India’s Aviation Arbitration Cases Will Still Fly Off Overseas

Context

• India’s aviation story is one of tremendous transformation. From colonial-era restrictions to the modern-day vision of becoming a global aviation hub, the trajectory has been both inspiring and complicated.
• However, as India attempts to revamp its aviation infrastructure through legislative reform, most notably the Bharatiya Vayuyan Adhiniyam, 2024, one glaring gap remains: the country’s arbitration system continues to lag behind.
• Despite monumental progress, the unresolved issue of specialised arbitration in aviation could undermine India's aspirations of becoming an aviation powerhouse.

Legacy of the Aircraft Act, 1934

• The origins of India’s aviation legal framework lie in the colonial-era Aircraft Act of 1934, a statute that was more concerned with imperial control than with fostering an aviation ecosystem.
• Crafted during British rule, the Act served administrative and military objectives, not commercial or technological growth.
• As the decades passed and India’s aviation sector matured, the Act became increasingly outdated, failing to adapt to new technologies, rising passenger demand, and the entry of private airlines.
• The result was a regulatory bottleneck: cumbersome licensing processes, inefficient air traffic management, and insufficient passenger protection.

Bharatiya Vayuyan Adhiniyam, 2024: A New Dawn

• Recognising the need for a modern framework, the Bharatiya Vayuyan Adhiniyam, 2024 was introduced to replace the archaic 1934 law.
• This progressive legislation has streamlined licensing, improved air traffic regulation, and enhanced passenger rights.
• It symbolises India’s attempt to take full ownership of its skies and aims to position the country as a formidable player in global aviation.
• Yet, while these advancements represent a major leap forward, the reform stops short of addressing a critical issue, dispute resolution in aviation.
• The omission is significant. Without a reliable and specialised arbitration system, commercial disputes continue to be outsourced to foreign jurisdictions, undermining India’s legal and economic sovereignty in aviation.

The Missing Piece in Bharatiya Vayuyan Adhiniyam, 2024: Arbitration

• The current arbitration framework in India, governed by the Arbitration and Conciliation Act, 1996, provides a generic approach to dispute resolution.
• It lacks the specialisation required to handle complex aviation disputes, which often span technical concerns, cross-border regulations, airline leasing agreements, and international treaties.
• As a result, companies continue to favour well-established arbitration centres in Singapore, London, and Paris, places that offer the requisite expertise and neutrality.
• Even though India has launched institutions like the Delhi International Arbitration Centre and the Mumbai Centre for International Arbitration, they have not been able to compete globally.
• Data shows that nearly 90% of arbitration cases involving Indian aviation firms are handled in Singapore, a stark indicator of India's lack of institutional readiness.
• The issue, therefore, extends beyond legislation to include a broader infrastructure of experts, institutions, and trust.

The Importance of Specialised Arbitration

• Aviation disputes are highly specialised and they demand legal professionals who understand aeronautical engineering, international aviation treaties, and the nuances of airline operations.
• The absence of such expertise within India’s arbitration ecosystem means that foreign companies, often already wary of India’s bureaucratic inefficiencies, choose to resolve disputes elsewhere.
• This not only leads to loss of revenue for Indian law firms and arbitration professionals but also diminishes India's credibility in the global aviation market.
• Moreover, arbitration outcomes in India often suffer from judicial overreach, with courts interfering in matters that should ideally remain independent.
• Lengthy legal battles and inconsistent enforcement of arbitration awards further discourage international players.

Recommendations for Reform

• Specialised Institutions: Establish arbitration bodies specifically for aviation, staffed by experts in aviation law, technology, and international regulatory frameworks.
• Training and Education: Encourage Indian law schools to offer specialisation in aviation law and arbitration to build a pool of future-ready professionals.
• Institutional Neutrality: Create independent arbitration panels where arbitrators are selected by mutual consent or through a neutral third party—not by government decree.
• Judicial Restraint: Ensure courts adopt a non-interventionist approach, enabling faster, more predictable enforcement of arbitration awards.
• Global Alignment: Model arbitration structures on successful international frameworks such as those in Singapore and the United Kingdom, which have demonstrated effectiveness in handling sector-specific disputes.

Conclusion

• The Bharatiya Vayuyan Adhiniyam, 2024 is a bold and necessary leap into the future of Indian aviation, but without accompanying reform in arbitration, it remains a half-measure.
• A robust, neutral, and specialised arbitration framework is not a luxury, it is a necessity if India is to retain disputes, revenues, and investor confidence within its borders.
• India now stands at an inflection point, it has the vision, the ambition, and the legal momentum to reshape its aviation sector.
• But for this vision to truly take flight, dispute resolution must land at the heart of reform.

Q1. What outdated law governed India’s aviation sector before 2024?
Ans. India’s aviation sector was governed by the Aircraft Act of 1934, a colonial-era law that primarily served administrative and military purposes.

Q2. What key reform replaced the 1934 Act?
Ans. The Bharatiya Vayuyan Adhiniyam, 2024 replaced the old Aircraft Act and introduced modern reforms to support the growth of India’s aviation sector.

Q3. What major issue remains unaddressed in the new aviation law?
Ans. The new aviation law does not address the need for a specialised arbitration system to resolve complex international aviation disputes.

Q4. Why do Indian aviation disputes often go to foreign arbitration centres?
Ans. Indian aviation disputes often move abroad because the country lacks the specialised institutions, expertise, and neutrality required for effective dispute resolution.
Q5. What must India do to retain aviation dispute cases?
Ans. India must develop a dedicated aviation arbitration framework with expert panels, neutral procedures, and robust institutional support to retain such cases domestically. 

Source:The Hindu