Dynamics Of Arbitration And Insolvency In India: A Detailed Guide

1. INTRODUCTION

The tension between arbitration and insolvency is often described as a "conflict of almost polar extremes". In Re United States Lines Inc.¹, this dichotomy is highlighted by contrasting the decentralised approach of arbitration with the centralised nature of bankruptcy legislation. Arbitration policy favors a decentralised resolution of disputes, allowing parties to resolve their disagreements independently through arbitrators often chosen by the parties themselves. Alternatively, bankruptcy law inherently trends towards centralisation to effectively manage and resolve claims within a single unified framework.

In India too, arbitration and insolvency are two critical legal regimes which often find themselves in conflict. Recent judicial interpretations and decisions have provided greater clarity on the conflicting aspects between the Insolvency and Bankruptcy Code, 2016 (IBC) and the Arbitration and Conciliation Act, 1996 (Arbitration Act).