Appellate arbitration perspectives from India and Australia: The Draft Arbitration and Conciliation (Amendment) Bill 2024 and the ACICA Arbitration Rules
Introduction
Studies published by the School of International Arbitration at Queen Mary University of London (‘SIA’) consistently identify arbitration’s status as a preferred dispute resolution mechanism in cross-border trade. Most recently, in SIA’s 2025 International Arbitration Survey, 48% of respondents preferred arbitration coupled with ADR and a further 39% preferred arbitration alone: the survey summarising that ‘[a]rbitration reigns supreme, with or without ADR’.
International commercial arbitration (‘ICA’) is said to have several advantages vis-à-vis State court litigation. It may be quicker and cheaper (though this is not always true today); it can be confidential; it respects party autonomy; it accommodates procedural neutrality; and parties can choose their arbitrators. Perhaps most importantly, in addition, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (‘New York Convention’) facilitates ICA award enforcement across the treaty’s 172 Contracting States (significantly more States than those currently adopting the Hague Choice of Court Convention and Judgments Convention).
ICA award enforceability implicates a further frequently cited advantage: finality. There is usually no appeal on the merits from ICA awards, noting that the Art. V New York Convention challenge grounds (reflected also in the UNCITRAL Model Law on International Commercial Arbitration) do not address matters of substance. India and Australia having adopted both instruments; it is against this legal background that these jurisdictions’ proposed appellate arbitration reforms can be understood. This post will identify that currently-proposed appellate arbitration proposals in India and Australia are very different in their nature: India’s appellate arbitration proposal addresses annulment applications, whilst Australia’s addresses merits review. This post will conclude by observing that Australia’s conception of appellate arbitration can operate in India, whilst India’s proposal is likely constitutionally impermissible in Australia.
Appellate arbitration: as proposed in India
The Draft Arbitration and Conciliation (Amendment) Bill 2024 (‘Draft Bill’) would, through its s 26, introduce a new s 34A into what would be restyled the Arbitration Act 1996: dealing with appellate arbitration. This ‘is among the most discussed provisions’ of the Draft Bill.
This provision’s section number highlights the intended effect of India’s proposed appellate arbitration system. The existing Arbitration and Conciliation Act 1996 s 34 implements Art. 34 UNCITRAL Model Law on International Commercial Arbitration’s annulment regime. The proposed new s 34A, which would immediately follow, provides for appellate arbitration as a means of determining annulment applications:
- After section 34 of the principal Act, the following section shall be inserted, namely-
“34A. Appellate Arbitral Tribunal. – (1) The arbitral institutions may, provide for an appellate arbitral tribunal to entertain applications made under Section 34, for setting aside an arbitral award.
(2) The appellate arbitral tribunal while deciding an application under Section 34 shall follow such procedure, as may be specified by the Council.”
This proposal needs to be understood in the context of India’s arbitration ecosystem: allowing appellate arbitral tribunals to determine annulment applications will alleviate demands on India’s High Courts, and will also appropriately accommodate differing regional needs. The hope is that appellate arbitration might address ‘judicial backlog[s]’ and thereby ‘reduce the burden on the court’. The proposal is also critiqued. It has been described as a ‘regression’ that ‘add[s] an additional procedural tier’, noting too that the proposal will apply only to institutional arbitration (although its potential to further institutional arbitration’s promotion in India has also been identified). Its establishment of ‘two parallel mechanisms’ for annulment has caused concern, it being argued that judicial annulment determinations may be necessary to ‘avoid concerns about outsourcing public policy interpretations to private entities’. It has also been suggested that the Supreme Court’s recognition of appellate arbitration in Centrotrade renders the proposal ‘redundant’, although a distinction might be drawn here between the differing conceptions of appellate arbitration in Centrotrade (merits review to a second-tier tribunal) and under the Draft Bill (annulment determinations).
Appellate arbitration: as proposed by the Australian Centre for International Commercial Arbitration
The Australian Centre for International Commercial Arbitration (‘ACICA’) ‘is Australia’s international dispute resolution institution’ having arbitration rules last updated in 2021. Its current rules revision procedure is considering appellate arbitration, understood in the second-tier tribunal merits review sense. This conception of appellate arbitration exists under institutional and ad hoc arbitration rules elsewhere in the world: for example, under rules published by the AAA-ICDR, JAMS, the CPR Institute, AMINZ, and the SCIA.
Under existing Australian arbitration law, limited procedures for appealing domestic commercial arbitration (‘DCA’) awards to State courts for errors of law exist in each internal jurisdiction: in the Australian Capital Territory, New South Wales, the Northern Territory, Queensland, South Australia, Tasmania, Victoria, and Western Australia. No such appeal procedure exists under Australia’s International Arbitration Act 1974 (Cth), in the ICA context. To the extent that Australian arbitration law already provides for merits review, such appeals – as under the Arbitration Act 1996 (UK) s 69 – lie to State courts. ACICA’s appellate arbitration proposal would provide for merits appeals being determined by second-tier tribunals and would thus add to existing Australian arbitration procedure in both the DCA and ICA contexts.
