In Fatehpuria, an arbitrator appointed by the Delhi High Court had failed to render an award within the statutory period. (¶ 11) Rather than substituting him, the High Court simply extended his mandate. (¶ 12) The SC reversed this. Once a mandate expires under S.29A(4), the arbitrator becomes functus officio. (¶ 11) S.29A(6), the Court held, “empowers and obligates” courts to appoint a substitute. (¶ 13)  A new arbitrator was directed, with proceedings to continue from the stage already reached. (¶ 14) The decision treated substitution not as a discretionary remedy but as a structural consequence of expiry, an interpretation that left little room for judicial hesitation.

Viva Highways quietly dismantled this. The Madhya Pradesh High Court had done exactly what Fatehpuria seemed to require: on mandate expiry, it terminated the appointment and directed substitution. The SC set this aside, holding that the High Court had misread the precedent. (¶ 4) The Court clarified that “obligates” does not imply a blanket mandate, it simply means substitution is an available remedy when the situation demands it. It would follow only “if the situation so warranted.” (¶ 4)

The tension sits in that single word. “Empowers” and “obligates” are not synonyms, one gives a court an option, the other removes it. When Fatehpuria used both in tandem, the jurisdiction to substitute an arbitrator not only existed but had to be exercised. Reading “obligates” as simply restating “empowers” makes the word pointless. The practical effect of this is that it transforms a strict rule of automatic substitution into a discretionary standard where substitution only happens if the specific facts warrant it.

S.29A works through credible commitment, wherein, the legislature deliberately imposes a deadline precisely so that both, the parties and arbitrators take it seriously. If the consequence of missing that deadline is uncertain, with extension possible and substitution merely discretionary, the deterrent loses force. An arbitrator who expects accommodation rather than replacement has weaker reason to conclude within time. The ICC Commission’s work on controlling time and costs has noted that the primary cause of high costs and long durations in international arbitration is the unnecessary complication of proceedings. S.29A represents India’s attempt to break this cycle of delay, using the substitution mechanism as its sharpest instrument.

What makes India’s approach worth pausing on is how unusual it is. Neither the UNCITRAL Model Law, nor the English Arbitration Act 1996, nor the Singapore International Arbitration Act prescribes a statutory time limit on making an award, let alone a substitution mechanism triggered by its breach. India went further than virtually every major arbitration jurisdiction, and deliberately so. The delay in domestic arbitration is a genuine, documented problem for which the parliament brought about strict statutory deadlines, Viva highways suggests that the judiciary is moving towards sensitivity to context rather than imposing rigid and automatic consequences.

There is a genuine paradox at the heart of substitution as the remedy for delay itself causes delay. In complex infrastructure disputes, like that of Viva Highways, a substitute arbitrator must re-read voluminous submissions, re-examine evidence, and reconstruct a procedural context they had no part in building. Practitioner experience in institutional arbitration puts tribunal reconstitution at three to six additional months, with significant added costs. S.29A(6) anticipates this partially, providing that the substitute “shall continue” from the stage already reached and may rely on evidence already recorded. But there is a real gap between continuing from a stage and actually understanding a complex dispute at that stage. A tribunal that has heard witnesses, absorbed the cadence of arguments, and formed tentative impressions carries institutional memory that a handover can hardly replicate.

The downstream litigation costs compound this. Every substitution risks generating fresh applications, potential challenges under Sections 12 and 13, and further time-extension proceedings. Viva Highways is itself a good example, wherein, the SC had to intervene to correct a High Court that was itself trying to apply Fatehpuria correctly. If mechanical substitution produces more ancillary litigation than it prevents, the efficiency rationale for the strict rule starts to look weaker than it first appeared.

The Court unanimously held that once a resolution plan is approved under Section 31 of the IBC, any claim not forming part of that plan cannot be enforced as a separate claim in arbitration. Therefore, WBPDCL was not entitled to an independent counterclaim or affirmative relief on its claim after the approval of the resolution plan. However, the SC drew a crucial distinction. It allowed WBPDCL to use its claim in defence by way of a set-off. The SC held that even though WBPDCL is not entitled to independently pursue its claim by way of a separate counterclaim post approval of the resolution plan, it ought to be permitted to raise the plea of set-off at least by way of defence. This implied that WBPDCL could not obtain any money from Ujaas, but it could use its claim to reduce or defeat Ujaas’s own claims in arbitration.

