Foundational Shifts in the Arbitral Environment
The year 2025 represents a transformative epoch for Indian arbitration, characterized by a deliberate judicial effort to align domestic practices with international standards while simultaneously addressing unique procedural challenges. The evolution of the Arbitration and Conciliation Act, 1996, throughout this period is not merely a collection of isolated judgments but a coherent attempt to redefine the boundaries of judicial intervention and the finality of arbitral awards. Central to this transformation is the Supreme Court of India’s recognition that for India to emerge as a global hub for dispute resolution, the judiciary must transition from a supervisory role to one of supportive facilitation.
This shift is most evident in the way the courts have handled the friction between the need for speed and the mandate for substantial justice, particularly under Section 34 and Section 37 of the Act. The legislative framework, bolstered by the anticipated Arbitration and Conciliation (Amendment) Bill, 2024, reflects a growing consensus that institutional arbitration must supersede the traditional ad hoc model to ensure predictability and efficiency.
Defining the Limits of Judicial Repair under Section 34
The controversy surrounding the power of courts to modify arbitral awards reached a definitive conclusion in the landmark case of Gayatri Balasamy v. ISG Novasoft Technologies Ltd., 2025 INSC 605 decided by a five-judge Constitution Bench. This ruling addressed a long-standing debate within Indian jurisprudence regarding whether a court exercising jurisdiction under Section 34 of the Act is restricted to a binary choice of either setting aside an award in its entirety or upholding it without modification.
Historically, the prevailing view was that the 1996 Act deliberately omitted the power to modify awards to minimize judicial interference and align with the UNCITRAL Model Law. However, the majority in Gayatri Balasamy, by a 4:1 verdict, held that courts do possess a limited power to modify awards under specific, severable circumstances. The Court reasoned that a rigid interpretation requiring the complete setting aside of an award for a minor error leads to unnecessary delays and repetitive proceedings.
Strict Guardrails on the Power of Modification
Despite the recognition of this power, the Supreme Court established strict guardrails to prevent judicial overreach. The majority emphasized that the power to modify is strictly confined to correcting clerical, computational, or typographical errors, or adjusting post-award interest. It must not be exercised in a manner that leads to the re-evaluation of facts or merits, nor should it allow the court to substitute its own interpretation for that of the arbitral tribunal.
Modification is limited to correcting patent illegalities that are severable and do not require the court to act as an appellate body. The dissenting opinion remains a critical point of reference, arguing that reintroducing the power of modification through judicial interpretation amounts to judicial legislation, as Parliament had consciously chosen to exclude this power to reduce judicial interference. This tension between judicial efficiency and statutory fidelity continues to influence the drafting of dispute resolution clauses.
Appellate Restraint and the Plausible View Test under Section 37
The scope of appellate intervention under Section 37 of the Act was further clarified in Somdatt Builders NCC–NEC (JV) v. National Highways Authority of India, 2025 INSC 113. In this case, the Supreme Court overturned a High Court decision that had reinterpreted contractual clauses and substituted its own view for that of the arbitral tribunal. The Court reiterated that while deciding a challenge to an award, courts must refrain from re-entering the merits of the case if the tribunal’s view is a plausible one.
This judgment reinforces the “plausible view” doctrine, which holds that as long as the arbitrator’s interpretation is possible based on the contract, the court should not interfere even if it favors a different interpretation. Section 37 is not an invitation to conduct a de novo trial, and the ground of “patent illegality” must go beyond mere allegations of erroneous application of law or misappreciation of evidence.
Enforceability of Unsigned Agreements through Performance
Another critical area of development in 2025 was the formation of arbitration agreements through conduct and electronic correspondence. In Glencore International AG v. Shree Ganesh Metals, 2025 INSC 1036 the Supreme Court addressed the validity of an unsigned arbitration agreement in an international commercial context. The Court held that under Section 7(4)(b) of the Act, an arbitration agreement can be derived from the exchange of letters or other means of telecommunication that provide a record of the agreement.
