India considers revisiting arbitration reforms amid calls for broader access and accountability

Attorney General R Venkataramani signals potential government policy shift on arbitration in public contracts, highlighting the need for reforms that balance commercial credibility and public accessibility amid industry resistance and ongoing debates.

Attorney General R Venkataramani has signalled that New Delhi may yet soften its retreat from arbitration in public contracts, saying the government should take another look at the June 2024 procurement memorandum that pushed disputes above ₹10 crore away from the arbitral route. Speaking at the closing session of GHAC Arbitration Week 2026 in GIFT City, he said he had been urging the government to take a “second look” so that the framework could become more relaxed. (barandbench.com)

His intervention was part of a broader argument that India’s arbitration debate has become too narrow. SCC Times reported that Venkataramani used his valedictory address to argue that the next phase of reform cannot be reduced to another round of statutory amendments; it has to deal with institutions, professional standards, ethics, accountability and procedural culture as well. Bar and Bench reported that he also rebuked the profession for failing to drive the shift away from ad hoc proceedings, saying the Bar had become a “part-time activist” instead of the engine of transition. (scconline.com)

That wider theme ran through the Gandhinagar gathering. Ahmedabad Mirror reported that the three-day conference, organised by the Gujarat High Court Arbitration Centre with the support of the Gujarat High Court, brought together Supreme Court judges, former judges, senior advocates and state officials. Justice K V Viswanathan used the opening to link Gujarat’s commercial history to arbitration, recalling Mahatma Gandhi’s early use of an arbitration board in the city, while Justice P S Narasimha suggested a Gujarat Arbitration Council with an office outside the court system. Justice N V Anjaria put the social test more bluntly, warning that arbitration “should not be an elitist club” and must remain affordable, party-centric and accessible to ordinary users. (ahmedabadmirror.com)

The memorandum now under scrutiny was issued on 3 June 2024 by the Finance Ministry’s Department of Expenditure. As The Indian Express reported at the time, it was circulated not only to Union ministries but also to the departments of public enterprises and financial services and to the states. The note said arbitration should not be inserted “routinely or automatically” into procurement contracts, especially large ones, and justified the change by calling arbitration expensive, slow and vulnerable in high-value matters to “perceptions of wrong-doing including collusion”. It steered departments towards mediation under the Mediation Act, 2023, along with negotiation and, where necessary, court litigation. (indianexpress.com)

That change drew immediate resistance from the specialist Bar. Mint reported in June 2024 that the newly formed Arbitration Bar of India wanted the advisory withdrawn and planned to seek a meeting with the government. Its secretary, Shashank Garg, said practitioners were “deeply concerned” because the guidelines ignored what he called the “success story” of arbitration in India, including for the government itself. The backlash was sharpened by timing: the report noted that it came only weeks after Law Minister Arjun Ram Meghwal had spoken of making India an arbitration hub. Even those sympathetic to tighter scrutiny of public spending were unconvinced by the ministry’s case as presented; former law secretary T K Viswanathan said the government should justify any scaling-back with proper data. (livemint.com)

By the autumn of 2024, the guidance was already being translated into contract practice at state-backed companies. Mint later reported that ONGC had decided not to use arbitration in domestic public procurement disputes above ₹10 crore and would send smaller disputes to the India International Arbitration Centre. ONGC said future contracts would carry that upper limit, while its annual report showed contractors’ claims worth ₹170.41 billion in FY24, down from ₹193.45 billion the year before, sitting as contingent liabilities. Shaneen Parikh of Cyril Amarchand Mangaldas said the memorandum was advisory rather than mandatory but “does not set the right tone” for a country still trying to sell itself as an arbitral hub. In a sign of the policy’s uneven implementation, IIAC registrar Vinay Kumar Sanduja told Mint that details of ONGC’s proposed use of the centre would have to come from ONGC itself. (livemint.com)

The policy logic also spread into the government’s infrastructure machinery. Mint reported this year that ministers had set up an early dispute resolution panel aimed at clearing small-value highway disputes worth about ₹20,000 crore, part of a wider attempt to reduce legal costs and keep projects moving. The same report said adverse arbitral awards against the government had topped ₹30,000 crore over the past decade. It offered a vivid example of how delay compounds liability: a ₹27.5 lakh unpaid road bill in Karnataka’s Yadgir district eventually swelled to roughly ₹1.2 crore once interest and enforcement costs were added. And when the National Highway Builders Federation wrote to the road transport ministry on 30 December 2025, it argued that the deeper problem lay not merely in the choice of forum but in how disputes were generated through poor project reports, slow approvals and inconsistent contract administration. (livemint.com)

Venkataramani’s latest remarks therefore land in a debate that is no longer just about whether arbitration is quicker than litigation. The question, as he framed it at GHAC and as the judges in Gandhinagar framed it in their own way, is whether India can build a system that is both commercially credible and publicly accountable: fast enough for investors, disciplined enough for the state, and accessible enough not to become a preserve of insiders. If the government does revisit the 2024 memorandum, it will be revisiting that larger argument too. (scconline.com)