India: Light Of The Day For The Arbitration Council Of India Through Arbitration And Conciliation (Amendment) Bill, 2019

Last Updated: 7 August 2019
Article by Deiya Goswami

India aims to be a jurisdiction that is arbitration-friendly and the introduction of the Arbitration and Conciliation (Amendment) Bill, 2019 in the Rajya Sabha has proven to be step towards achieving that goal. The Bill was initially called the Arbitration and Conciliation (Amendment) Bill, 2018, which was passed by the Lok Sabha but was pending before the Rajya Sabha and subsequently, as the Lok Sabha was dissolved, the bill could not see the light of the day.

Subsequently on 15.07.2019, Mr. Ravi Shankar, Minister for Law and Justice introduced the Arbitration and Conciliation (Amendment) Bill, 2018 with minor changes as the Arbitration and Conciliation (Amendment) Bill, 2019 (hereinafter referred to as "The Bill") which was passed by Rajya Sabha on 18.07.2019. The Bill is the fruit of the recommendations of the High Level Committee chaired by Justice. B. N. Srikrishna (hereinafter referred to as "The Committee").

The key feature of the Bill is to provide a suitable framework for all the arbitration on or after 23.10.2015 which is appropriate for both domestic and international arbitration. The Bill aims to outline a proper timeline and procedure so that India could emerge as an arbitration-friendly jurisdiction. India has set sights on becoming a hub for international jurisdiction just as Singapore1, wherein appointment of arbitrators is designated as per the Singapore International Arbitration Centre (SIAC) and Hong Kong2, wherein appointment of arbitrators is in accordance with the Hong Kong International Arbitration Centre (HKIAC) respectively.

Likewise in India, the Bill has proposed to constitute an Independent Government body called Arbitration Council of India (hereinafter referred to as "ACI") which will be responsible for the promotion of arbitration, conciliation, mediation and other alternative dispute redressal mechanisms (ADR). The main reason for proposing ACI to be a government body is due to the fact that the Government of India is the largest litigator in India, and ACI will have to make serious attempts to overcome the shortcomings of the Arbitration and Conciliation Act (Act).

According to the Bill, the main functions3 of the ACI would be as follows;

  • Framing policies for grading arbitral institutions and accrediting arbitrators.
  • Making policies for the establishment, operation and maintenance of uniform professional standards for all alternate dispute redressal matters.
  • Maintaining a depository of arbitral awards (judgments) made in India and abroad.

The Bill is majorly based on the recommendations of the Committee, but a few modifications have been made in the Committee Report of Justice B. N. Srikrishna, while finalizing the Bill. The Bill proposes that the ACI will be headed by the Chairperson who would be either Chief justice of a High Court or a Judge from Supreme Court or High Court or an eminent person with expert knowledge in conduct of arbitration. Furthermore, the council will include eminent practitioners, academician, and government appointees with experience in arbitration. The Secretary to the Government of India in the Legal Affair, Ministry of Law and Justice or a representative, another member from the Government of India in the Department of Expenditure , Ministry of Finance or a representative could also be considered for being the members of the council. There would also be one representative from the Commerce and Industry on a rotational basis and finally a Chief Executive Officer or a Secretary ex officio could also be the member of the council.

The Committee had recommended that the retired Judge of the Supreme Court or High Court who would be nominated by the Chief Justice of India will be heading ACI. The other members in the council are envisaged to be eminent practitioners, academicians, and government appointees with experience in arbitration as will be nominated by the Central Government. The Committee has also recommended that a nominee member from the Ministry of Law and Justice and another representative from the Commerce and Industry department on a rotational basis, as selected by the Ministry of Commerce and Industry, would also be present. Finally, the Committee recommended that there should also be the presence of one overseas practitioner who has substantial knowledge and experience in the field of arbitration.

The amendments were made to facilitate and achieve the goal of improving institutional arbitration by establishing an independent body to lay down standards that are international in nature, and make the arbitration process more user-friendly, cost-effective and to also ensure timely disposal of cases.4 However,on the other hand, the ambiguity still prevails as the parties are free to choose and appoint arbitrator as per the Act, 19965 in the Bill. The next major question is whether or not a foreign legal professional will be able to act as an arbitrator given the fact that the Eight Schedule6 of the Bill, as the qualification of the arbitrator is as per the Advocates Act, 1961. The Hon'ble Supreme Court of India consisting of Justice A.K. Goel and Justice U.U. Lalit recently passed a crucial verdict in the matter titled Bar Council of India vs. A.K. Balaji and Ors.7 declaring that foreign lawyers/firms are not entitled to practice law in India either on the litigation or non-litigation side unless they fulfil the requirements of the Advocates Act, 1961, and the Bar Council of India Rules.8

Although the committee was of the opinion that Section 11 of the Act, 1996 should be amended by providing powers to the Supreme Court and the High Court to designate arbitrators and arbitration which have been accredited by the ACI, and the Bill has implemented the recommendations in Paragraph 39.

