36 governs enforcement. A dissatisfied party may apply under Section 34 to set the award aside within three months of receiving the award, on grounds that are deliberately narrow:

• a party was under some incapacity, or the arbitration agreement was not valid;
• a party was not given proper notice or was unable to present its case;
• the tribunal was improperly constituted or exceeded its jurisdiction;
• the award conflicts with the public policy of India; or
• for domestic awards, patent illegality appearing on the face of the award.

The court cannot re-appreciate evidence or substitute its own view of the merits. Section 34(4) allows the court to remit the matter to the tribunal to cure a curable defect. Section 37 permits appeals only from a defined list of orders, including a refusal to refer under Section 8 and an order setting aside or refusing to set aside an award under Section 34; notably, no appeal lies against a Section 11 appointment order, an anomaly noted in the case law.

Timelines

A defining feature of the amended Act is its emphasis on speed. Section 29A requires the tribunal to make its award within 12 months from the completion of pleadings, extendable by the parties' mutual written agreement by up to a further six months. Beyond 18 months, an extension requires the court's permission. Section 29B provides a fast-track procedure before a sole arbitrator, with the award due within six months. A challenge under Section 34 must be filed within the statutory period, and Section 34(6) directs that a set-aside application be disposed of within one year of notice to the other party.

Ad hoc and institutional arbitration

The Act permits both ad hoc and institutional arbitration. In ad hoc arbitration, the parties themselves manage the process and appoint the tribunal, often adopting the UNCITRAL Arbitration Rules to fill procedural gaps; the trade-off is greater autonomy against the risk of administrative delay. In institutional arbitration, a permanent institution administers the reference under its own rules, maintaining a roster of arbitrators, fixing fees, managing timelines and providing facilities and oversight.

The leading Indian institutions include the Delhi International Arbitration Centre (DIAC), the Mumbai Centre for International Arbitration (MCIA) and the Indian Council of Arbitration (ICA), with the India International Arbitration Centre (IIAC) established by statute as an institution of national importance. The 2019 Amendment explicitly encouraged institutional arbitration by enabling courts to designate institutions as appointing authorities, reflecting a policy preference for structured, professional dispute resolution.

The court's limited role, in summary

The Supreme Court has repeatedly affirmed that the 1996 Act is founded on minimal judicial intervention. Courts examine only the existence of an arbitration agreement at the referral and appointment stages, defer to the tribunal on jurisdiction under Section 16, and review awards on narrow grounds under Section 34 without re-trying the dispute. The public policy ground is confined: an award may be set aside on that basis only where it offends the fundamental policy of Indian law, shocks the conscience of the court, or is patently illegal, and even high commercial interest rates fall outside its reach unless the award is perverse. On enforcement, the 2015 Amendment ended the automatic stay of an award on the mere filing of a Section 34 challenge, and the 2021 Amendment provides that an unconditional stay may be granted only where the court is satisfied that the arbitration agreement, the contract, or the making of the award was induced by fraud or corruption.

Where online dispute resolution fits

Online dispute resolution refers to conducting arbitration, conciliation or mediation wholly or partly through electronic means. The central question for parties is whether online arbitration is lawful under the existing framework, and whether it can be adopted where an arbitration agreement is already in place but silent on the point.

Online arbitration is legally valid under the Arbitration and Conciliation Act, 1996, without any express ODR clause, provided the parties consent. Its validity rests on two foundations. The first is party autonomy: Section 19 allows the parties to agree on the manner of conducting the proceedings, and Section 20(3) permits the tribunal to meet "at any place it considers appropriate" for hearings, consultation or inspection, which need not be a physical location. Section 24 confers a right to an oral hearing but does not require physical, in-person presence, and Section 29B permits a documents-only arbitration well suited to online platforms. The second foundation is the Information Technology Act, 2000, whose provisions on electronic records, digital signatures and the admissibility of electronic evidence (including Sections 4, 5 and 65B) give electronic submissions, digitally signed awards and virtual proceedings legal standing equivalent to their physical counterparts. On this basis, arbitration agreements formed by email exchange have been upheld, and an award may be issued and signed digitally.

The courts have recognised virtual proceedings. In State of Maharashtra v. Praful B. Desai (2003), the Supreme Court accepted evidence by video-conference, observing that recording evidence through electronic means in the virtual presence of the accused complies with the requirement that evidence be taken in the accused's presence, and that people need not sit in the same physical space where consultation can take place by electronic media. Although that case arose in a criminal context, its reasoning that virtual presence is legally equivalent to physical presence has informed the acceptance of remote arbitration.

Can one party impose online proceedings?

The starting point is the arbitration agreement. If the agreement specifies in-person proceedings, a claimant cannot unilaterally impose online arbitration: the parties are bound by their agreed mode, and a shift would require mutual consent. If the agreement is silent on mode, the parties may agree to proceed online, whether in the original agreement, by a later written agreement, or through the terms of reference at the preliminary stage. Where the parties cannot agree, the tribunal has discretion under Section 19(3) to determine the procedure, and may direct remote proceedings provided due process is preserved, meaning equal treatment and a full opportunity to present the case. An express prohibition on online proceedings in the agreement would, however, override this general discretion.

For online arbitration to hold up, certain safeguards matter: equality of access, so that remote participation does not disadvantage a party; a secure digital platform agreed in advance for the transmission and storage of documents; and confidentiality and data-security protocols. Digital signatures on awards are valid, and the seat of the arbitration should be clearly identified so that supervisory jurisdiction is not left in doubt when there is no single physical venue.

