The Arbitration and Conciliation (Amendment) Bill, 2018 ("Bill") to further amend the Arbitration and Conciliation Act, 1996 ("Act") was approved on 7 March 2018 by Cabinet of Ministers for introduction in ongoing session of the Parliament. These amendments in the Act set to promote institutional arbitration in India and further streamline the arbitration process by removing practical difficulties in applicability of the first round of amendments made by the Arbitration and Conciliation (Amendment) Act, 2015 ("2015 Amendment").
The Bill implements the suggestions made by the High Level Committee (HLC) under the Chairmanship of Justice Srikrishna. The HLC had inter alia recommended that International Centre for Alternative Dispute Resolution should be taken over with complete revamp of its governance structure and be rebranded as a centre of national importance to highlight its character as a flagship arbitral institution. In view of the above recommendations, New Delhi International Arbitration Centre Bill, 2018 was introduced in the Parliament on 5 January 2018.
- Appointment of
Arbitrators by the Institutions:
- This amendment will facilitate the appointment of arbitrators by the designated arbitral institutions even though parties have not chosen the institutional rules in their arbitration clause.
- This will expedite the constitution of the arbitral tribunal and reduce the burden on the Courts for appointment of arbitrators. It will also enable the institutions as designated by the Courts to identify an arbitrator who is best suited and available for the matter.
- It will also make the current arbitral process swifter and more efficient. This is in consonance with the minimum court interventionist approach, which is central to the sanctity of an arbitral process as has been growingly recognised in India.
- Establishment of the
Arbitration Council of India (ACI):
- ACI will grade arbitral institutions and accredit arbitrators by laying down norms and take all such steps as may be necessary to promote and encourage arbitration, conciliation, mediation and other ADR Mechanisms. ACI shall also maintain an electronic depository of all arbitral awards. This amendment will set the much needed bare minimum standard for evaluating arbitral institutions and accredit the arbitrators.
- As the HLC Report suggested, it may also incentivise institutions which are not performing well to improve their functioning and infrastructure or find themselves weeded out by a competitive market for arbitral institutions.
- Timeline for completing
arbitration be relaxed for International Commercial
- Section 29A of the Act shall be amended to exclude International Commercial Arbitrations from the bounds of timeline and further to provide that the time limit for arbitral award in other arbitrations shall be within 12 months from the completion of the pleadings of the parties.
- HLC Report highlighted that international arbitral institutions strongly criticised the setting of timelines for conducting International Commercial Arbitrations since monitoring the conduct of the arbitral proceedings is best left to the arbitral institutions.
- This amendment will enable more complex International Commercial Arbitrations being governed by institutional rules to be seated in India by removing the impediment of timeline that was unrealistic to achieve in certain cases.
- Experience of 2015 Amendment has shown that invariably, the parties agreed to extend the time by further 6 months. The change in timelines from the stage of completion of pleadings instead of date the tribunal enters upon the reference, will facilitate arbitral tribunal to conduct the process in a more efficient manner and allow time to draft quality awards within the specified time limit.
- Given that the time for completion of pleadings has been excluded, tribunals shall have to follow strict approach for timely completion of pleadings and forfeit the parties' rights if not filed in time as contemplated in the 2015 Amendment, as otherwise it will defeat the very purpose of introducing a time limit for completion of proceedings.
- Confidentiality and
- A new Section 42A is to be inserted to provide that the arbitrator and the arbitral institutions shall keep confidentiality of all arbitral proceedings except the award. Further, a new Section 42B protects an arbitrator from suits or other legal proceedings for any action or omission done in good faith in the course of arbitration proceedings.
- Confidentiality provisions are presently in place only for conciliation proceedings under Section 75 of the Act and they were required to be extended to arbitral proceedings as well. This will put obligations on the parties, arbitrators and everyone involved in the process to maintain strict confidentiality of the proceedings. However, the consequences of breach of the same are not contemplated.
- HLC Report suggested immunity of arbitrators from liability for acts or omissions in the discharge of their functions as arbitrators except in cases of bad faith to be ensured, given that it is an international best practice. This move will ensure that any individual who is functioning as an arbitrator will be immune so long as the act or omission to act was in good faith.
- Applicability of 2015
- A new Section 87 is proposed to be inserted to clarify that unless parties agree otherwise, the 2015 Amendment shall not apply to: (a) arbitral proceedings which have commenced before the commencement of the 2015 Amendment; (b) court proceedings arising out of or in relation to such arbitral proceedings irrespective of whether such court proceedings are commenced prior to or after the commencement of the 2015 Amendment and shall apply only to arbitral proceedings commenced on or after the commencement of the 2015 Amendment and to court proceedings arising out of or in relation to such arbitral proceedings.
- This amendment if brought into effect, will essentially codify the law laid down by the Division Bench of the Delhi High Court in Ardee Infrastructure Pvt. Ltd. v. Ms. Anuradha Bhatia.1 However, the question of applicability of the 2015 Amendment is currently pending before the Supreme Court in Arup Deb Andors and Ors. v. Global Asia Venture Company.2
- Notably, the Supreme Court reserved its judgment in Arup Deb on 6 March 2018, a day before the Cabinet approved the Bill for introduction in the Parliament. In light of the above, it will be interesting to see upcoming developments given that the Supreme Court is expected to pronounce its judgment in Arup Deb very soon.
1. 2017 SCC OnLine Del 6402.
2. SLP(C) No. 20224 of 2016.
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