Ojas Sharma
I. Introduction
Delhi International Arbitration Centre (DIAC) has been an outcome of extensive experience within the Indian legal fraternity owing to the constant demand of an Indianized system pertaining to arbitration through Law Commission’s 246th Report. While the project seems ambitious and promising, the system is still at a very nascent stage compared to its contraries like Singapore International Arbitration Centre (SIAC), which is the favourable seat of international arbitration among international clients consisting of a total sum in dispute of USD 11.90 billion. Emergency arbitration has emerged as a favourable interim measure to resolve various disputes among domestic and international agreements, often providing a swift measure to seek relief among parties particularly saving time and providing efficiency in deals where time is a crucial commodity. Simultaneously, growth in commercial footprint has been observed in state-owned enterprises in international trade and investment which has generated its own set of complexity. These transactions often invoke the doctrine of state immunity, emphasising sovereign dignity and noninterference, creating a complex clash between emergency arbitration (EA) proceedings and state-owned enterprises invoking state immunity.
To make the procedure more complex, the Arbitration and Conciliation Act, 1996 (Arbitration Act) does not have any clarity on EA proceedings and only very recently, the Indian courts have begun to accept the legitimacy of such proceedings. DIAC aims to address such concerns by complying with international standards to promote international arbitration in India, boost the economy and attract foreign companies to comply with a strongly structured Indian framework to promote ease of doing business, but challenges persist. This article aims to critically examine such intricate provisions and unravel the legal gaps in EA and state immunity while providing a comparative analysis to give significant policy suggestions and propose reforms in this system while arbitration in India enters a new stage.
Emergency Arbitration and its Significance
The roots of emergency arbitration can be traced from the International Chamber of Commerce’s Rules for Pre-Arbitral Referee Procedure adopted in 1990 and from the Optional Rules for Emergency Measures by the American Arbitration Association Commercial Arbitration Rules and Mediation Procedures, highlighting the need for an interim measure for parties to arbitration, however, it gained major significance when SIAC adopted these measures and boosted its usage in the global south, promoting great acceptance among Indian clients. DIAC also accepts emergency arbitration as an integral provision, promoting its usage to seek interim relief and facilitate ease of doing business among parties.
India’s stance on EA appears to be lukewarm at best. While other jurisdictions have accepted EA and amended their legislation to recognise EA, India’s prominent legislation, the Arbitration and Conciliation Act, 1996, still fails to recognise EA. However, the Indian judiciary has accepted EA with a positive response, majorly in Amazon.com NV Investment Holdings LLC v. Future Retail Ltd., where the Apex Court held that emergency arbitrators would be included in Section 2(1)(d) and order by such arbitrators would be backed by Section 17(1) of the Arbitration act. This decision ultimately reinforces the notion that a decision set by an Emergency Arbitrator in India seat is enforceable under section 17 of the Arbitration Act.
Doctrine of State Immunity in Context
The concept of State Immunity is often expressed by the maxim “par in parem non habet imperium” meaning “Equals have no sovereignty over each other”. For arbitral proceedings, these immunities can be used in two contexts, jurisdictional immunity, manifesting as a resistance against participation in emergency proceedings or being subjected to interim measures, and immunity from execution, ultimately challenging the enforceability of such awards. This distinction becomes significant in EA proceedings, where voluntary participation can negate giving consent for the enforcement of awards. This dual invocation can delay proceedings, disrupt the ease of business and ultimately discourage international clients from participating in Indian jurisdictions, often skipping frameworks in the country to go for other arbitration centres like SIAC. The United Nations Convention on Jurisdictional Immunities of States and Their Property has given structured legislation with an aim to prevent the misuse of state immunity while preserving the equal interests of the parties but India is not a signatory to this convention. However, this convention is often relied on persuasively by the judiciary and serves as a resource for potential policy-making, cited as customary international law trends. India lacks a regulated framework for such issues and often relies on judicial precedents and Section 86 of the Code for Civil Procedure, which discusses foreign state protection/sovereign immunity.
However, this fragmented framework often leads to ambiguity and lapse in certainty, questioning the arbitrability of Public Sector Undertakings (PSUs) and the enforceability of awards in emergency measures. India’s approach towards state immunity is backed by judicial pragmatism but lacks a justified structure, resulting in issues pertaining to jurisdiction and compliance and demands proper legislation for clarification.
DIAC Framework and EA Involving Sovereign Entities
Delhi International Arbitration Centre is established under the aegis of the Delhi High Court in hopes of being the key arbitration forum in India, promising a boost in international arbitration while providing efficient, cost-effective and timely arbitration services. It is further governed by the DIAC Rules 2018 to emphasise neutrality, minimal judicial interference and independence.
However, compared to institutions such as SIAC and VIAC, which publish detailed annual caseload reports, DIAC’s public disclosures are limited to aggregate statistics on listings and hearings. Compared to leading arbitral institutions that release detailed annual caseload reports, DIAC’s public disclosures are confined to summary statistics on listings and hearings, which restricts granular empirical scrutiny of disputes involving PSUs and sovereign entities. This absence of anonymised awards or detailed caseload breakdowns restricts empirical evaluation of DIAC’s handling of PSU and sovereign disputes. Sections 9 and 17 of the Arbitration Act function as judicial substitutes for interim relief but lack the procedural speed, confidentiality and subject-specific expertise associated with emergency arbitrators. SIAC’s emergency arbitrator decisions are typically issued within 8–14 days, whereas Section 9 proceedings frequently experience delays due to court congestion. Moreover, EA preserves party autonomy by enabling the tribunal to shape tailored commercial remedies, a feature not replicable under Section 9.
