Reassessing India’s Multi-Party Arbitration Framework vis-a-vis Tribunal’s Constitution in Default Scenarios
**Vikhyaat Maheshwari and Preet Arya
“Any uncertainty in the law of arbitration would be an anathema to business and commerce.”
– Hon’ble Justice J.B. Pardiwala
Introduction
Commercial transactions have become significantly layered, involving multiple parties and interlinked contracts. The traditional arbitration framework, designed primarily to address disputes between two parties, has faced challenges lately. While some jurisdictions have amended their laws to accommodate multi-party arbitrations, India’s legal framework remains notably silent on this critical aspect, despite its aspirations to become an international arbitration hub.
Part-I critically examines the discrepancies in global practices on institutional multi-party arbitration, particularly with respect to the constitution of arbitral tribunals in default scenarios. It proceeds to examine the origin of the underlying issue in the context of United Nations Commission on International Trade Law (“UNCITRAL”) rules. Part-II analyses India’s current approach on multi-party arbitrations. It places emphasis on Indian legislative silence in relation to multi-party arbitrations. It further explores the prospective increase in multi-party arbitrations owing to the recent judicial developments related to joinder of non-signatories during arbitration proceedings.
This blog underscores the necessity for systematic reforms at both the global and domestic levels. It sets forth suggestions to better align India’s arbitration framework with modern realities, suitable to address the tribunal’s constitution in default scenarios during institutional and ad-hoc multi-party arbitrations.
PART-I
The Annual Casework Report, 2023 by the London Court of International Arbitration (“LCIA”), the world’s second-largest arbitration institution by caseload, reveals that five out of seven of the UNCITRAL arbitrations involved multiple parties. Similarly, International Chamber of Commerce (“ICC”) Dispute Resolution Statistics 2024 record that approximately one third of the newly-filed cases involved multiple parties. Furthermore, Hong Kong International Arbitration Centre (“HKIAC”) Statistics 2024 indicate that of the 352 arbitrations submitted to HKIAC involved 134 multiple parties i.e. 4 out of 10 cases filed involved multiple parties. The aforementioned statistics highlight the growing global prevalence of multi-party arbitrations and reiterate the pressing need for uniform procedural standards for the tribunal’s constitution in case of default by parties during multi-party arbitrations internationally.
Emergence Of the Principle Of Égalité In Multi-Party Arbitrations
The French law principle of égalité, commonly known as the ‘Ducto Principle’, highlighted in the case of DUTCO v. BKMI Industrieanlagen GmbH (1992), has widely influenced the emerging jurisprudence on constitution of three-member arbitral tribunals in cases of default in appointments by parties during multi-party arbitrations worldwide since the year 1992. Subsequently, the recent landmark precedent, Vidatel v. PT Ventures by the French Supreme Court in 2022 upheld the principle of égalité, thus preventing any party from having undue influence over the tribunal’s composition. The dispute involved four contracting parties, one as claimant and three as respondents in the original 2019 ICC arbitral tribunal award centred on the arbitral tribunal’s constitution, wherein the respondents advocated for a five-member panel in accordance with the original agreement, while the claimant advocated for a three-member tribunal pertaining to the concerns regarding equality, given the aligned interests of the other parties. The ICC intervened under Article 12(8) of its erstwhile 2017 Arbitration Rules, thereby appointing all five arbitrators to ensure impartiality. Furthermore, in 2021, the ICC Arbitration Rules were revised to add Article 12(9), which reads:
“Notwithstanding any agreement by the parties on the method of constitution of the arbitral tribunal, in exceptional circumstances the Court may appoint each member of the arbitral tribunal to avoid a significant risk of unequal treatment and unfairness that may affect the validity of the award.”
The verbatim mentioned herein above provides specificity and reinforces the primacy of the principle of equality in multi-party arbitrations. The clarity and procedural transparency embedded in the ICC Arbitration Rules have significantly contributed to positioning the institution at the top with the highest caseload as compared to LCIA, HKIAC, Singapore International Arbitration Centre (“SIAC”) and Dubai International Arbitration Centre (“DIAC”) and serves as a best practice model in the authors’ opinion that other international institutions should consider adopting.
Divergence In International Arbitration Institutions’ Practices
The aforementioned precedents unleashed a wave of constructive revisions and amendments to the existing arbitration rules at the global scale vis-à-vis tribunal’s constitution in case of default appointments during multi-party arbitrations.