The Court observed that the respondent’s performance accepting goods and furnishing security demonstrated clear consensus ad idem. This ruling provides essential legal certainty for modern businesses that often close transactions via electronic modes before formal documentation. It signals that parties cannot rely on their own failure to sign a contract to escape the obligations contained therein.
The Arbitrability of Intellectual Property and Fraud Allegations
The arbitrability of disputes involving intellectual property rights was clarified in K. Mangayarkarasi v. N.J. Sundaresan, 2025 INSC 687. The Supreme Court held that while the registration of a trademark may be an act in rem, a dispute arising from a contractual assignment of a trademark involves rights in personam. Such disputes are fundamentally contractual and fall within the scope of arbitration. The Court further narrowed the “fraud exception” by ruling that mere allegations of forgery do not render a dispute non-arbitrable.
Building on the fourfold test for arbitrability, the Court held that unless the fraud has public domain implications or vitiates the entire arbitration agreement itself, the arbitral tribunal is competent to adjudicate these issues under the principle of kompetenz-kompetenz. This judgment ensures that commercial parties cannot bypass arbitration by simply labeling their disputes as fraud.
Extension of Agreements to Non-Signatories: The Group of Companies Doctrine
The application of the Group of Companies doctrine reached a new level of maturity in ASF Buildtech v. Shapoorji Pallonji and Company, 2025 INSC 616. The Court held that an arbitral tribunal possesses the authority to summon non-signatories if it can be shown that the non-signatory was an alter ego of a signatory or played a substantive role in the performance of the contract. Crucially, the Court clarified that a separate notice under Section 21 is not a mandatory prerequisite for impleading a non-signatory, provided the entities formed part of a single economic reality.
This decision empowers tribunals to exercise jurisdictional control over complex corporate structures where parent companies may be the real parties in interest. The judiciary has furthered the cause of arbitral autonomy, by allowing tribunals to decide these fact-intensive issues.
The Perversity of Delay and the Finality of Arbitral Awards
Temporal discipline was a major focus in Lancor Holdings Ltd. v. Prem Kumar Menon, 2025 INSC 1277 where the Supreme Court addressed the deleterious effects of undue delay in delivering awards. The Court held that while delay alone is not an independent statutory ground for setting aside an award under Section 34, an inordinate delay that demonstrably impacts the decision can render the award in conflict with the public policy of India.
The Court reasoned that the primary purpose of arbitration is speedy resolution, and prolonged inaction breeds’ suspicion. When a delay results in an unworkable award that fails to give finality to claims despite altering party positions, the award becomes patently illegal. Exercising its extraordinary powers under Article 142, the Supreme Court provided a final settlement of a long-standing property dispute, highlighting that the judiciary will intervene when the arbitral process fails its fundamental promise.
Waiver of Objections and the Discipline of Section 29A
The concept of procedural waiver was robustly applied in Hindustan Construction Company v. Bihar Rajya Pul Nirman Nigam, 2025 INSC 1365. This case centered on whether a party could challenge the validity of an arbitrator’s appointment after having participated in proceedings for years. The Supreme Court held that the respondent’s participation in numerous sittings and its joint applications for extensions under Section 29A amounted to an unequivocal waiver of any objection to the appointment.
This ruling emphasizes that Section 29A is not merely for time management but serves as a statutory anchor that estops parties from raising retrospective jurisdictional challenges. The Court sent a stern message to public officers that they cannot exploit procedural avenues to delay resolution once they have actively engaged in the process.
Jurisdictional Anchors: The Seat Doctrine in Cross-Border Disputes
In cross-border arbitration, the decision in Disortho S.A.S v. Meril Life Sciences, 2025 INSC 352 provided clarity on determining the law governing the arbitration agreement (lex arbitri) when the contract is silent. The Court adopted the three-stage test involving an inquiry into the express choice, the implied choice, and the law with the closest connection. In Disortho, the parties designated a foreign seat (Bogota, Colombia) despite choosing Indian law for the substantive contract.
