Arbitration: A case for amending law

Arbitration is gaining popularity for resolving disputes in a contemporary legal landscape worldwide. With increasing cross-border transactions, business enterprises are becoming more interconnected leading to higher chances of disputes. It has led to businesses seeking mechanisms outside the traditional court system which offer neutrality, confidentiality, and procedural autonomy. Top economies are modifying their arbitration laws
to enhance investor confidence through a business-friendly legal milieu.

The United Kingdom (UK) amended its Arbitration Act 1996 in February 2025 to introduce summary disposition/dismissal under Section 39A. Summary dismissal or disposition refers to determining a frivolous claim or counterclaim without a full hearing on the merits. As per Section 39A, the arbitral tribunal is empowered to make an award on a summary basis (modelled after Part 24 of the UK Civil Procedure Rules, which allows English courts to pass summary judgements).

The introduction of a summary procedure in arbitration is a significant development, especially in light of rising costs and delays as highlighted in the 2021 International Arbitration Survey (jointly conducted by Queen Mary University, London and US-based law firm White & Case LLP). Another international arbitration survey by the aforementioned institutions in 2025 revealed that 49% of respondents have considered early determination procedures for unmeritorious claims/defences
as the most effective mechanism for improving efficiency in arbitration.

Two main standards for granting summary awards are ‘no real prospect of succeeding’ and ‘manifestly without merit’ which have originated from the UK Civil Procedure Rules and the International Centre for the Settlement of Investment Disputes (ICSID), respectively.

According to Section 39A, the arbitral tribunal may, upon application by a party, render a summary award on a claim or a specific issue if it considers that a party has ‘no real prospect of succeeding’ on the claim or issue, or in defending against it. In Swain vs Hilman (2001), the English court defined ‘no real prospect of succeeding’ through ascertaining whether there is a ‘realistic’ as opposed to ‘fanciful’ prospect of success.

Indian courts have followed the Swain vs Hilman framework for granting summary awards under Order XIII-A of the Commercial Courts Act 2015, as seen in Su-Kam Power Systems Ltd vs Kunwer Sachdev (2019) and Deepali Designs and Exhibits Private Limited vs Encompass Events Private Limited (2022). Importantly, both standards aim to promote the timely resolution of a dispute. The challenge for the arbitral tribunal would be to align and harmoniously interpret them without undue risk of injustice to the parties.

The principal issue regarding the use of summary disposition in arbitration is the potential infringement on procedural fairness and the parties’ right to present their case, i.e., the ‘due process’ requirement – one of the grounds for refusal to recognise and enforce awards under Article V of the New York Convention 1958.

To overcome the challenges involving due process, Section 39A (3) of the UK Act itself includes procedural protection by requiring that the parties be given a reasonable opportunity to present their case before the tribunal exercises its summary powers. Moreover, the provision is discretionary, and the parties can opt out of the mechanism, thus retaining party autonomy – a core principle of arbitration. These defences ensure that the parties’ right to be heard is preserved.

Due process also doesn’t mean that frivolous or baseless claims are entertained and heard in detail by the courts or tribunals. Summary disposition, when applied judiciously, promotes efficacy without compromising the foundational principles of natural justice in arbitration.

Summary awards
in India

A study conducted by the Indian law firm Khaitan & Co in March 2024, titled ‘Current Trends in Domestic Arbitration in India’, suggests that arbitration proceedings usually get completed in two to three years, instead of the mandatory one-year period for the entire proceedings. If arbitral tribunals are given express powers of summary disposition in law, it can prevent prolonging of the arbitration process and narrow down the scope of the dispute.

The adoption of a summary mechanism in the Commercial Courts Act shows India’s commitment to the speedy resolution of commercial disputes. Hence, it is imperative to include an analogous provision in the Indian Arbitration & Conciliation Act 1996 that will augment the overall efficacy of arbitration as a mode of dispute settlement.

The UK’s amended law serves as an important template for enhancing India’s dispute resolution mechanisms. Extending a similar provision in the arbitration law will strengthen India’s efforts to establish itself as a preferred destination for arbitration.

(The writer, after practising law for over five years, is an LLM student at National Law University, Delhi)