The Union Law Minister of India, Shri Ravi Shankar Prasad introduced a Bill in Rajya Sabha aimed at improving institutional arbitration in the country in the Rajya Sabha on Monday, July 15, 2019. The Arbitration and Conciliation (Amendment) Bill 2019, which seeks to make India a hub of domestic and global arbitration for settling commercial disputes. Successive governments have been pushing to make India a centre of domestic and international arbitration. The previous version of this Bill was cleared by the Lok Sabha on August 2018 but could not be passed in the Rajya Sabha then. The new Bill, which amends the 1996 Act, seeks to provide for a robust mechanism to deal with institutional disputes and ensures accountability of the arbitrator. The Bill identifies the dominance of Adhoc-arbitration and international arbitration in India but a road map to make India an arbitration hub has commenced with the Justice Srikrishna report.
Highlights of the Amendment
(1) Formation of an Independent Body: The amendment will help establish an independent body to lay down standards, make the arbitration process more friendly and cost-effective, and ensure timely disposal of cases. It provides for setting up an independent body — the Arbitration Council of India (ACI) — to set up a framework for creating arbitral institutions and accrediting arbitrators by laying down norms. The ACI would be mandated to frame rules on how institutions would be graded, norms to be followed, and monitoring of quality and performance.
(2) Arbitral Institution on Section 11 (3A): The Supreme Court and High Court will have the power to designate the arbitral institution, which has been graded by the Arbitration Council.
(3) Where there are no graded Arbitral Institutions are available: In respect of those High Court jurisdictions, where no graded arbitral institution is available, then, the Chief Justice of the concerned High Court may maintain a panel of arbitrators for discharging the functions and duties of arbitral institution and any reference to the arbitrator shall be deemed to be an arbitral institution for the purposes of this section and the arbitrator appointed by a party shall be entitled to such fee at the rate as specified in the Fourth Schedule.
(4) Six Months for completion of Pleadings in Section 23 (4): The statement of claim and defence under this section shall be completed within 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) Time Period for the passing of the Award in International Commercial Arbitration Section 29 A (1) The award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings under sub-section (4) of section 23. Provided that the award in the matter of international commercial arbitration may be made as expeditiously as possible and endeavour may be made to dispose off the matter within a period of twelve months from the date of completion of pleadings under sub-section (4) of section 23.
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Arbitration Council of India Section 43B. (1): The Central Government shall, by notification in the Official Gazette, establish, for the purposes of this Act, a Council to be known as the Arbitration Council of India to perform the duties and discharge the functions under this Act. (2) The Council shall be a body corporate by the name aforesaid, having perpetual succession and a common seal, with power, subject to the provisions of this Act, to acquire, hold and dispose of property, both movable and immovable, and to enter into contract, and shall, by the said name, sue or be sued. (3) The head office of the Council shall be at Delhi. (4) The Council may, with the prior approval of the Central Government, establish offices at other places in India. Section 43C. (1) The Council shall consist of the following Members, namely: (a) a person, who has been, a Judge of the Supreme Court or, Chief Justice of a High Court or, a Judge of a High Court or an eminent person, having special knowledge and experience in the conduct or administration of arbitration, to be appointed by the Central Government in consultation with the Chief Justice of India–Chairperson; (b) an eminent arbitration practitioner having substantial knowledge and experience in institutional arbitration, both domestic and international, to be nominated by the Central Government–Member; (c) an eminent academician having experience in research and teaching in the field of arbitration and alternative dispute resolution laws, to be appointed by the Central Government in consultation with the Chairperson–Member; (d) Secretary to the Government of India in the Department of Legal Affairs, Ministry of Law and Justice or his representative not below the rank of Joint Secretary–Member, ex officio; (e) Secretary to the Government of India in the Department of Expenditure, Ministry of Finance or his representative not below the rank of Joint Secretary–Member, ex officio ; (f) one representative of a recognised body of commerce and industry, chosen on a rotational basis by the Central Government–Part-time Member; and (g) Chief Executive Officer-Member-Secretary, ex officio. (2) The Chairperson and Members of the Council, other than ex officio Members, shall hold office as such, for a term of three years from the date on which they enter upon their office: Provided that no Chairperson or Member, other than ex officio Member, shall hold office as such after he has attained the age of seventy years in the case of Chairperson and sixty-seven years in the case of Member. |
(6) Grading of Organisation Section 43-I: The Council shall make grading of arbitral institutions on the basis of criteria relating to infrastructure, quality and calibre of arbitrators, performance and compliance of time limits for disposal of domestic or international commercial arbitrations, in such manner as may be specified by the regulations.
(7) Eighth Schedule Section 43J. The qualifications, experience and norms for accreditation of arbitrators shall be such as specified in the Eighth Schedule:
Provided that the Central Government may, after consultation with the Council, by notification in the Official Gazette, amend the Eighth Schedule and thereupon, the Eighth Schedule shall be deemed to have been amended accordingly.
(9) Electronic depository of Arbitral Awards Section43K: The Council shall maintain an electronic depository of arbitral awards made in India and such other records related thereto in such manner as may be specified by the regulations.
(9) Who would be impacted by the Amendment?- Section 87: Unless the parties otherwise agree, the amendments made to this Act by the Arbitration and Conciliation (Amendment) Act, 2015 shall—
(a) not apply to––
(i) arbitral proceedings commenced before the commencement of the Arbitration and Conciliation (Amendment) Act, 2015;
(ii) 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 Arbitration and Conciliation (Amendment) Act, 2015;
(b) apply only to arbitral proceedings commenced on or after the commencement of the Arbitration and Conciliation (Amendment) Act, 2015 and to court proceedings arising out of or in relation to such arbitral proceedings.
EIGHTH SCHEDULE
General norms applicable to Arbitrator
(i) The arbitrator shall be a person of the general reputation of fairness, integrity and capable to apply objectivity in arriving at a settlement of disputes;
(ii) The arbitrator must be impartial and neutral and 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;
(iii) The arbitrator should not involve in any legal proceeding and avoid any potential conflict connected with any dispute to be arbitrated by him;
(iv) The arbitrator should not have been convicted of an offence involving moral turpitude or economic offence;
(v) The arbitrator shall be conversant with the Constitution of India, principles of natural justice, equity, common and customary laws, commercial laws, labour laws, the law of torts, making and enforcing the arbitral awards;
(vi) The arbitrator should possess a robust understanding of the domestic and international legal system on arbitration and international best practices in regard thereto;
(vii) The arbitrator should be able to understand key elements of contractual obligations in civil and commercial disputes and be able to apply legal principles to a situation under dispute and also to apply judicial decisions on a given matter relating to arbitration; and
(viii) The arbitrator should be capable of suggesting, recommending or writing a reasoned and enforceable arbitral award in any dispute which comes before him for adjudication.
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