The Supreme Court held that where a foreign seat is designated, Indian courts do not have jurisdiction under Section 11 to appoint arbitrators, as the lex arbitri is that of the seat. This judgment reinforces the seat doctrine, establishing that the seat of arbitration is the juridical home of the process and determines the supervisory jurisdiction of the courts.
Interface with Specialized Statutes: The MSMED Act Conundrum
The relationship between statutory arbitration under the The Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) and the Arbitration Act saw refinement in Tamil Nadu Cements Corporation v. Micro and Small Enterprises Facilitation Council, 2025 INSC 91. The Court held that while the MSMED Act provides a specialized mechanism, it cannot circumscribe the High Court’s constitutional powers to intervene if an order is wholly without jurisdiction.
However, the Court cautioned against the mechanical invocation of writ jurisdiction to bypass the statutory remedy of challenging an award under Section 34. This balancing act ensures that procedural integrity is maintained while providing a constitutional safety valve. The Court also referred to a larger bench the question of whether Council members who act as conciliators can subsequently serve as arbitrators.
Legislative Reform: The Arbitration and Conciliation (Amendment) Bill, 2024
The legislative environment in 2025 was active with the government pushing the Arbitration and Conciliation (Amendment) Bill, 2024. The Bill aims to revitalize institutional arbitration by transferring powers currently exercised by courts to designated arbitral institutions. These include the power to appoint arbitrators, extend timelines for awards, and substitute arbitrators. By reducing the judicial role at pre-arbitral stages, the Bill seeks to minimize delays. A notable proposal is the amendment to Section 9, which would restrict court power to grant interim measures to the period before arbitration commences and after the award is rendered. The Bill also proposes the introduction of emergency arbitration under Section 9-A, allowing parties to seek urgent relief before a full tribunal is appointed.
Institutionalization and the Role of the Arbitration Council of India
The role of the Arbitration Council of India (ACI) remains a subject of debate. Envisaged as a central body to regulate and grade arbitral institutions, the ACI has yet to be fully constituted years after the 2019 amendments. The delay is attributed to concerns regarding government dominance, which critics argue could undermine neutrality. Since the government is the largest litigant, a government-led regulator overseeing institutions has met with scepticism.
The 2024 Bill seeks to address this by redefining arbitral institutions more broadly and reducing the need for formal designation by courts. The goal is to foster an environment where multiple competitive institutions can flourish based on their own procedural rules rather than relying on a centralized state accreditation mechanism.
Contractual Sovereignty over Commercial Interest Rates
The judiciary’s stance on interest rates in commercial arbitration underwent a significant affirmation in 2025. In BPL v. Morgan Securities,2025 INSC 1380 the Supreme Court upheld high default interest rates, ruling that such rates in a commercial contract do not violate public policy unless they are so perverse as to shock the conscience of the court. The Court reasoned that in transactions between sophisticated parties, the rate of interest is a matter of contractual bargain.
This decision aligns with the principle that an arbitrator has wide discretion to award interest unless there is an explicit contractual bar. This pro-enforcement stance helps discourage tactical challenges to awards by making the cost of delay prohibitively high for the losing party.
Conclusion
The judicial and legislative developments of 2025 have significantly restructured the Indian arbitration framework by clarifying the limits of Section 34 modification, narrowing the grounds for Section 37 appeals, and expanding the enforceability of unsigned agreements. The move toward institutionalization and the introduction of emergency arbitration signify a maturation of the dispute resolution culture in India.
While challenges regarding the autonomy of the Arbitration Council and the uniformity of judicial application persist, the overall trajectory is one of increased efficiency and global alignment. For legal professionals, the 2025 rulings provide a robust framework that prioritizes party autonomy and the finality of the arbitral process. The sustained credibility of this system will ultimately depend on the continued restraint of the High Courts and the successful implementation of the 2024 Bill, ensuring that the arbitral tribunal remains the primary forum for jurisdictional and procedural control.
Recent Supreme Court rulings have clarified how Non-Signatories & Confidentiality in Indian Arbitration are treated, a principle that finds consistent reinforcement across key 2025 arbitration judgments shaping Indian arbitration law.