Institutional support for online arbitration

Indian institutions have moved to accommodate online proceedings. The DIAC issued a guidance note (effective 8 June 2020) providing for e-filing, hearings and examination of witnesses by video-conference, digital signing and circulation of awards, and documents-only proceedings where the parties are satisfied with written submissions. The DIAC's 2023 rules and the MCIA's rules (updated in 2025) treat in-person, video-conference and hybrid hearings as valid modes, with emergency-arbitrator mechanisms capable of operating remotely. The ICA accommodates virtual proceedings largely through institutional practice.

Government policy and regulatory frameworks for ODR

The most significant policy document is the NITI Aayog report Designing the Future of Dispute Resolution: The ODR Policy Plan for India (November 2021), produced by a committee chaired by Justice (Retd.) A.K. Sikri. Prompted by a large backlog of pending civil cases, the disruption of the pandemic, and the cost and speed advantages of online resolution, the report describes ODR as the use of technology and ADR techniques to resolve disputes, particularly small and medium-value cases, outside the traditional court system. It recommends building digital literacy and infrastructure, encouraging government and enterprise adoption, and a light-touch, principle-based regulatory approach. Among its indicative legislative recommendations are amendments to the Arbitration and Conciliation Act to include arbitration conducted wholly or partly online within the definition of "arbitration," and recognition of electronic conciliation; these recommendations are not yet enacted.

The most developed sectoral framework comes from the Securities and Exchange Board of India. By a circular dated 31 July 2023 (SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/131), later amended in December 2023, SEBI established a common ODR portal, described as the Securities Market Approach for Resolution Through Online Dispute Resolution (SMART ODR), for disputes between investors and listed companies or regulated intermediaries. The mechanism offers time-bound online conciliation, followed by binding online arbitration under the 1996 Act if conciliation fails, and market infrastructure institutions must establish and operate the portal. The December 2023 amendment moved toward party choice, allowing parties to elect either the SEBI mechanism or an independent institution. The framework compresses timelines considerably; the memo notes, for instance, a much shorter window to challenge an ODR arbitral award than the ordinary period under Section 34 of the Act, a point that warrants caution for larger or document-heavy claims.

Other bodies have taken a lighter approach. The Reserve Bank of India has not issued specific ODR guidance for arbitration, its focus remaining on the administrative Ombudsman schemes for customer complaints. The Ministry of Corporate Affairs has not mandated or prohibited ODR in arbitration, leaving it to party agreement and institutional rules.

Proposed reform

An Expert Committee constituted by the Ministry of Law and Justice reported in early 2024, and a Draft Bill has since been circulated for consultation. Among other proposals, it would amend the definition of "arbitration" to expressly include a proceeding "conducted wholly or partially by use of electronic means," introduce time limits for certain court applications, expand the powers of arbitral institutions, and (controversially) provide for appellate arbitral tribunals to hear challenges to awards. As at May 2026 the Draft Bill has not been enacted; arbitration continues to operate under the Act as amended in 2015, 2019 and 2021. The direction of both policy and practice, however, is clearly toward formal recognition of online arbitration.

Practical Takeaways

• An arbitration agreement should identify the governing statute, the number and method of appointment of arbitrators, and the seat, which fixes the supervisory court and the applicable procedural law.
• Build in realistic timelines consistent with the 12-month window under Section 29A, and consider the fast-track route under Section 29B for smaller disputes.
• Draft challenges to awards on the narrow statutory grounds (procedural breach, want of jurisdiction, fraud or corruption, public policy) rather than as an appeal on the merits; courts will not re-try the dispute.
• Online arbitration needs no express ODR clause, but an express clause adds certainty. Where the agreement is silent, obtain mutual written consent specifying the platform, security measures and the seat before moving online.
• A claimant cannot unilaterally impose online proceedings where the agreement provides for in-person hearings; the tribunal may nonetheless direct remote proceedings under Section 19(3) if the parties cannot agree, provided due process is maintained.
• For securities-market disputes, SEBI's ODR portal offers a fast, low-cost route, but note the compressed timelines for challenging awards.

Key Authorities

1. Arbitration and Conciliation Act, 1996 (Act No. 26 of 1996) - the governing statute; amended in 2015, 2019 and 2021. Source
2. Information Technology Act, 2000 - recognition of electronic records, digital signatures and electronic evidence underpinning online proceedings. Source
3. Vidya Drolia v. Durga Trading Corporation (2020) - the scope of judicial review under Sections 8 and 11 is identical but extremely limited and restricted.
4. Perkins Eastman Architects DPC v. HSCC (India) Ltd. (2019) - a person interested in the outcome cannot unilaterally appoint a sole arbitrator.
5. Voestalpine Schienen GmbH v. Delhi Metro Rail Corporation Ltd. (2017) - arbitrator panels curated by a powerful party must be properly counterbalanced to preserve impartiality.
6. State of Maharashtra v. Praful B. Desai (2003) - evidence by video-conference is valid; virtual presence is legally equivalent to physical presence.
7. NITI Aayog, Designing the Future of Dispute Resolution: The ODR Policy Plan for India (November 2021) - policy blueprint recommending statutory recognition of ODR. Source
8. SEBI Circular SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/131 dated 31 July 2023 - common ODR portal (SMART ODR) for the securities market, offering time-bound online conciliation and arbitration.

This analysis reflects the law as at May 2026. It is published for general information and does not constitute legal advice.