Committee deliberations chaired by T. K. Vishwanathan continued along the same path as the LCI Report, but with greater focus on institutional arbitration, the use of technology and clearer jurisdictional boundaries. Lawmakers reflected the same view, describing arbitration as user friendly and capable of faster resolution. The establishment of the New Delhi International Arbitration Centre demonstrated the same long-sighted confidence.

Yet sovereign contracting practice, particularly in infrastructure, reveals a far more uneven reality. The National Highways Authority of India’s experience illustrates this clearly, with its Annual Report for 2022–23 recording 140 ongoing arbitration matters involving claims of approximately ₹1.16 lakh crore, alongside 219 court proceedings involving nearly ₹28,863 crore. These figures are substantial and outline the scale at which disputes arise within public infrastructure, with approximately ₹8,109 crore already deposited pursuant to judicial directions, which demonstrates that arbitration and litigation were ongoing realities rather than far-off risks. Within Highway projects alone, around 150 arbitration matters were identified, with claims exceeding ₹1.09 lakh crore. 95 awards had already been delivered while others remained pending, suspended somewhere between contractual and financial disagreement.

Institutional arbitration mechanisms have also been widely used, with more than 100 disputes referred under the Society for Affordable Redressal of Disputes [‘SAROD’]­­­­­– Highways, resulting in 47 awards and several others concluding through negotiated settlement. Individual outcomes could also be substantial, such as the ₹485.28 crore award in favour of PNC Infratech in relation to the Agra Bypass Project. These numbers show how common arbitration has become and how deeply it is integrated into infrastructure contracting.

However, these instances are not evidence of arbitral malfunction, since highway concession agreements structured under EPC (Engineering, Procurement, Construction), BOT (Build, Operate, Transfer) or HAM (Hybrid Annuity Model) models operate within unstable conditions. Land acquisition delays, regulatory approvals that shift midway and scope modifications are rampant. Arbitration does not create these disputes but resolves issues that arise from contractual realities already in place. The Comptroller and Auditor General of India noted that the Employees’ State Insurance Corporation failed to provision ₹138.29 crore linked to an arbitral award, understating liabilities and overstating surplus. The liability did not originate in arbitration. Arbitration simply forced its recognition.

Despite this, executive policy has moved towards restricting arbitration precisely in those disputes where it has been most visible. A circular issued in January 2026 by the Ministry of Road Transport and Highways directed that disputes valued at ₹10 crore or above, along with declaratory or non-monetary disputes, were not to be referred to arbitration. Instead, conciliation or civil litigation was to be pursued. A nuanced appreciation of the ₹10 crore threshold reveals that its effect is not merely just restrictive but exclusionary in substance. Infrastructure disputes arising from EPC, BOT and HAM contracts are inherently high value, as evidenced by the data reflected in the NHAI’s Annual Report for 2022–23. The Government’s rationale for this exclusion is problematic in nature as referring these high value disputes to conciliation and the court system is reactionary rather than solving the root of the problem. Hence, it can be stated that this circular does not operate as a selective filter but as a near substantive bar leaving arbitration to a category of disputes that rarely arise in practice. Therefore, arbitration exists in a limbo wherein it is rendered ineffective in dispute resolution mechanisms through no fault of its own.

This shift exposes a deeper institutional tension. Arbitration reform was premised on courts being structurally incapable of resolving complex commercial issues efficiently. Redirecting high-value infrastructure disputes back to courts risks recreating those conditions. It also recasts arbitration less as a dispute resolution mechanism and more as a forum where fiscal exposure becomes visible. This contradiction is further sharpened by statutory reforms that strengthen tribunal authority and repeated committee recommendations that signal internalising arbitration. Therefore, while it is present at the level of architecture, its adoption remains cautious when the financial consequences are immediate.

Investor-state arbitration reflects a similar pattern as observed in the dispute involving Cairn Energy. In December 2020, an arbitral tribunal directed India to refund retrospective tax collections along with interests and penalties, which was not immediately complied with. Cairn Energy, as a response, initiated enforcement actions targeting state-owned assets including aircrafts and diplomatic property. Only later did legislative change intervene where retrospective tax demands were withdrawn in 2021, and approximately ₹7,900 crore was refunded, though interest and penalties were excluded.

A related but somewhat distinct pattern appeared in the dispute between Antrix Corporation and Devas multimedia. Domestic courts annulled the arbitral award, citing fraud in the formation of the underlying contract, but the enforcement proceedings abroad did not treat annulment as automatically determinative. Foreign courts examined the reasoning behind the annulment, particularly weighing it against the international standards of due process. Therefore, the Hague Court of Appeal held that such setting aside of arbitral awards cannot be based on an annulment ruling which is procedurally deficient.

