India: The New Delhi International Arbitration Centre Bill, 2018 - An Institutional Push To Arbitration In India

Last Updated: 16 January 2018
Article by Rajat Jariwal, Sahil Narang and Shagun Jaggi

Most Read Contributor in India, August 2018

The Indian government has been committed towards making India an international hub for arbitration, at par with international standards, one that would give comfort to investors and businesses. The Arbitration (Amendment) Act, 2015 was a progressive step towards this end, in line with the concerted efforts of the Indian government to increase the ease of doing business in India. Another step in the right direction appears to be the New Delhi International Arbitration Centre Bill, 2018 (Bill) which was recently introduced in the Lok Sabha. The Bill provides for the establishment of the New Delhi International Arbitration Centre (NDIAC) as an autonomous and independent institution for promoting institutional arbitration in India, while recognising the failure of the existing International Centre for Alternative Dispute Resolution (ICADR) in effectively functioning as a centre for institutional arbitration.

In January 2017, the Ministry of Law and Justice had constituted a ten-member committee under the chairmanship of Justice B.N. Srikrishna (retd.) (Justice Srikrishna Committee) to review the functioning of ICADR. A major drawback of ICADR, as identified by the Justice Srikrishna Committee, was its failure in keeping pace with new developments in the arbitration scenario to match up with the dynamic developments in the field of arbitration globally. In fact, the ICADR Rules, which were revised recently in 2016, failed to account for the latest developments in the field of arbitration such as provisions for joinder of parties, consolidation of arbitral proceedings, emergency arbitration, etc. Another drawback of the ICADR was a large governing council which made it difficult for the institution to coordinate its governance. The NDIAC is aimed at countering the problems ICADR faced in serving as an arbitral institution of repute, and providing quick and efficient dispute resolution.

Salient features of the Bill

  • Institute of National Importance

Clause 4 of the Bill declares the NDIAC to be an institution of national importance, and provides for the establishment of different branches of the NDIAC in other places in India and abroad, with its head office in New Delhi.

  • Composition of the Centre

The ICADR had a large governance structure, and the Justice Srikrishna Committee recommended a complete overhaul in its governance structure, such that it shall include only experts of repute who can lend credibility and respectability to the institution.

In furtherance of this recommendation, Clause 5 of the Bill proposes that the NDIAC shall comprise of a Chairperson who has been a Judge of the Supreme Court or the High Court, or an eminent person having special knowledge and experience in the conduct or administration of arbitration, appointed by the Central Government in consultation with the Chief Justice of India. In addition, the NDIAC shall also appoint two members who are eminent persons having substantial knowledge and experience in institutional arbitration, both domestic and international, along with one part-time member who shall be a representative of a recognised body of commerce and industry.

  • Objects and functions of the NDIAC:

The objectives of the NDIAC, envisaged to replace the ICADR, include the provision of cost effective and timely administrative facilities for the conduct of ADR proceedings, maintenance of a panel of accredited arbitrators, conciliators and mediators, research, study and training in Alternative Dispute Resolution (ADR) mechanisms, collaboration with other national and international arbitral institutions and the requirement to bring about targeted reforms to develop the NDIAC as a reputed arbitral institution.

  • Creation of a two-tier structure

Clause 21 of the Bill proposes to appoint a Chief Executive Officer of the NDIAC, who shall be responsible for the day-to-day administration of the NDIAC, and shall liaison between the NDIAC and the Secretariat. In terms of Clause 23 of the Bill, the Secretariat of the NDIAC shall be headed by the Registrar, and comprise of counsel who shall be responsible for handling caseload, and such other officers and employees as may be prescribed.

  • Body Corporate under the Companies Act

Unlike the ICADR which was established as a society registered under the Societies Registration Act, 1860, in terms of Clause 3 of the Bill, the NDIAC is proposed to be a body corporate, as defined under Section 2(11) of the Companies Act, 2013, with perpetual succession, common seal, power to hold and dispose property and to enter into contract and to sue or be sued. In order to promote a smooth replacement of the ICADR, Clause 7 of the Bill contains transitory provisions which provide that all interests and rights of ICADR in any and all its undertakings shall vest in the Central Government. Further, the NDIAC shall use the existing infrastructure and the funds of the ICADR provided by the Central Government.

  • Funds of the NDIAC

Clause 25 of the Bill prescribes that the NDIAC shall not simply rely on the funds received from the Central Government, but shall also collect fees charged towards conduct of ADR proceedings, donations and grants, and amount received as investment income.

  • Chamber of Arbitration

Clause 28 of the Bill proposes the creation of a Chamber of Arbitration which shall undertake the task of scrutinising applications of arbitrators for empanelment with the NDIAC as part of their permanent panel of arbitration. The Chamber intends to select experienced arbitrators of repute basis criteria set out by the NDIAC by the formulation of regulations.

  • Arbitration Academy

In order to promote research and training in the area of alternative dispute resolution, Clause 29 of the Bill proposes the establishment of an Arbitration Academy, specifically in the area of international commercial arbitration, to compete with the standard of training imparted at international arbitral institutions. The emphasis on incorporating changes and suggestions to the working of the NDIAC is so high that the Bill proposes that a permanent three-member committee be set up to report to the NDIAC any amendments required for its efficient working.

Comment

While the objectives and the functions of the NDIAC, as envisaged under the Bill, are strikingly similar to those of the ICADR, the administrative structure, and the composition of the NDIAC are significantly different from those of the ICADR. The 246th Law Commission report recommended the "creation of a specialised body, like an Arbitral Commission of India, which has representation from all the stakeholders of arbitration and which could be entrusted with the task of, inter alia, encouraging the spread of institutional arbitration in the country".  In sync with these suggestions, and those of the Justice Srikrishna Committee, it is hoped that the inclusion of experts in the field of arbitration, and the creation of a two-tier close-knit governance structure would go a long way in the efficiency of the NDIAC as a reputed arbitral institution.

India has historically suffered from a lack of credible arbitral institutions, and arbitration in India has always been skewed towards ad-hoc arbitration. The possible creation of the NDIAC, thus, bodes well for the future of institutional arbitration in India.

The content of this document do not necessarily reflect the views/position of Khaitan & Co but remain solely those of the author(s). For any further queries or follow up please contact Khaitan & Co at legalalerts@khaitanco.com

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