Indian-style appellate arbitration: viable in Australia?
India’s appellate arbitration proposal – situated in the annulment context – has been described as being unique to the jurisdiction. This being so, it is interesting to assess whether India’s appellate arbitration model is viable in other jurisdictions. In the case of Australia, such an appellate arbitration mechanism is likely to be constitutionally impermissible.
The Commonwealth Constitution establishes a strict separation of judicial power at the Commonwealth level of Australia’s federal legal system. The strict nature of this separation of judicial power has two important implications, for present purposes. First, the judicial power of the Commonwealth is only exercisable by State court judges appointed under Chapter 3 of the Constitution. Secondly, persons who are not judges so appointed cannot exercise the judicial power of the Commonwealth.
In 2013, the High Court of Australia was required to assess the constitutionality of Australia’s adoption of the UNCITRAL Model Law on International Commercial Arbitration’s award enforcement regime in TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia. The award debtor, in that case, argued that an enforcement court’s inability to assess an award’s merits via the limited available award challenge grounds meant that arbitrators were (impermissibly) exercising judicial power by determining the arbitrating parties’ legal rights and obligations. The High Court rejected that contention. Awards were conceptualised as operating via accord and satisfaction: rather than adjudicating upon the parties’ existing rights and obligations, arbitrators (via their awards) effectively replace those rights and obligations. It is then the courts that exercise judicial power, when determining enforcement applications.
Whilst this decision upheld the constitutionality of Australia’s adoption of the UNCITRAL Model Law on International Commercial Arbitration, it simultaneously casts significant doubt upon the permissibility of adopting Indian-style appellate arbitration in that jurisdiction. Key to the High Court of Australia’s decision was the observation that judges exercise judicial power of Commonwealth when determining enforcement applications: it is this process that was understood as involving the adjudication of party rights and obligations. It can equally be observed that annulment processes would involve the adjudication of party rights and obligations, for the same reasons given by the High Court in 2013. The (hypothetical) use of appellate arbitration to determine award annulment applications in Australia would thus likely infringe the jurisdiction’s constitutionally entrenched strict separation of judicial power. This objection does not apply to the type of appellate arbitration (involving merits review) proposed by ACICA: the issuing of an arbitral award is understood as involving accord and satisfaction in Australia, and the issuing of an appellate arbitral award reconsidering matters of fact and/or law would be understood in that very same sense.
Australian-style appellate arbitration: viable in India?
On the other hand, it appears quite clear that ACICA’s conception of appellate arbitration can operate in India, given that the Supreme Court has already legitimised the use of second-tier tribunals for merits review purposes in Centrotrade. The fact that Centrotrade involved a bespoke two-tier tribunal clause, rather than the adoption of pre-existing appellate arbitration (merits review) rules, should not (as a matter of principle) affect this conclusion.
Providing for merits review via second-tier tribunals – which is entirely a matter of party agreement, and does not require legislative basis (including in India, given Centrotrade) – overcomes the problem whereby State courts cannot have jurisdiction conferred upon them (by party agreement) that they do not otherwise have: a problem surfacing, for example, in the United States Supreme Court’s decision of Hall Street Associates, LLC v Mattel, Inc., where it was held that parties could not (as had been attempted) provide for court review of an award for errors of fact and law (grounds not recognised under the Federal Arbitration Act). This proposition, incidentally, would appear to meet concerns expressed in relation to India’s proposed s 34A, regarding the possibility that parties might seek to agree to expand the role of appellate arbitral tribunals to include merits review.
To the extent that questions have been raised concerning potential conflict between the Draft Bill’s provision for appellate arbitration and the ongoing operation of appellate arbitration as addressed in Centrotrade, this post’s differentiation of appellate arbitration in the annulment sense and appellate arbitration in the merits review sense may be a helpful frame of reference. Whilst it has been suggested that the Draft Bill will codify the Centrotrade decision, and that it may lead to Centrotrade’s form of appellate arbitration being ‘foreclosed’, this is (in my view) not the case. The problem identified here is perhaps one deriving from an unfortunate choice of legislative ‘nomenclature’: the Draft Bill applies an existing label (appellate arbitration) having an existing (perhaps even a ‘colloquial’) understanding (merits review via second-tier tribunals) to a new and distinct context (annulment). Thus rather than it being the case that the Draft Bill ‘effectively prohibits appellate tribunals on an ad-hoc basis’, and rather than it being the case that the Draft Bill should accommodate cross-appeals, it might be argued: the Draft Bill requires institutional arbitration for annulment-type appellate arbitration, and it has nothing to say about the merits-review-type of appellate arbitration addressed in Centrotrade (where, for example, cross-appeals might be relevant). If the Draft Bill eventually becomes law, only time (and ultimately judicial determination) will tell if India’s courts agree.
*Professor Benjamin Hayward, is an Associate Professor at the Department of Business Law and Taxation, Monash Business School.