The Supreme Court sought Government’s response on a plea seeking constitution of the Arbitration Council of India under the 2019 Amendment Act. A Bench of Justices JK Maheshwari and Atul Chandurkar issued notice on Anil Kalyandas Thanvi’s petition filed.
NEW DELHI: The Supreme Court requested a response from the Union of India regarding a petition seeking the establishment of an Arbitration Council of India (ACI), a statutory body proposed under the Arbitration and Conciliation (Amendment) Act, 2019.
A Bench consisting of Justices JK Maheshwari and Atul Chandurkar issued a notice on the petition submitted by Anil Kalyandas Thanvi, a cotton trader.
The ACI is outlined in Sections 43A and 43B of the Arbitration and Conciliation Act, 1996, with these provisions introduced through a 2019 amendment. Further amendments were made in 2021, with draft notifications released in 2020. The relevant sections were notified in October 2023. However, the ACI has not been established for over six years, according to the petition.
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Inserted by the 2019 Amendment, Sections 43A and 43B of the Arbitration and Conciliation Act, 1996 lay the foundation for the Arbitration Council of India (ACI). Section 43A explains key expressions such as “Chairperson,” “Council,” and “Member,” while Section 43B authorises the Central Government to establish the ACI as a statutory corporate body to regulate, strengthen, and enhance the quality and effectiveness of arbitration in India.
In addition to seeking the formation of the ACI, the petitioner is also requesting directions to create uniform policies and guidelines for the regulation, conduct, and accreditation of arbitral institutions and arbitrators.
The petitioner highlighted that the Eighth Schedule of the Arbitration Act, which previously outlined qualification criteria for arbitrators, has been removed. This omission, the petitioner argues, accentuates the need for the ACI, which is meant to ensure minimum professional standards and institutional credibility in arbitration.
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The petition raises significant issues regarding arbitrations conducted by trade associations, claiming these arbitrations are arbitrary, unregulated, and violate Articles 14 and 19(1)(g) of the Constitution.
Furthermore, the plea contends that several institutions coerce parties into accepting arbitrary rules, unfair appointment processes, and internal mechanisms as conditions for doing business, leaving them with limited recourse under the Arbitration and Conciliation Act. The petition alleges that some institutions mandate compulsory membership or restrict arbitral panels in a way that favors their members.
According to the petitioner, such practices erode the principles of independence, impartiality, and equal treatment of parties, which are fundamental to arbitration law.
The petition also challenges the internal appellate mechanisms established by certain trade associations, stating that these mechanisms conflict with the statutory remedies available under Sections 34 and 37 of the Arbitration and Conciliation Act.
The lack of uniform regulation, the petition argues, leads to poor-quality arbitral awards and results in conflicting rulings from High Courts, thereby undermining the guarantee of equal protection under Article 14.
The Cotton Association of India (CAI) is specifically named in the petition. The petitioner, a member of CAI and engaged in the cotton trade, alleges that the CAI mandates the inclusion of its arbitration rules as a prerequisite for trading, compelling traders to accept arbitrary rules.
The petition contests the Arbitration Rules of CAI dated April 26, 2024, arguing that these rules override agreements between parties and even the Arbitration and Conciliation Act itself. A declaration has been requested, stating that these rules are unconstitutional.
The petitioner was represented by Advocate Jeetender Gupta.
The court plans to hear the matter in six weeks.
Case Title: ANIL KALYANDAS THANVI VERSUS UNION OF LNDIA & ORS.
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