Subsequently, the prominent international arbitration institutions amended their respective rules, namely LCIA Arbitration Rules 2020 (⁋ 8), ICC 2021 Arbitration Rules (⁋ 12.9), 2024 HKIAC Administered Arbitration Rules (⁋ 8.2), SIAC Rules 2025 (⁋ 23.2) and DIAC Arbitration Rules 2022 (⁋ 12.5) to include similar provisions following the UNCITRAL mandate.
However, a detailed analysis of the aforesaid rules reveals a persisting lack of uniformity in the approach towards the tribunal’s constitution in default scenarios during multi-party arbitrations.
Use Of Enabling Clause Rather Than Obligatory Clause
UNCITRAL amended its model arbitration clauses to come up with revised UNCITRAL Arbitration Rules, 2010, thereby replacing the erstwhile 1976 Rules in light of tribunal’s constitution in default scenarios during multi-party arbitration, which reads:
“10.3 In the event of any failure to constitute the arbitral tribunal under these Rules, the appointing authority shall, at the request of any party, constitute the arbitral tribunal and, in doing so, may revoke any appointment already made and appoint or reappoint each of the arbitrators and designate one of them as the presiding arbitrator.”
The non-uniformity in the outlined procedures worldwide originates from the purposive use of liberal language in the aforesaid Article 10.3 that employs the term “may” rather than “shall”. Therefore, discretion is conferred upon the appointing authority or institution to either appoint the entire arbitral tribunal (as followed by ICC, LCIA, HKIAC & SIAC) or to appoint only the arbitrator(s) on behalf of the defaulting party (as followed by DIAC), where the parties have failed to jointly appoint the tribunal composed of three or more members.
The incorporation of such liberal verbatim in the 2010 revision was perhaps intended to provide member states with procedural flexibility, given the relatively nascent stage of the underlying issue at the time. However, despite three decades of substantial developments in multi-party arbitration practices globally since 1992, the latest UNCITRAL Arbitration Rules 2021 still do not offer any clarification to address this procedural ambiguity.
PART-II
Legislative Silence On Multi-Party Arbitrations In India
With multi-party commercial disputes growing increasingly common in complex transactions involving multiple stakeholders, the governing arbitration framework must be equipped to adequately address both institutional and ad-hoc multi-party arbitrations. However, even after one and a half decade of the revised UNCITRAL Arbitration Rules, 2010 coming into existence, India’s legislature has been inexplicably silent by not incorporating the UNCITRAL principles into the principal act i.e., the Arbitration and Conciliation Act, 1996 (“Arbitration Act”). Similarly, the Expert Committee on Arbitration Law constituted in February 2024 overlooked multi-party challenges in its recommendations. Besides, the Draft Arbitration and Conciliation (Amendment) Bill, 2024 (“Draft Amendment Bill”) conspicuously lacks explicit provisions for multi-party arbitrations, thereby widening the existing procedural gap. It further undermines India’s ambition to become an international arbitration hub as the absence of statutory clarity on multi-party arbitrations creates uncertainty that can deter parties from choosing India as a reliable international arbitration destination.
Divergence In Indian Arbitration Institutions’ Practices
Indian arbitration institutions are not indifferent to the paradigm shift in the arbitration practices being followed across the globe. India is home to four prominent institutional arbitration institutions that serve as a popular venue for domestic as well as international arbitrations.
The respective rules of these centres with regards to tribunal’s constitution in case of default by parties during multi-party arbitrations, namely India International Arbitration Centre (Conduct of Arbitration) Regulations 2023 (⁋ 14.3), Mumbai International Arbitration Centre (“MCIA”) Arbitration Rules 2025 (⁋ 12.3) and Hyderabad Arbitration Centre (“HAC”) Arbitration Rules 2022 (⁋ 6.9.e), provide for the constitution of an entire tribunal by the centre in case of dispute in joint nomination by the parties, while Delhi International Arbitration Centre (Arbitration Proceedings) Rules 2023 (⁋ 9.3, 9.4) confer discretion upon the centre to either appoint arbitrator(s) on behalf of the defaulting party. This discretionary approach reduces procedural certainty and contributes further towards non-uniformity within the Indian institutional arbitration framework.
Judicial Intervention
The Indian Courts have attempted to address multi-party arbitrations through judicial interpretation; however, these efforts remain fragmented and indirect, lacking a comprehensive approach to the complexities of multi-party disputes.
