The Arbitration and Conciliation (Amendment) Act, 2019 (“the 2019 Amendment”), which amends the Indian Arbitration and Conciliation Act, 1996 (“the Act”), became effective on August 9, 2019. After the Bill in Support of the 2019 Amendment was passed in the Lower House of Parliament, India's Law Minister was quoted in one of the press releases as saying that the government wanted to render India a centre of domestic and foreign arbitration by bringing in reforms in law for the quicker settlement of commercial disputes.
Now that the 2019 Amendment has been enacted, this article examines some of its requirements to see whether it moves in the right direction for India to become a global arbitration centre.
KEY FEATURES OF THE 2019 AMENDMENT
- Arbitration Council of India (“ACI”)
The 2019 Amendment adds Section 11(3A) to the Act, giving the Supreme Court of India and High Courts the authority to appoint arbitral entities that the ACI has graded under Section 43-I of the Act. Instead of the court-appointed arbitrator(s) in situations where parties cannot find an arrangement, the courts will nominate classified arbitral institutions to do so (Sections 11(4)–(6))
Part 1A of the 2019 Amendment introduces this concept under Sections 43A to 43M, which empowers the Central Government to create the ACI through an official gazette notification (Section 43B). The ACI shall be composed of
(i) a former Supreme Court or High Court judge designated by the Central Government in consultation with the Chief Justice of India as its Chairperson,
(ii) a renowned arbitration practitioner nominated as the Central Government Member, and
(iii) an esteemed academician with research and teaching experience in arbitration, appointed by the Central Government in consultation with the Chief Justice of India.
(iv) Secretary to the Central Government in the Department of Legal Affairs, Ministry of Law and Justice,
(v) Secretary to the Central Government in the Department of Expenditure, Ministry of Finance – both as ex officio members,
(vi) one representative of a recognised body of commerce and industry, chosen on a rotational basis by the Central Government, as a part-time member,
(vii) Chief Exec of the Central Government in the Department of Legal Affairs, Ministry of Law and Justice The ACI is tasked with rating arbitral institutions based on factors such as infrastructure, arbitrator standard, quality, efficiency, and adherence to time limits for the resolution of domestic and foreign commercial arbitrations (Section 43I).
- Time limitations are being relaxed.
Under the Act, arbitral tribunals are expected to render their award within 12 months for any arbitration hearings. The bill is removing this period limit for international trade arbitrations. It goes on to say the tribunals must try to resolve foreign arbitration cases within a year.
- Confidentiality of cases:
The Bill stipulates that all specifics of arbitration proceedings would be held secret, except some details of the arbitral award. The arbitral award may only be made public if required for the award to be implemented or enforced.
The scheme's biggest flaw is that it restricts group sovereignty in foreign arbitration by allowing governments and courts to intervene. The ACI is a government agency tasked with regulating the institutionalisation of arbitration in India and establishing a policy for arbitral institution grading. The point remains that the ACI's choices would constrain the court's ability to designate an arbitral agency. As a result, an international group requesting the election of an arbitrator before the Supreme Court would be restricted to entities that have received ACI accreditation and arbitrators that might be on the panel of those arbitral institutions. The court would be similarly hampered in designating an ungraded entity with a global reputation for its infrastructure and standard of services and wishes to open a local office in India without going through the ACI's administrative hoops.
About the fact that the 2019 Amendment aims to legitimise the arbitration scene in India, it leaves it up to the courts and the executive to determine who is included in the change. Another issue correlated with government oversight of the institutionalisation phase is the potential for nepotism, red tape, lack of objectivity, and lack of accountability in the grading process. In my view, an international party prefers to avoid arbitration regimes that include major judicial or regulatory intervention. However, the government's recognition that formal arbitration is the only way to get international parties to have India as a seat in their arbitration agreements is a positive step.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code VIA Mediation and Arbitration Centre shall not be responsible for any errors caused due to human error or otherwise.