India’s treaty framework reflects comparable caution. The 2016 Model Bilateral Investment Treaty requires investors to exhaust domestic remedies before initiating arbitration along with structured consultation requirements. Arbitration remains available as an option under Article 14.4, but stays intertwined with multiple conditions such as an advance notice to the responding party, thereby weakening its promise of speed and neutrality. 

Taken together, these developments demonstrate that arbitration is strengthened as a system, yet its use is narrowed in situations where its outcomes carry immediate fiscal repercussions. Arbitration turns such consequences visible, making that moment of visibility generate a discomfort among the stakeholders.

While some courts found it necessary to contextually interpret the term “court”, in order to decide the jurisdictional issue under Section 29A, others were satisfied with a textual reading of the provision. This ultimately resulted in a complete divergence in opinions expressed by different high courts, thereby splitting them into two broad groups. The High Courts belonging to the former category, subscribed to the opinion that applications under Section 29A would have to be filed before the principal civil courts exercising original jurisdiction i.e., the District Courts. The latter set of High Courts however, adopted the exercise of contextual interpretation which led them to hold that applications under Section 29A would lie before the constitutional courts which exercise the power of appointment of arbitrator under Section 11(6).  

1. High Courts Favouring Jurisdiction of Civil Courts

The line of reasoning adopted by High Courts belonging to the former category primarily draws support from the literal rule of interpretation of statutes and further, from the courts’ understanding of the jurisdiction vested with referral courts under Section 11.

In Dr. V.V. Subba Rao v. Dr. Appa Rao Mukammala,[i] a Division bench of the Andhra Pradesh High Court observed that the stage of Section 11 and the jurisdiction vested in referral courts thereof, is sui generis from the stage of Section 29A. Drawing reference to the ratio of the Apex Court in Nimet Resources Inc. v. Essar Steels Ltd. (“Nimet Resources”),[ii] the Division bench noted that once the power of appointment under Section 11 stands duly exercised by constitutional courts, they become functus officio and do not retain any residual jurisdiction over the arbitral proceedings.

While holding that an application under Section 29A would only lie before a “court” as defined under Section 2(1)(e) and not before itself i.e., a High Court sans ordinary original civil jurisdiction, the Bench rejected the need for contextual interpretation. In doing so, the Court held that exercise of powers under Section 29A by civil courts, would not impinge on the jurisdiction exercised by constitutional courts under Section 11 and thus, no jurisdictional anomaly would arise.

The Allahabad High Court also gave a comprehensive judgement on the issue in M/S A’Xykno Capital Services Private Ltd. v. State of U.P. (“M/S A’Xykno”),[iii] wherein it countered the need to contextually interpret the term “court” with reference to Section 29A. The Court drew reference from Section 2(1)(e) itself, and observed that the legislature conferred exclusive jurisdiction to High Courts in cases pertaining to international commercial arbitrations thereby, expressly excluding civil courts. Therefore, the Court reasoned that if the intent of the legislature was to exclude the jurisdiction of civil courts from exercising powers under Section 29A, it would have categorically expressed the same. The Court placed reliance on the amendment to Sections 47 & 56 of the Act to buttress this contention. Through the 2015 amendment, the legislature expressly ousted the jurisdiction of civil courts under Sections 47 & 56 and conferred such jurisdiction upon the High Courts. In light of the aforesaid, the Court observed that the exclusion of High Courts, not having ordinary original civil jurisdiction, was deliberate and intentional in Section 29A.

Akin to the Andhra Pradesh High Court, the Allahabad High Court also rejected the contention that a jurisdictional anomaly would arise if civil courts are permitted to exercise powers of substitution under Section 29A, to replace an arbitrator appointed by “superior” constitutional courts under Section 11(6).

The Allahabad High Court took a different approach to dismantle this contention. The Court observed that accepting this argument would imply that a jurisdictional anomaly also arises when civil courts exercise their powers under Section 34 and set aside an award passed by an arbitrator, duly appointed by a constitutional court under Section 11(6). Therefore, it would mean that even applications seeking setting aside of the award under Section 34 would need to be filed before the court which exercised jurisdiction under Section 11(6), in order to prevent a “jurisdictional anomaly”. The Court noted that this would inevitably result in a situation where once a constitutional court exercises the power to appoint an arbitrator under Section 11, it ousts the jurisdiction of all other courts in all curial matters. Ruling that such a situation would make the statute unworkable and fall afoul of the scheme of the Act, the Allahabad High Court rejected this contention.

The dictum laid down in M/S A’Xykno (supra) came to reconsidered by the Allahabad High Court in Jaypee Infratech Limited v. EHBH Services Pvt. Ltd.. The Court expressed its disagreement with the view taken by the Learned Single Judge in M/S A’Xykno (supra) and therefore, referred the question of law to a larger bench in light of conflicting decisions rendered by coordinate benches of equal strength.

Notably, even prior to Jagdeep Chowgule (supra), the Supreme Court had an opportunity to interpret the law and clarify its stance on the jurisdictional issue arising out of Section 29A. In Chief Engineer v. M/S BSC & C and C JV (“Chief Engineer”),[iv] the Court dismissed a Special Leave Petition and refused to interfere with an order of the Meghalaya High Court whereby, it had dismissed an application for extension under Section 29A for want of jurisdiction. The Apex Court held that as per Section 2(1)(e), only High Courts possessing ordinary original civil jurisdiction are empowered to entertain applications under Section 29A and since, the Meghalaya High Court lacked the same, it was not vested with jurisdiction under Section 29A. The Court notably observed that the power of substitution under Section 29A is only a consequential power, vesting in the Court which is empowered to extend time.

Seemingly, the Supreme Court had settled the jurisdictional controversy with its order in Chief Engineer (supra), however, this was not the case since the judgement came to be distinguished subsequent to its pronouncement thereby, keeping the question of law alive.

In conclusion, the Courts belonging to the first category have firmly rejected the occasion of any jurisdictional anomaly in case of exercise of powers under Section 29A by civil courts. Courts have primarily reasoned that since referral courts become functus officio after exercising powers under Section 11 and cease to retain any jurisdiction over arbitral proceedings, exercise of jurisdiction under Section 29A by civil courts would not impinge on the jurisdiction of the referral courts.

2. High Courts Favouring Jurisdiction of Referral Courts

High Courts belonging to the latter category however, have readily placed reliance on contextual interpretation in order to prevent, what they understand to be, a jurisdictional anomaly in the procedure under Section 29A. The rationale followed by the Courts in this category is that once the power to appoint an arbitrator under Section 11 is exercised by the referral court, being a “superior” court, it would be improper for a civil court to exercise powers of extension or substitution under Section 29A. Such an exercise, according to these courts, was contrary to the hierarchical structure on which the Indian Judicial system functions.

The Delhi High Court in DDA v. M/S Tara Chand Sumit Construction Co.,[v] held the power of substitution to be a subset of the wider power of appointment under Section 11. Thus, the Court observed that once a “superior” court exercises the power of appointment, powers of substitution under Section 29A would also vest in it. The Court found it inconceivable that the legislature would on one hand, confer jurisdiction to appoint arbitrators on constitutional courts and on the other, allow civil courts to substitute such arbitrators while exercising powers under Section 29A(6). The High Court interpreted this to be a conflict between the powers under Section 11 and 29A and thus, ruled that the power of substitution would only vest in referral courts.

In Sheela Chowgule (supra), the Goa bench of the Bombay High Court gave the judgement which was subsequently set aside in appellate proceedings before the Supreme Court in Jagdeep Chowgule (supra). The law laid down by the Division bench has already been discussed however, another pertinent aspect of the judgement in question is the part where the High Court distinguished the ruling of the Apex Court in Chief Engineer (supra).

The Court undertook a brief analysis of what constitutes ratio decidendi and consequently, attracts application of the Doctrine of Binding Precedent in terms of Article 141 of the Constitution. Placing reliance on a number of precedents, it noted that in determining the ratio, due consideration has to be given to the factual matrix before the Court and the context in which such decision was rendered.

Upon considering the facts of Chief Engineer (supra), the Court found that the arbitral tribunal therein, was constituted by mutual consent of the parties under Section 11(2), and there was no exercise of the power of appointment under Section 11(6). Therefore, in such a case, there was no occasion for any jurisdictional anomaly, as had been observed in cases where power of appointment is exercised by constitutional courts under Section 11(6) and thereafter, civil courts attempt to exercise powers of substitution under Section 29A. Thus, the Division bench was of the considered opinion that Chief Engineer (supra) could not be treated as a binding precedent in view of the peculiar facts of Sheela Chowgule (supra).

The Telangana High Court in Smt. Somuri Ravali v. Somuri Purnachandra Rao,[vi] upon a conjoint reading of Sections 2(1)(e) and 11, observed that the Act envisaged High Courts to be the focal point of all domestic arbitrations. It observed that High Courts are vested with exclusive jurisdiction to appoint an arbitrator, extend or terminate his mandate, and even exercise the powers of substitution. The Division bench opined that the provisions of the Act are hierarchy-sensitive and placed reliance on the judgement of the Bombay High Court in Sheela Chowgule (supra), endorsing the view expressed therein. The Court ultimately observed that applications under Section 29A are to be filed before High Courts, barring the exceptional situation where an arbitrator is appointed by mutual consent of the parties, in terms of Section 11(2) of the Act. Only in such a case would civil courts be empowered to entertain application under Section 29A.  

[i] 2024 SCC OnLine AP 1668

[ii] (2009) 17 SCC 313

[iii] 2023 SCC OnLine All 2991

[iv] 2024 SCC OnLine SC 1801

[v] 2020 SCC OnLine Del 2501

[vi] Order dated 10.04.2025 in Civil Revision Petition No. 739 of 2025

The practice of courts independently applying their mind to the facts of a case in cases of applications made under section 9 of the Act 1996, without due regard to the reasoned decisions of emergency arbitrators, has given rise to considerable uncertainty and potential misuse. Two recent decisions of Qatar Holding LLC v. Byjus Investments Pvt. Ltd.^[1] and Ashwani Minda and Another. v. U-Shin Ltd. and Another.^[2]  illustrate the problematic consequences of this judicial stance.

In the case of Ashwani Minda & Another. v. U-Shin Ltd. & Another., the applicants had first invoked emergency arbitration and unsuccessfully sought interim relief from the Emergency Arbitrator. Having failed to obtain a favourable order, they subsequently approached the Delhi High Court under section 9 of the Arbitration and Conciliation Act, 1996, seeking substantially the same reliefs that had already been declined in emergency arbitration. The High Court categorically rejected this approach, holding that section 9 cannot be used as an appellate forum against an emergency arbitral order. Permitting such recourse would allow a party to “have a second bite at the cherry”. In effect, the section 9 application was being used by the applicants as an appeal against the order of the emergency arbitrator which is a blatant misuse of the legislative lacuna.

Similarly, in the case of Qatar Holding LLC v. Byjus Investments Pvt. Ltd. [3] the petitioner had succeeded before the Emergency Arbitrator in a foreign-seated arbitration and had also enforced the emergency award before the Singapore High Court. Despite this, the petitioner approached the Karnataka High Court under section 9 seeking additional and wider interim reliefs in India, including reliefs that went beyond the express scope of the emergency arbitration award. Thereby, effectively attempting to modify/supplement or widen the scope of the Emergency Arbitration Award is legally untenable. The court reiterated that section 9 cannot be employed as a backdoor mechanism to improve upon or expand that award.

Although in both cases the courts, upon independently applying their mind to the facts, declined to grant the relief sought by the applicants, the broader concern persists. Moreover, courts remain legally competent to pass orders that may run contrary to the emergency arbitrator’s award. This position is deeply problematic, as it opens the floodgates to frivolous litigation wherein parties dissatisfied with the outcome of emergency arbitration attempt to re-agitate the same issues before courts.

Further, a de novo consideration of disputes under section 9 runs contrary to the fundamental principles of party autonomy in international commercial arbitration and the legislative objective of minimal court intervention as also contained in section 5 of the Act. This practice also runs contrary to the legislative intent underlying section 9, particularly after insertion of section 9(3) by 2015 amendment which prohibits the courts from entertaining the application for interim relief post the constitution of the arbitral tribunal and availability of a efficacious remedy before the same. Since Emergency Arbitrator also gets its jurisdiction from the arbitration agreement, it must be recognised and any remedy before it must be enforced instead of promoting judicial intervention by way of section 9 applications.

It also frustrates the very purpose of emergency arbitration, which is to provide urgent and time-sensitive interim relief. Interim relief, by its very nature, is exigent, and the prevailing practice of courts independently re-examining the dispute on merits risks defeating the objective of timely and effective protection that emergency arbitration is designed to achieve.

[1] Qatar Holding LLC v. Byjus Investments Pvt. Ltd., 2025 SCC OnLine Kar 170

[2] Ashwani Minda & Anr. v. U-Shin Ltd. & Anr., 2020 SCC OnLine Del 1648

[3] Qatar Holding LLC v. Byjus Investments Pvt. Ltd., 2025 SCC OnLine Kar 170

The principal issue before the Supreme Court was whether the arbitral award could be set aside on the ground that the tribunal had been improperly constituted due to the delayed appointment of the presiding arbitrator. A related question concerned whether a party that had participated in the arbitral process without a timely objection could subsequently raise a jurisdictional challenge based on alleged non-compliance with the arbitration agreement.