ESCAPING THE 1940 SHADOW: COLONIAL LEGACIES AND JUDICIAL INTERVENTION IN INDIAN AND PAKISTANI ARBITRATION

Abstract

Both India and Pakistan inherited a highly interventionist, court-centric arbitration framework governed by the colonial-era Arbitration Act 1940. Over the subsequent decades, the two South Asian neighbours embarked on vastly different trajectories to modernise their dispute-resolution architectures and appeal to international commercial users. India repealed the 1940 Act early with the Arbitration and Conciliation Act 1996 (modelled on the UNCITRAL Model Law). However, India's ambition has been historically undercut by a "judicial pendulum of intervention". This pendulum swung from the expansive merits-review doctrine of patent illegality in ONGC v. Saw Pipes (2003) to the pro-arbitration corrections in BALCO (2012) and Ssangyong (2019). Yet, recent jurisprudence, exemplified by the five-judge Constitution Bench decision in Gayatri Balasamy v. ISG Novasoft Technologies Ltd. (2025), carving out a limited judicial power to modify awards under Sections 34 and 37, highlights a persistent judicial appetite for "repairing" arbitral outcomes. In response, the Indian Draft Arbitration and Conciliation (Amendment) Bill 2024 has proposed state-sanctioned, de facto mandatory appellate arbitral tribunals under a new Section 34A. This paper argues that this proposal acts as a doctrinally incoherent legislative overcorrection that risks transforming arbitration into an endless, multi-tiered litigation process