Legislative Reform Imperatives in Nepal’s Arbitration Regime: A Comparative Analysis with Reference to India
Abstract
This article critically examines Nepal’s outdated arbitration regime, highlighting the urgent need for legislative modernization to meet the demands of a federal, investment-ready state. Despite constitutional support, Nepal’s arbitration law suffers from ambiguous provisions, broad judicial discretion, and weak enforcement mechanisms, which undermine commercial confidence. Through a comparative analysis with India, the article illustrates how India’s targeted reforms—such as statutory timelines, a narrow public policy exception, and judicial restraint—have fostered procedural efficiency and legal certainty. The article assesses Nepal’s recent legislative amendments and identifies ongoing gaps, offering reform proposals including statutory definitions, institutional oversight, and harmonization with international standards. It concludes that Nepal must go beyond legal transplants,
embracing contextualized reform, judicial education, and stakeholder engagement to establish a credible, modern arbitration framework that aligns with global best practices.
References
NEPAL CONST. arts. 56, 162, 214 (2015).
Arbitration Act, 1999 (Nepal).
NEPAL CONST. art. 127(2) (2015).
NEPAL CONST. art. 51(j)(5) (2015).
Arbitration Act §§ 31, 32 (1999) (Nepal)
id. § 30.
Bhanu Prasad Acharya v. Damodhar Ropeway and Construction Company et. al., NKP 2067
(2011), vol. 5, Decision no. 8368 (Nepal).
Hanil Engineering and Construction Co. Ltd v. High Court Patan et. al., NKP 2075 (2019), volume
, Decision no. 10138 (Nepal).
Hanil Engineering and Construction Co. Ltd v. High Court Patan et. al., NKP 2075 (2019), volume
, Decision no. 10138 (Nepal); National Construction Co. Nepal v. Appellate Court Patan, N.K.P.
, Decision No. 7933 (Nepal).
Bhanu Prasad Acharya v. Damodhar Ropeway & Constr. Co., 12 N.K.P. 2003 (Nepal) (declaring
unconstitutional the practice of naming Chief Justice as arbitrator).
Nepal Elec. Auth. v. Korea Hydro & Nuclear Power Co. Ltd., N.K.P. 2075, vol. 11, decision no.
(Nepal).
Arbitration Act § 32 (1999) (Nepal)
ICRAFT Co., Ltd v. Ministry of Communication and Information Technology, Kathmandu District
Court, Application No. 31830 (Nepal).
Anil Kumar Pokharel v. District Court Kathmandu, N.K.P. 2064, Decision No. 7836 (Nepal).
Rajendra Man Sherchan v. Appellate Court, Patan, N.K.P. 2064, Decision No. 7823(Nepal).
Bikram Pandey v. Ministry of Physical Planning and Construction, N.K.P. 2067, Decision No. 8437
(Nepal).
M/S Duro Felguera, S.A. v. Gangavaram Port Limited, (2017) 9 SCC 729 (India).
K.K. Modi v. K.N. Modi, (1998) 3 SCC 573 (India).
Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., (2001) 6 SCC 356 (India).
MVR JV v. National Highways Authority of India, 2023 SCC OnLine SC 454 (India).
Gayatri Balasamy v. ISG Novasoft Technologies Ltd., 2022 SCC OnLine SC 523 (India).
Asian Dev. Bank, Governance and Institutional Risks and Challenges in Nepal 10–12 (2019).
Public Expenditure & Fin. Accountability (PEFA), Nepal: Public Expenditure and Financial
Accountability (PEFA) Assessment 2015 (Gov’t of Nepal, Ministry of Fin. 2015).
In re: Interplay between Arbitration Agreements under the Arbitration & Conciliation Act 1996 and
the Indian Stamp Act 1899, (2023) 8 SCC 739 (India).
Id.
Bhanu Prasad Acharya v. Damodhar Ropeway and Construction Company et. al., NKP 2067
(2011), vol. 5, Decision no. 8368 (Nepal).
N.C. Sharma, Defining Issues of Public Policy Exceptions in International Commercial Arbitration:
Promoting Uniform Model Norms, Asian J. Legal Educ. (2025),
https://doi.org/10.1177/23220058251336906
Id. at abstract.
Hanil Engineering and Construction Co. Ltd v. High Court Patan et. al., NKP 2075 (2019), volume
, Decision no. 10138 (Nepal).
Convention on the Recognition and Enforcement of Foreign Arbitral Awards art. V(2)(b), June 10,
, 330 U.N.T.S. 38.
The Arbitration and Conciliation Act, No. 26 of 1996, § 48(2) (Explanation I), INDIA CODE
(1996).
The Arbitration and Conciliation Act, No. 26 of 1996, § 48(2) (Explanation II), INDIA CODE
(1996).
Renusagar Power Co. v. Gen. Elec. Co., (1994) Supp. (1) SCC 644 (India).
Oil & Natural Gas Corp. v. Saw Pipes Ltd., (2003) 5 SCC 705 (India).
Shri Lal Mahal Ltd. v. Progetto Grano Spa, (2014) 2 SCC 433 (India).
Vijay Karia v. Prysmian Cavi E Sistemi S.R.L., (2020) 11 S.C.C. 1 (India).
NN Global Mercantile Pvt. Ltd. v. Indo Unique Flame Ltd., 2023 SCC OnLine SC 1666 (India).
Anil Kumar Pokhrel v. Kathmandu District Court, NKP 2067, vol. 4, Decision no. 8437 (Nepal).
Rajendra Man Sherchan v. High Court, Patan, N.K.P. 2064, Decision No. 7823 (Nepal).
Anil Kumar Pokhrel v. Kathmandu District Court, NKP 2067, vol. 4, Decision no. 8437 (Nepal).
Penny Madden KC & Ceyda Knoebel, Arbitrability and Public Policy Challenges, in The Guide to
Challenging and Enforcing Arbitration Awards For (4th ed. 2025),
https://globalarbitrationreview.com/guide/the-guide-challenging-and-enforcing-arbitrationawards/4th- edition/article/arbitrability-and-public-policy-challenges.
Arbitration Act 2001, Cap. 10, § 31(4) (Sing.).
Décret n° 2011-48 du 13 janvier 2011 portant réforme de l’arbitrage [Decree No. 2011-48 of Jan.
, 2011, Reforming Arbitration] (Fr.).
The Arbitration and Conciliation Act, No. 26 of 1996, § 48(2) (Explanation I), INDIA CODE
(1996).
Renusagar Power Co. v. Gen. Elec. Co., (1994) Supp. (1) SCC 644 (India).
Oil & Natural Gas Corp. v. Saw Pipes Ltd., (2003) 5 SCC 705 (India).
The Arbitration and Conciliation Act, No. 26 of 1996, § 48(2) (Explanation II), INDIA CODE
(1996).
U.N. Comm’n on Int’l Trade Law, Report of the Secretary-General on Possible Future Work in the
Field of International Commercial Arbitration, U.N. Doc. A/CN.9/460 (Mar. 25, 1999); Gary Born,
International Commercial Arbitration 3140–45 (3d ed. 2021).
The Arbitration and Conciliation Act, No. 26 of 1996, § 29A, INDIA CODE (1996).
Id. at § 29A (1).
Id. at § 29A (3).
Id. at § 9.
Draft Arbitration and Conciliation (Amendment) Bill, 2024, (India) (unpublished draft).
Id.
Vidya Drolia v. Durga Trading Corp, (2020) 2 SCC 194 (India).
Rohan Builders (India) (P) Ltd. v. Berger Paints India Ltd., 2024 INSC 686 (India).
TATA Sons (P) Ltd. v. Siva Industries, (2023) 5 SCC 421 (India).
Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India, (2019)
SCC 785 (India).
Draft Arbitration and Conciliation (Amendment) Bill, 2024, §§ 9A (India) (unpublished draft).
Gayatri Balasamy v. ISG Novasoft Techs. Ltd., 2025 SCC OnLine SC 986 (India).
Perkins Eastman Architects DPC v. HSCC (India) Ltd, 2019) 20 SCC 1 (India).
Rajendra Man Sherchan v. Appellate Court, Patan, N.K.P. 2064, Decision No. 7823(Nepal).
Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1 (India).
Anil Kumar Pokharel v. District Court Kathmandu, N.K.P. 2064, Decision No. 7836 (Nepal).
Ssangyong Engineering & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 (India).
Rohan Builders (India) (P) Ltd. v. Berger Paints India Ltd., 2022 SCC OnLine SC 664 (India).
Renusagar Power Co. v. Gen. Elec. Co., (1994) Supp. (1) SCC 644 (India).
Oil & Natural Gas Corp. v. Saw Pipes Ltd., (2003) 5 SCC 705 (India).
Vijay Karia v. Prysmian Cavi E Sistemi S.R.L., (2020) 11 S.C.C. 1 (India).
Arbitration Act, 1999 § 13A (Nepal).
Arbitration Act, 1999 § 32(3) (Nepal).
Muluki Civil Code, 2074, § 507 (Nepal).
Arbitration Act, 1999 § 30(4) (Nepal).
Arbitration Act, 1999 § 32(3) (Nepal).
Id.
AJU v. AJT, [2011] SGCA 41, Civil Appeal No. 125 of 2010 (Sing.).
SNF SAS v. Cytec Industries BV, [2007] RD-SC 609 (Fr.).
Shri Lal Mahal Ltd. v. Progetto Grano S.P.A., (2013) 6 SCC 353 (India).
Vijay Karia v. Prysmian Cavi E Sistemi S.R.L., (2020) 11 S.C.C. 1 (India).
S.P. Satyal, Executive Ordinances in Nepal: Scope, Limits, and Practice, 12 Nepal L. Rev. 45, 48–
(2022).
Vidya Drolia v. Durga Trading Corp, (2020) 2 SCC 194 (India).
Ssangyong Engineering & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 (India).
