Under the Chairmanship of Justice B.N. Srikrishna, Retired Judge of Supreme Court of India, a High-Level Committee ("Committee"), was established to review India's institutionalisation of arbitration mechanisms.
THE NEED FOR HIGH-LEVEL COMMITTEE
According to the Committee's report, accreditation of arbitrators is one of the significant reforms needed to improve institutional arbitration in India. The rationale for this was that stakeholders lost faith in the domestic arbitration process as domestic arbitrators lacked quality and professionalism. Stakeholders also expressed concern about the need for Indian arbitral institutions to be on par with international institutions regarding the services and facilities they provide and how they conduct proceedings. The Committee believes litigating parties will have a reliable standard of assessing arbitrators they are looking to appoint.
COMMITTEE'S GUIDELINES FOR THE ACCREDITATION OF ARBITRATORS
An autonomous entity called the APCI should be established to recognise technical institutes that offer arbitrator accreditation based on standards, including the system of certification, training provided before and after arbitrator accreditation, evaluation of certification, membership, and so on.
For: (a) foreign commercial arbitrations seated in India; and (b) other arbitrations seated in India where the demand amount is equivalent to or exceeds INR 5,00,00,000, the accreditation of arbitrators by any such recognised professional institute may be preferable (INR 5 crores).
Only arbitrators approved by some other recognised legal institute shall be named as arbitrators under such arbitration clauses/agreements. The Central Government and different state governments may stipulate arbitration clauses/agreements in government contracts.
ACTION TAKEN BY THE CENTRAL GOVERNMENT
The Central Government created the Council by adding Part IA to the Arbitration Act, 1996, in response to the Committee's report. Also, it stipulated the acknowledgement of technical institutes offering accreditation of arbitrators, among other things, as an essential duty and role of the Council.
The Central Government has added the Eighth Schedule to the Arbitration Act, 1996, under Part IA. The 2019 Amendment prescribed an exhaustive set of necessary credentials and expertise for appointment as arbitrators.
CRITICISM ON THE EIGHTH SCHEDULE
Since its implementation, the Eighth Schedule has been criticised for its restrictive approach, limiting India's capacity as an arbitration-friendly nation. Jurists also criticised that the Eighth Schedule prohibits a foreign national from being selected as an arbitrator in an India-seated arbitration. In reality, the Supreme Court has stated that foreign lawyers performing international commercial arbitrations in India are not prohibited from doing so as long as the relevant rules of the arbitral institution are followed. Moreover, the mandate of the Eighth Schedule, which only allows an advocate with ten years of experience under the Advocates Act, 1961 to be qualified as an arbitrator, ran counter to the existing values of group sovereignty that the Arbitration Act, 1996 embodies. Furthermore, the Eighth Schedule's lengthy list of necessary credentials and expertise for appointment as an arbitrator was not only subjective but also showed an explicit prejudice in favour of Indian lawyers, ostensibly attempting to render India an unpopular destination as a seat in international arbitration.
However, even before the provisions of Part IA as introduced by the 2019 Amendment are notified, the President Promulgated Section 3 of the Ordinance, allowing the qualifications, experience, and norms for arbitrator accreditation to be specified by regulations made by the Council in consultation with the Central Government, effectively repealing the Eighth Schedule to the Arbitration Act.
The removal of the Eighth Schedule is seen as a positive step toward effectively expanding India's arbitration landscape. However, there is a haziness in defining the accreditation standards for arbitrators since the Council technically does not exist as of yet because Part IA has not been notified. Since arbitrator accreditation would increase public trust in the system, the Council must be established quickly, and that accreditation standards be developed based on the best practices of arbitral accreditation institutions across the world, such as the Singapore Institute of Arbitrators, Resolution Institute, and British Columbia Arbitration and Mediation Institute.
Notably, when deciding the norms for arbitrator accreditation, these organisations take a realistic stance, focusing on expertise in performing arbitral trials, advanced skills of the arbitration, and evidence of written publications in ADR journals or legal periodicals.
Qualification and competence requirements for being selected as an arbitrator can be framed more comprehensively than relying solely on association with government posts/entities to ascertain eligibility.
To give effect to the Amendment Act in its proper letter and spirit, the requirements of Part IA must be informed by the Central Government as soon as possible, and the Council must frame the legislation contemplated by the Amendment Act in consultation with the Central Government.
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