The Hon’ble Supreme Court in Cox and Kings (I) (⁋ 128), while incorporating the ‘Group of Companies’ doctrine for joinder of parties in the Act, acknowledges the relevance of arbitration in multi-party disputes. Subsequently, in the recent landmark judgment of ASF Buildtech Pvt. Ltd. v. Shapoorji Pallonji and Company Pvt. Ltd. (⁋ 76, 77, 116, 117, 170), delivered by a Division Bench of the Supreme Court on May 2, 2025, the Court held that non-signatories can be impleaded in arbitration proceedings. This decision clarified the respective roles of arbitral tribunals and courts in determining whether a non-signatory can be treated as a party to the arbitration. It further affirms that the power to order joinder and consolidation arises from substantive law and cannot be contractually excluded. Through a conjoint reading of section 2(1)(h) and section 7 of the Act, the Court recognised that both signatories and certain non-signatories may be treated as parties to the arbitration, provided they meet specific criteria laid down in the judgment.
This decision has profound implications for multi-party disputes in India, as it further opens a gateway for an increase in multi-party arbitrations, with the arbitral tribunals now holding more power with respect to joinder of non-signatories.
CONCLUSION
India’s arbitration regime, while grounded in the principles of party autonomy and equality, continues to falter in the face of proliferating multi-party disputes due to the absence of a specific legal framework. Unlike jurisdictions such as France and the United Kingdom that have long codified comprehensive frameworks to address default scenarios in multi-party arbitrations, it is regrettable that even after decades of reforms globally, such procedural uncertainties continue to plague India’s arbitration framework. Therefore, to effectively address such procedural lacunae as discussed in Part II of this blog and strengthen India’s credibility as reliable international arbitration hub, authors propose the following long-term and short-term reforms.
- The Arbitration Act and the Draft Amendment Bill must be augmented with explicit provisions recognising and regulating multi-party arbitrations in India. Further, it becomes incumbent upon the Department of Legal Affairs, Ministry of Law and Justice to undertake a rigorous review of the prevailing regime and augment the Draft Amendment Bill with uniform, transparent and binding mechanisms for default scenarios in multi-party arbitral tribunal constitution, thereby aligning Indian regime with international best practices and securing the certainty that complex commerce demands.
- The recent judgment of ASF Buildtech Pvt. Ltd. v. Shapoorji Pallonji and Company Pvt. Ltd. has already expanded the contours of Indian arbitration law by affirming that non-signatories may be impleaded in arbitral proceedings. This judgement signifies judicial acknowledgment of the increasing prevalence of multi-party disputes. Further, Supreme Court’s consistent affirmation of party equality, recently reiterated in CORE v. M/s ECI SPIC SMO (⁋ 124), makes legislative codification imperative to establish a structured framework that complements these judicial developments and prevents case-specific pronouncements from becoming the default mechanism to resolve multi-party arbitrations.
- Since legislative reforms are inherently time-consuming, parties entering into multi-party transactions must consider interim safeguards at the contractual stage that can serve as the preventive measure against the prevailing procedural uncertainty. Parties, while negotiating contractual terms, may incorporate arbitration clauses that expressly provide for the constitution of the tribunal in an event of default by either party in appointing arbitrators, thereby avoiding delays upon invocation of arbitration clause.
This exercise assumes more relevance in the Indian context, given that ad-hoc arbitrations far outnumber institutional arbitrations in India. The primary drawback of the ad-hoc arbitration is the absence of pre-existing institutional rules, as proceedings are governed directly by the Arbitration Act and the rules mutually agreed upon by the parties. Consequently, greater reliance is placed on the contractual terms of the arbitration agreement executed between the parties. Further, parties opting for institutional arbitration can, on the basis of foregoing discussion in Part II, accordingly identify the most suitable Indian arbitration centre to address default scenarios in multi-party arbitrations.
Thus, by contractually incorporating such safeguards, parties can minimise the risks posed by the current statutory silence and facilitate effective arbitral proceedings until comprehensive reforms are enacted.Moreover, a modest recalibration by UNCITRAL, substituting “shall” for “may” in its multi-party arbitration provisions as discussed in Part I of this blog, could go a long way towards enhancing uniformity and addressing the institutional procedural lapses in international commercial arbitration globally.
**Vikhyaat Maheshwari, fifth-year B.A. LL.B. (Hons.) student, Dharmashastra National Law University, Jabalpur.
**Preet Arya, fourth-year B.Com. LL.B. (Hons.) student, MS Ramaiah College of Law, Bangalore.
**Disclaimer: The views expressed in this blog do not necessarily align with the views of the Vidhi Centre for Legal Policy.