2 September 2019

A Step Forward: The Arbitration And Conciliation (Amendment) Act 2019

Tuli & Co


Tuli & Co is an insurance-driven commercial litigation and regulatory practice established in 2000. With offices in New Delhi and Mumbai, we undertake work for a cross section of the Indian and international insurance and reinsurance market and work closely alongside Kennedys’ network of international offices
The Arbitration and Conciliation Act 1996 was recently amended by the Arbitration and Conciliation (Amendment) Act 2019 and certain key reforms have been introduced.
India Litigation, Mediation & Arbitration
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The Arbitration and Conciliation Act 1996 ("Arbitration Act") was recently amended by the Arbitration and Conciliation (Amendment) Act 2019 ("Amendment Act") and certain key reforms have been introduced. An overview of the changes introduced by the Amendment Act are discussed below:

Arbitral Institutions: The Amendment Act introduces Arbitral Institutions to be designated by the Supreme Court and the High Courts for appointment of arbitrators, for international and domestic arbitrations respectively. §11 of the Arbitration Act has also been amended to lay down the new procedure for such appointments.

Appointment of Arbitrator(s): A party seeking appointment of an arbitrator(s) will have to apply to the Arbitral Institutions as designated by the Supreme Court (for international arbitrations) and High Courts (for domestic arbitrations). As such, under the new appointment regime, the powers exercised by the Supreme Court and High Court, for the appointment of arbitrators, will now be exercised by the designated Arbitral Institutions. The Amendment Act has omitted §11(6-A) which confined the scope of examination only to the determination of the existence of the arbitration clause. This means that a mechanical approach for appointment of arbitrators cannot be exercised and the existence of prima facie dispute between parties will have to be determined at the time of appointment of arbitrators. It will be interesting to see how the law develops in this respect, particularly if the Arbitral Institutions are allowed to exercise identical judicial functions as exercised by the Courts.

An application for appointment of arbitrator(s) will have to be decided within 30 days of the date of service of notice on the opposite party. Furthermore, the Arbitral Institution will determine the fees of the arbitrator(s) and manner of payment subject to the rates specified in the Fourth Schedule to the Arbitration Act. 

Arbitration Council of India: An Arbitration Council of India ("ACI") with its headquarters at New Delhi will be established. The ACI will comprise of a Chairperson, two nominated/appointed members, three ex-officio members, and one part-time member. ACI's duties inter alia will include promotion of alternative dispute resolution, policy making in that regard and operation and maintenance of uniform professional standards including grading arbitral institutions and accrediting arbitrators. The grading of Arbitral Institutions will be done by the ACI on the basis of infrastructure, quality and calibre of arbitrators, and performance and compliance of time limits for disposal of arbitrations.

Interim Relief from the Arbitrator(s): §17 of the Arbitration Act permitted the parties to approach the arbitrator(s) for interim relief at any time before enforcement of the award. This position has now changed, and parties will be able to seek interim relief from the panel of arbitrator(s) only during the arbitration proceedings.

Time Lines: The timelines pertaining to the arbitration proceedings have been amended and the position is as below:

  1. Pleadings (filing of statement of claim and defence) are required to be completed within 6 months from the date of appointment of the arbitrator(s).
  2. Arbitrator(s) will have to pass an award within 12 months from the date of completion of pleadings in domestic arbitrations.
  3. For international arbitrations, the arbitrator(s) will make an endeavour to complete the proceedings within 12 months from the date of completion of pleadings. The period of 12 months is not mandatory for international arbitrations.
  4. When an application has been made to the Court for extension of the arbitrator(s)'s mandate and the same is pending, the mandate of the arbitrator(s) shall not expire until the disposal of the application.

Challenge to the Award: It was a practice in some High Courts to accept fresh evidence, documentary or oral, and sometimes even frame issues to conduct a mini-trial, while deciding upon a challenge to an arbitral award under §34 of the Arbitration Act. This practice has been eliminated with the amendment to §34, as any challenge will be required to be established on the basis of the record filed before the arbitral tribunal.  

Eighth Schedule: Under the newly inserted Eighth Schedule, the minimum qualifications and experience required to act as arbitrator have been specified. This amendment has been brought about to strengthen the pool of arbitrators, ensure effective dispute resolution and reduce the susceptibility of awards to legal challenges.

Confidentiality and Immunity: Indian law was silent on the issue of confidentiality of arbitration proceedings and the arbitral award. The Amendment Act now provides that an arbitrator, the Arbitral Institutions and the parties to the arbitration agreement are required to maintain confidentiality with respect of the arbitral proceedings. This however does not extend to an award pronounced by an arbitral tribunal. The Amendment Act also provides immunity to arbitrators from any suit or other legal proceedings against the arbitrator for anything, which is done in good faith or intended to be done under the Act or its rules and regulations.

Application of the 2015 amendment: The Arbitration Act was previously amended by the Arbitration and Conciliation (Amendment) Act 2015 ("2015 Amendment"), pursuant to which, the question of its retrospective application to arbitrations and court proceedings became a question of constant debate.  The Supreme Court in BCCI v Kochi Cricket Pvt Ltd (2018) 6 SCC 287) had laid down that the 2015 Amendment applies prospectively to arbitrations but it was held that §36 of the 2015 Amendment would apply retrospectively to proceedings that were pending as on 23 October 2015, when the 2015 Amendment came in to force. It has now been clarified that the 2015 Amendment shall apply only to arbitration proceedings commenced after 23 October 2015. The 2015 Amendment will also not apply to Court proceedings which pertain to arbitration proceedings commenced before 23 October 2015.

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.

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