India: Highlights Of The Proposed Amendments To The Arbitration And Conciliation Act, 1996

The object of the Arbitration and Conciliation Act, 1996 ("Principal Act/Act") is to comprehensively consolidate and amend the law relating to domestic arbitrations, international commercial arbitration and enforcement of foreign arbitral awards and also to define the law relating to conciliation and for matters connected therewith or incidental thereto.¹

A bill "The Arbitration and Conciliation (Amendment) Act, 2018" was present before the 16th Lok Sabha, to amend the Act, with primary aim to strengthen the Indian arbitral institution and promote institutional arbitration. Further also to promote the alternate dispute resolution as a mechanism to solve the dispute arisen between the parties instead of approaching to the courts.

It would be worth mentioning that the Principal Act was earlier amended by the Arbitration and Conciliation (Amendment) Act, 2015 and the said amendment revolutionized the alternate dispute resolution process, with the introduction of minimal interference of the Court in arbitration proceedings, completing the arbitration process in a time bound manner and speedily disposal of the matters. Before the said amendment act of 2015 there were no strict timelines within which the proceedings were to be concluded and at times the arbitration proceedings continues for three to four years.

The present proposed amendments are been made to enlist the hurdles and obstructions for the development of institutional arbitration and to prepare a channelized route for institutional arbitration. The present amendment has been proposed by a committee constituted by the Central Government, under the Chairmanship of Justice B.N. Srikrishna, Former Judge of Supreme Court of India.

The salient features of the present Arbitration and Conciliation (Amendment) Bill, 2018, inter alia, are as follows²

i. To amend section 11, wherein the arbitrators to be appointed in an Arbitration proceeding shall be from the arbitral institutions designated by the Supreme Court or High Court;

ii. The Chief Justice of the concerned High Court may maintain a panel of arbitrators in case no graded arbitral institutions are available;

iii. An Arbitral Council of India ("Council") will be constituted, which will have its headquarters in New Delhi. The Council will be an independent body, for the purpose of grading of arbitral institutions and accreditations of arbitrator and other functions;

iv. The Statement of Claim and defense shall be completed within six (6) months from the date the arbitrator receives notice of Appointment;

v. The proposed amendment also provides for maintaining confidentiality of the proceedings other than the Award and also protect the arbitrator or arbitrators from any suit or other legal proceedings for any action or omission done in good faith in the course of the arbitration proceedings;

vi. An important amendment proposed in the present amendment bill is to clarify that Section 26 of the Arbitration and Conciliation Act, 1996 (amended as upto) is applicable to proceeding which commenced on or after 23.10.2015 and to all such court proceedings which emanate from such arbitral proceedings;

The following are some of the changes in crux of the Bill, 2018

1. The definition of the term "arbitral institution" has been inserted as ca in the definition sec tion of the Act.

2. Amendment in the Section 11 of the Arbitral and Conciliation Act, 1996, (amended in 2015) and it proposes to introduce Arbitration Council of India (ACI) with its head office at New Delhi.

The Bill proposes to insert Part 1A in the Arbitration and Conciliation Act, 1996. This part provides for constitution of arbitration council, its functions and powers.

I. The Council will be a body corporate, having perpetual succession and a common seal, with power to acquire, hold and dispose of both movable and immovable property and to enter into contract, and sue or be sued in its name.

II. The Council will consist of sitting judges of Supreme Court and High Courts, an eminent person with expert knowledge in conduct of arbitration and an eminent arbitration practitioner, an academician with experience in arbitration, and secretaries of Government Departments, with a term of three years with age limit being seventy years in the case of Chairperson and sixty-seven years in the case of Member.

III. The functions of the Council will be to frame polices governing the grading of arbitral institutions, recognize professional institutes providing accreditation of arbitrators, hold training, workshops and courses in the area of arbitration in collaboration of law firms, law universities and arbitral institutes, to set up, review and update norms and ensure satisfactory level of arbitration and conciliation and to act as a forum for exchange of reviews and techniques to be adopted in order to make India a robust center for domestic and international arbitration and conciliation.

IV. The Council will also create an electronic depository of all arbitral awards made in India in order to create a database of the same. The Bill also sets out the qualifications to be an arbitrator, which includes experienced lawyers, standing counsels of government bodies and private companies, senior managerial persons at PSUs and private companies.

V. It also lays down certain general principles of fairness applicable to arbitrator such as an arbitrator shall be a person of general reputation of fairness, integrity, he must avoid entering into any financial business or other relationship that is likely to affect impartiality or might reasonably create an appearance of partiality or bias amongst the parties, the arbitrator should not have been convicted of an offence involving moral turpitude or economic offence.

VI. In addition to this the arbitrator shall be conversant with the Constitution of India, principles of natural justice, equity, common and customary laws, commercial laws, labour laws, law of torts, making and enforcing the arbitral awards and should possess robust understanding of the domestic and international legal system on arbitration.

India has emerged as a hub of commercial activities in recent years, which means an increase in the commercial activities.

Further Eighth Schedule has proposed to be inserted, which will enlist the Qualification and Experience of Arbitrator.

3. In Section 17 of the Arbitration and Conciliation Act, 1996, (amended as upto) in sub section (1)

Un amended Section 17

"17. Interim measures ordered by arbitral tribunal.-( 1) A party may during the arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with Section 36, apply to the arbitral tribunal-(i) for the ......."

Proposed amendment

"17. Interim measures ordered by arbitral tribunal.-( 1) A party may during the arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with Section 36, apply to the arbitral tribunal-(i) for the ......."

4. In Section 23, sub-section (4) has been proposed to be inserted wherein the time lines for completion of pleading has been provided and it states that statement of claim and defense under this section shall be completed with a period of six months from the date the arbitrator or all the arbitrators, as the case may be, received notice, in writing, of their appointment.

5. In Section 29A of the principal Act, the sub-section (1) is substituted. It means that the awards in matters other than international commercial matter, the award has to completed with the period of twelve months from the date of the completion of the pleadings.

A proviso has proposed to be added to the Section 29A sub section (4), wherein the mandate of the Arbitrator shall continue till the application under Section 29A sub section 5 is disposed off.

Also the arbitrator has been given a right to be heard, before the fee is reduced by the Court.

6. The Section 34 (Appeal) has been proposed to be amended to the extent that the parties while making an application to set aside the award have to establish/satisfy on the basis of the record of the arbitral tribunal and not by any other document which is not on record. If the amendments are approved Section 34 will reads as;

"34. Application for setting aside arbitral award.—(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and subsection (3).

(2) An arbitral award may be set aside by the Court only if— (a) the party making the application furnishes proof that proposed to be inserted (established on the basis of the record of the arbitral tribunal that)—

(i) a party was under some incapacity, or (ii) the arbitration agreement is not valid under the law

to which the parties have subjected it or, failing any

indication thereon, under the law for the time being in force; or.............."

7. That in section 37 the following has been proposed to be amended:

"37. Appealable orders.—(1) An appeal Notwithstanding anything contained in any other law for the time being in force, an appeal shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:--........."

8. Further after the section 42 of the principal Act, it has been proposed to add Section 42A, which will enlist that the confidentiality has to be maintained of the arbitral proceeding by each one, the arbitrator, the institution, the parties to the arbitration agreement other than the award.

Footnotes

1 The Arbitration and Conciliation (Amendment) Bill, 2018

2 The Arbitration and Conciliation (Amendment) Bill, 2018

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