Theoretically, if a sovereign state agrees to follow the forum rules, it becomes bound to comply with the rules but its compliance only becomes voluntary and is often dependant on the national courts for enforcement. Practically, they often contest both enforceability and jurisdiction, challenging interim relief offered by the forum. Jurisdictional objections always persist if the state does not waive its immunity and enforceability is challenged under CPC contesting the attachment of public and diplomatic assets without consent. While DIAC appears to be soundly equipped to handle large commercial matters, its lack of clarity on legislations pertaining to emergency arbitration, state immunity and time-bared approach appears to be a legal loophole, discouraging international parties from opting for such a forum.
Uncovering India’s Reluctance Towards Embracing EA
Despite being a mainstream issue for a significant time, India’s limited statutory engagement with EA, combined with broad assertions of state immunity, often produces uncertainty in sovereign-party disputes, which ultimately puts its international disputes at a stalemate. Judicial hesitation stems from concerns that emergency arbitrators may issue intrusive orders affecting sovereign decision-making or public welfare functions. Likely, arbitrators can potentially intrude upon the sovereign decision-making and expose public interest to seizure, clearly violating section 23 of the Indian Contract Act, 1872 by going against the ‘public policy’. There is a legitimate fear that private arbitrators can act swiftly to obtain orders that can interfere with governmental functions and public welfare policies. Indian judiciary has time and again preferred to control such measures under Section 9 of the Arbitration act which allows the court to grant interim relief before the tribunal is constructed. Judicial oversight is viewed as a safe blanket to ensure that no abuse of law and no unbalanced orders are passed against the state entities as it affects the people at large.
The core argument, however, revolves around Section 9 lacking the commercial expertise and subject-matter specialisation that emergency arbitrators bring to time-sensitive corporate disputes. EA allows parties to appear before an arbitrator who is generally an industry-specific practitioner capable of issuing tailored, commercially coherent interim measures something a generalist court cannot replicate. Confidentiality, which is central to maintaining commercial leverage during negotiations, is compromised in Section 9 proceedings but preserved in emergency arbitration. EA also enhances party autonomy, allowing parties to structure relief within the contours of their bargain, whereas Section 9 substitutes judicial discretion for arbitral intent. For these reasons, Section 9, though valuable as a judicial safeguard, is an imperfect and slow substitute for emergency arbitration in high-value, cross-border matters where strategic speed, expertise and confidential handling of commercial information are essential.
It is pertinent to note that modern jurisprudence has a clearly distinguished between acts ‘jure imperii’ (sovereign) and ‘jure gestionis’ (commercial). Emergency Arbitration is typically sought in commercial disputes and not in matters pertaining to national security and public policies. Further, the Supreme Court has already approved the use of EA in Amazon vs Future Retail (supra), integrating the EA framework within Indian law and therefore, paving the way for the encouragement of this trend. Fear of unchecked arbitrators can be countered by studying already successful forums which have incorporated hundreds of emergency arbitrations like SIAC which has further resulted in successfully providing EA awards without misuse of law.
It is therefore contended that India should not view emergency arbitration as a threat to sovereignty but as an opportunity to move beyond its legacy of procedural opacity and structural inconsistency, aligning its framework with global developments.
Conclusion and Way Forward
With the right legislative amendments and revamped rulebook, DIAC shows the potential to tap the Global South market and become a strategic forum for complex commercial disputes involving sovereigns. First, legislative reform should expressly recognise emergency arbitrators within Section 2(1)(d) of the Arbitration Act and provide a dedicated enforcement pathway modelled on Section 17(2). Second, DIAC should adopt fixed EA timelines, sovereign-party protocols and a model clause requiring explicit waiver of jurisdictional and execution immunity. These measures align with comparative practice under the UK State Immunity Act 1978 and Singapore’s EA framework. Third, limits such as appointment of Emergency Arbitrator within 48 hours, first procedural order within 72 hours and final decision within 8-14 days similar to SIAC and HKIAC would improve investors’ confidence. Recognition of foreign seated arbitrations like the New York Convention and the Vienna Convention for interpretation pertaining to interim reliefs are another major contention raised through which international standards can be met. Fourth, DIAC should publish annual anonymised statistics on EA applications, sovereign-party cases and enforcement rates, aligning its transparency standards with global arbitral institutions. Fifth, India should consider adopting a dedicated State Immunity Act instead of relying on Section 86 of CPC that codifies the distinction between sovereign and commercial acts and clarifies exceptions to execution immunity where the state has contractually waived protection.
Ultimately, an express provision in DIAC is required to govern the timelines, costs and procedure for appointment and execution of emergency arbitration including sovereign party protocols, including measures where jurisdiction immunity could be handled through procedures and mandating a model arbitration clause that explicitly waives the elements of state immunity in these disputes.
As India gears up to be an economic hub, it is necessary to refresh its commercial laws to ensure the ease of doing business and compliance with stakeholder’s expectations from a sound commercial arbitration forum. Introducing transparency in the current opaque system of DIAC would encourage the stakeholders to consider India as a favourable seat for arbitration.
Ojas Sharma is a B.A. LL.B. (Hons.) student at the Maharashtra National Law University, Nagpur
NUALS Law Journal 