Advancing Arbitration In India: Key Perspectives On The Draft Arbitration And Conciliation (Amendment) Bill, 2024

Sr. No.

Draft Arbitration Bill, 2024²

Arbitration Act, 1996 (post 2015 Amendment)³

1.

Definition of Arbitral Institution:

A body or organisation that provides for conduct of arbitration proceedings under its aegis, by an arbitral tribunal as per its own rules of procedure or as otherwise agreed by the parties.

There was no clear or specific definition of an Arbitral Institution.

2.

Enhanced Powers for Arbitral Institutions:

The Draft Bill aims to seek to shift more to arbitral institutions, empowering them to perform several functions such extending timelines for issuing an arbitral award, adjust arbitrators' fees in cases of delays, and even substitute arbitrators.

Most of the proposed changes in powers were previously vested with courts.

3.

Exclusion of Grading Arbitral Institutions:

The Amendment proposes the removal of the Arbitration Council of India's (ACI) responsibility for grading arbitral institutions.

Under the previous act, the ACI was responsible for grading, along with other key roles, primarily focusing on policy development and supporting the growth of institutional arbitration in India.

4.

Time Limit on Application under Section 8:

The Amendment proposes a 60-day time limit for disposing of applications for referring a dispute to arbitration.

There was no specific limitation, except that it must be applied no later than the date of submitting the first statement on the substance of the dispute.

5.

Time Limit on Application under Section 16:

The Amendment introduces a 30-day time frame within which an arbitral tribunal must dispose of jurisdictional objections.

The issue of jurisdiction must be raised no later than the submission of the statement of defence. However, no specific timeline exists for the disposal of such an application.

6.

Time Limit on Appeal under Section 37(1):

The Amendment proposes a 60-day time limit for appeals against orders related to Arbitration. This includes appeals against orders that refuse to refer parties to arbitration, refuse to appoint an arbitrator, or grant or refuse interim measures.

Currently, no specific timeline exists within the Act, however such an appeal against an order arising from Arbitration is governed by Art. 117 & Art. 116 of the Limitation Act along with 13(1A) of the Commercial Courts Act.

7.

Limiting Court's Role in Interim Measures:

The Amendment narrows the scope by restricting the court's role in granting interim measures to the period before the commencement of arbitration or after the rendering of an award.

The present Act allows Court to grant interim relief post the constitution of the Arbitral Tribunal and during the pendency of arbitration proceedings.

Unless circumstances exist, which may render the Section 17 remedy ineffective.

8.

Expedited Commencement of Arbitration Proceedings:

The Amendment proposes to start the 90-day time limit from the filing of the interim relief application, rather than from the court order, to address delays caused by prolonged pre-arbitral proceedings and ensure prompt arbitration commencement.

Currently, as per Section 9(2) of the current Arbitration Act sets a 90-day time limit for initiating arbitration proceedings after a court-issued pre-arbitral interim measure order.

9.

Relief through Emergency Arbitrators:

The Amendment proposes the introduction of Section 9-A, permitting parties to seek interim relief from an emergency arbitrator prior to the constitution of the arbitral tribunal. Emergency arbitrator orders will be enforceable in the same manner as those granted by the arbitral tribunal.

The existing Act did not include such a provision and assigned the authority for interim measures prior to the constitution of the arbitral tribunal to the Courts.

10.

Appellate Arbitral Tribunals (Section 34-A):

The Amendment proposes the establishment of an appellate arbitral tribunal to handle challenges to arbitral awards, aiming to improve efficiency and reduce time and costs associated with court litigation.

The current Act places challenges under Section 34 within the jurisdiction of Indian Courts, likely to avoid concerns about outsourcing public policy interpretations to private entities.

11.

Exclusion of the Fourth Schedule:

The Amendment proposes the removal of the Fourth Schedule, which governs arbitrators' fees, as the new criteria would adopt a more nuanced approach, considering factors like case complexity and time spent.

The existing Act determines fees solely based on the value of claims, without considering other factors.

12.

Stamping of Arbitration Awards (Section 31(1)):

The Bill mandates that arbitration awards be stamped in accordance with the Stamp Act of 1899, ensuring proper stamping at issuance to minimize delays and complications during enforcement.

The current Act does not include a specific provision requiring the stamping of arbitral awards. However, stamping is necessary for enforcement, and stamp duty varies by state, particularly in states without a specific state stamp act or where the Indian Stamp Act, 1999 applies.

13.

Full and Partial Set Aside (Section 34):

The Bill amends Section 34 by introducing a bifurcated structure that delineates the grounds for wholly setting aside an arbitral award from those applicable to a partial annulment. This clear distinction enhances the procedural efficiency of challenging arbitral awards. In contrast, the existing Act does not explicitly contemplate the possibility of a partial setting aside, as is now being proposed.

Under Section 34 of the current Act, the Court may set aside an arbitral award on specific grounds but does not allow for partial setting aside. However, recent Supreme Court rulings indicate that if arbitrable and non-arbitrable issues can be separated, only the portion of the award related to non-arbitrable matters may be set aside, provided it is independent and does not impact other findings.