The Bill has not changed the timeline that was introduced in the 2015 Amendment10. The Bill maintains the timeline of a total time frame of 18 months11 (12+6 months) to complete the arbitral proceedings and to pass an award. If the arbitral award is not passed by the arbitrator within the time frame of 18 months, the provision stipulates that the mandate of the arbitrators shall be terminated, unless a court of competent jurisdiction grants a further extension.12

The Bill fails to provide clarification regarding the fact that whether or not the parties can mutually decide, at their will, to extend the time limit beyond 18 months or if they mandatorily have to approach the court for seeking extension which is quite contradictory to the pith and substance of the Act, more so since arbitration is deemed to be something consensual.13 Furthermore, in case, the parties are forced to approach the court then it is very likely that judicial intervention will cause more delay, thus retarding the concept of having a timeline. Although the Amendment Act, 2015 provides a 60 days period for the courts to dispose of the dispute but the feasibility is questionable given the fact that the Indian Judiciary is overburdened and the timeline is far from being achievable14.

However, the timeline for filing written claim was provided in order to maintain proper balance of the timeline, a period of 6 months is prescribed for framing and completion of statement of claim and defence is incorporated in the Bill. Although the biggest challenge is to determine the stage at which the filing of statement has to be made, as arbitrational proceeding do not strictly follow the well-established procedural law completely.

The Bill has exempted the international commercial arbitration by providing a non-binding proviso, although, on the other hand ensuring that the international commercial arbitration be made as expeditiously as possible and aim to resolve the dispute well within the 12 months' timeline. One of the striking features of the Bill, 2019 is that they have provided with clear cut guidelines and exceptions with regards to confidentiality15. Although, the Bill has departed from the recommendations provided by the committee which was to insert a specific provision for confidentiality stating that unless the disclose is utmost necessary to protect or to enforce legal rights or is required to be disclosed under a legal duty, or to enforce or challenge any award, the confidentiality will be overlooked. In the Bill however, the disclosure is allowed only for the purpose of implementation and enforcement of award.

Another feature of the 2019 Bill is that in it, it is proposed that the arbitrator will be provided with immunity for anything done bona fide16 and/or done in accordance to the Act17. Along with that, there is an insertion of a provision prescribing the qualification of the arbitrator18 although whether or not the foreign professional can be an accredited arbitrator or not is still ambiguous. If the foreign professionals are not allowed to become arbitrator in an international arbitration, then it will act detrimental to the future of the international commercial arbitration as the foreigners would not find it user-friendly and hence, the aim to become the hub of international arbitration might be a little too optimistic to be achieved.

In a nut shell, the Bill seeks to provide for a robust mechanism to deal with institutional disputes, but there exists many lacunas that still need to be looked at. The arbitration is undoubtedly becoming more complex with every passing amendment. Although, the implementation of the Bill is yet to be evaluated,the legislature should look out for a comprehensive amendment covering all the grounds instead of implementing a piecemeal in short interval of time which will create a mistrust in the international judicial system as it may reflect as an amateur in the company of the other international arbitration jurisdiction.

Footnotes

1. Sections 9A(2), 2(1) and 8(2), International Arbitration Act (Chapter 143a) (Singapore).

2. Section 13(2) and 24, Arbitration Ordinance, L.N. 38 of 2011, 01/06/2011 (Hong Kong).

3. Ministry: Law and Justice, The Arbitration and Conciliation (Amendment) Bill, 2019, prsindia.org, https://prsindia.org/billtrack/arbitration-and-conciliation-amendment-bill-2019

4. PTI, Cabinet clears bill to make arbitrators more accountable, Economic Times, https://economictimes.indiatimes.com/news/politics-and-nation/cabinet-clears-bill-to-make-arbitrators-more-accountable/articleshow/70060331.cms?from=mdr

5. The Arbitration and Conciliation Act, 1996

6. Section 43J of the Arbitration and Conciliation (Amendment) Bill, 2019

7. Civil Appeal Nos. 7875-7879, 7170 and 8028 of 2015; Decided on 13.03.2018

8. Divya Harchandani, India: Supreme Court Prohibits Practice Of Law By Foreign Lawyers/Law Firms In India, Mondaq, http://www.mondaq.com/india/x/703304/Performance/Supreme+Court+Prohibits+Practice+Of+Law+By+Foreign+LawyersLaw+Firms+In+India

9. Paragraph 3, Arbitration and Conciliation (Amendment) Bill, 2019.

10. The Arbitration and Conciliation (Amendment) Act, 2015

11. Section 29A (3), The Arbitration and Conciliation (Amendment) Act, 2015.

12. Section 29A (4), The Arbitration and Conciliation (Amendment) Act, 2015.

13. What is Arbitration?, World Intellectual Property Organisation, https://www.wipo.int/amc/en/arbitration/what-is-arb.html

14. Ruchika Darira, India: Section 29A Of The Amended Indian Arbitration And Conciliation Act, Mondaq, http://www.mondaq.com/india/x/592764/Arbitration+Dispute+Resolution/Section+29A+Of+The+Amended+Indian+Arbitration+And+Conciliation+Act+1996

15. Section 42A, Arbitration and Conciliation (Amendment) Bill, 2019.

16. Dispute Resolution Team, EMPEROR'S NEW CLOTHES? ARBITRATION AND CONCILIATION (AMENDMENT) BILL, 2019, Nishith Desai, http://www.nishithdesai.com/information/research-and-articles/nda-hotline/nda-hotline-single-view/article/emperors-new-clothes-arbitration-and-conciliation-amendment-bill-2019.html?no_cache=1&cHash=9d65c2d380dcaa4b97111692787bc0fb

17. Section 42B, Arbitration and Conciliation (Amendment) Bill, 2019.

18. Section 43J read with the Eighth Schedule of the Arbitration and Conciliation (Amendment) Bill, 2019.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Practice Guides
by Mondaq Advice Centres
Relevancy Powered by MondaqAI
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions