Retired Justice Rohinton Nariman Criticizes Supreme Court Arbitration Rulings for Creating Grave Uncertainty

Former Supreme Court Justice Rohinton F. Nariman has issued a sharp critique of recent judicial trends in Indian arbitration, warning that a series of Constitution Bench decisions have introduced significant instability into the legal framework. Speaking at the Gujarat High Court Arbitration Centre’s Arbitration Week 2026, Justice Nariman argued that the Supreme Court has frequently reopened settled questions of law, thereby undermining the predictability required for effective commercial dispute resolution. He specifically highlighted that the rapid reversal of positions previously established by five-judge benches by subsequent seven-judge benches has created a climate of legal ambiguity that threatens to erode faith in the arbitration process.

Justice Nariman’s address focused on the evolution of the Arbitration and Conciliation Act, 1996, over its thirty-year history. While acknowledging that the Act was intended to streamline dispute resolution, he contended that recent judicial interpretations have failed to provide the necessary clarity. He expressed particular concern that the court’s current approach to arbitration jurisprudence does not conduce to certainty, noting that the constant revisiting of established precedents leaves practitioners and parties in a state of flux. His remarks come at a time when the judiciary is actively grappling with the scope of its own intervention in arbitral proceedings, a theme that has dominated several high-profile rulings in the first half of 2026.

Justice Nariman provided a detailed analysis of several key rulings, including the decision in *Cox and Kings*, which addressed the group of companies doctrine. He contrasted this with the subsequent seven-judge ruling concerning the interplay between the Stamp Act and the Arbitration Act. While the latter described the Arbitration Act as a self-contained code, Justice Nariman argued that this reasoning contradicted the earlier approach in *Cox and Kings*, where the Contract Act was treated as fundamental to determining the existence of an arbitration agreement. He expressed frustration at the speed with which the five-judge ruling in *N.N. Global* was reopened, stating, “Unfortunately, what was made certain by 5 judges was made uncertain. God alone knows now whether a 9-judge bench will overrule this view, or whether whatever happens, happens.”

he criticized the Supreme Court’s curative judgment in the Delhi Metro dispute, which set aside an arbitral award in favor of Delhi Airport Metro Express Private Limited (DAMEPL). Justice Nariman argued that the court interfered with the award on a pure question of fact after proceedings had attained finality, effectively introducing a broad ground of miscarriage of justice at the curative stage. He warned that this development allows all arbitral awards to be challenged on factual grounds if the court’s conscience is shocked, a standard he views as dangerously expansive and detrimental to the finality of arbitral outcomes.

Addressing the ruling in *Gayatri Balasamy v ISG Novasoft Technologies Limited*, Justice Nariman criticized the majority’s recognition of a limited power to modify arbitral awards under Section 34 of the Act. He argued that this decision failed to properly overrule the precedent in *NHAI v M Hakeem*, which held that courts could set aside awards but not modify them. By merely tweaking the precedent, he suggested the court has created a confusing legal landscape. “The whole thing is one big jamboree. I don’t understand how the law gets furthered by having this kind of a judgment which, again, doesn’t conduce to either clarity or to any real forward advance in the law,” he remarked.

He also discussed the *Central Organisation for Railway Electrification* ruling, which invalidated clauses allowing one party to control the appointment of arbitrators. While he agreed with the conclusion, he questioned the majority’s reliance on Section 18 of the Arbitration Act, arguing that the provision applies to the treatment of parties after the arbitral process begins, not during the appointment stage. These critiques reflect a broader concern that the court is increasingly disregarding the statutory boundaries of its own authority, leading to inconsistent applications of the law across different benches.

In light of these challenges, Justice Nariman proposed a radical overhaul of the domestic arbitration framework. He advocated for a full-blown appeal on both facts and law at a single stage, to be heard directly by a division bench of a High Court. He suggested that the current single-judge stage should be eliminated to expedite the process, with a strict mandate for the division bench to decide the appeal within one year. He emphasized that the current system, which allows awards containing errors of fact or law to survive judicial scrutiny, is unsustainable for modern commercial disputes.

“My suggestion now is that the time has come, after 30 years of working of this Act, to have a full-blown appeal on both facts and law at one stage,” he stated. Additionally, he proposed a reform to the fee structure for arbitrators, suggesting that fees be fixed as a lump sum at the beginning of proceedings and deposited in an escrow account. This amount would only be released after the award is pronounced, a measure intended to ensure accountability and prevent the prolongation of proceedings for financial gain.

Justice Nariman’s comments arrive amidst a broader period of intense activity for the Supreme Court regarding arbitration. Data from the first half of 2026 indicates that the Court has delivered at least nine notable decisions concerning the Arbitration and Conciliation Act. These rulings have touched upon diverse issues, including the distinction between seat and venue, the scope of interim relief under Section 9, and the limitations of writ jurisdiction under Articles 226 and 227. While the Court has frequently reiterated the principle of minimum judicial intervention, the practical application of this principle remains a point of significant contention.

For instance, in *Nagreeka Indcon v Cargocare Logistics*, the Court clarified that the phrase “can be settled by arbitration” indicates possibility rather than compulsion. Similarly, in *Home Care Retail Marts Pvt. Ltd. v. Haresh N. Sanghavi*, the Court affirmed that interim measures under Section 9 can be sought at any stage of the proceedings, including post-award. These rulings demonstrate a court attempting to refine the procedural mechanics of the Act, even as senior legal figures like Justice Nariman call for more fundamental structural changes to ensure the system’s long-term viability and fairness.