Latest News
LEGAL FRAMEWORK OF INSTITUTIONAL ARBITRATION
LEGAL FRAMEWORK OF INSTITUTIONAL ARBITRATION
Institutional arbitration refers to arbitrations administered through arbitration institutions under rules and procedures formulated by them. The increased burden of courts, credibility, cost-specific resolution, transparency in fee structure and the need for speedier and more efficient mechanisms for dispute resolution are its attractive features. Institutional arbitration is popular among the public at the international level and the parties to the dispute prefer institutional arbitration for the resolution of the dispute. However, in India, this type of arbitration is still not preferred by the parties due to a lack of proper structure and organisation. To redress the issue, the 246th report of the Law Commission of India recommended on promotion of institutional arbitration in India and provided qualified arbitrators to be empanelled with the institution. Subsequently, it was promoted through the Arbitral Council of India (ACI) in the 2019 Amendment. The amendment brought forth Section 2 (ca), where ‘arbitral institution’ is defined as the one designated by the Supreme Court or High Court. Thus including ad hoc as well as institutional arbitrations in it.
2019 AMENDMENT ACT
In 2016 under the leadership of Justice (Retd.) B.N. Srikrishna, a High-Level Committee was constituted by the Government of India. Then the 2019 Amendment Act came into force on their recommendations. The Committee submitted a report which can be divided into three parts. Part I has provided recommendations and suggestions necessary for the performance of the arbitral institutions and also to promote India as a preferred seat of arbitration. The Committee in Part II of the report has reviewed the working of the International Centre for Alternative Dispute Resolution (ICADR). Lastly, in Part III of the report, the committee has recommended the inclusion of a new post of an International Law Adviser (ILA). It is to advise the Government in disputes relating to international law obligations.[1] In consideration of the report submitted by the committee, a new bill namely, the New Delhi International Arbitration Centre Bill was introduced which was assented to by the President on 29th July 2019. The Act proposed to bring about significant changes to Section 11 to promote the growth of institutional arbitration in India including the elimination of the requirement of examination of the existence of an arbitration agreement by the Courts thereby reducing the role of the judiciary in the arbitration proceedings. Thus, the Amendment Act has divested the power to appoint arbitrators to the arbitral institutions and repealed Section 11(6A). The Act also provides for the establishment of the New Delhi International Arbitration Centre.
ARBITRAL COUNCIL OF INDIA
To structure the process of institutional arbitration, an Arbitration Council of India was introduced as an independent body under Part IA, Section 43A to 43M. Section 43C provides that, the Arbitration Council of India shall be under the Chairman of a Supreme Court Judge or Chief Justice of the High Court or any other person having special knowledge and experience in arbitration appointed by the Central Government in consultation with the Chief Justice of India.[2] The Council also have other members such as eminent arbitration practitioners and academicians, one representative from the recognized body of commerce and industry and officers and employees prescribed by the Central Government. The important provision is section 43D which deals with functions like framing of policies, promotion and recognition of arbitration institutions in India, recognition of professional institutions giving arbitration accreditation, reviewing institutions etc. It is established as a corporate body and after the 2021 amendment they are supposed to frame regulations for accreditation of arbitrators.
APPOINTMENT OF ARBITRATORS
Section 11 of the Arbitration and Conciliation Act, 1996 had been amended, and accordingly, the Supreme Court and the High Court have the power to designate arbitral institutions graded by the ACI. Where no such graded institutions are available, the High Court shall maintain a panel of arbitrators, who shall discharge the functions and other duties of the arbitral institutions. However, this present scheme of appointment of arbitrators has been criticized as the whole idea of separation of judiciary from arbitration has been defeated. The qualifications of arbitrators were provided under Section 43J and Schedule VIII but were omitted in 2021. The appointment of the arbitrator has moved from a judicial function to an administrative one.[3]
LAW COMMISSION’S RECOMMENDATIONS ON INSTITUTIONAL ARBITRATION
The recommendations of the Law Commission encouraged institutional arbitration as a culture. The major recommendations so far as institutional arbitration is concerned are for the application for appointment of an arbitrator to be disposed of within 60 days of filing before the court. Once the arbitral tribunal is constituted, the court shall not have the power to entertain an application under Section 9 of the Arbitration Act instead the powers of granting interim measures will be with the arbitral institution. The Commission encouraged the establishment of arbitral institutions across the nation which the government supports in terms of establishment and initial funding.
[1] Rizvi, Zisha, The Shift Towards Institutional Arbitration: Critically Examining the Arbitration (Amendment) Act 2019 (March 1, 2020). Available at SSRN: https://ssrn.com/abstract=3558538 or http://dx.doi.org/10.2139/ssrn.3558538
[2] Draft Arbitration Council of India (ACI) Rules issued for public consultation, Ministry of Law and Justice, Posted On: 12 FEB 2020 1:32 PM by PIB Delhi, https://pib.gov.in/PressReleasePage.aspx?PRID=1602900#:~:text=The%20Arbitration%20and%20Conciliation%20Act,disposal%20and%20neutrality%20of%20arbitrators.
[3] Shashank Garg, Alternative Dispute Resolution, New Delhi: Oxford University Press, 2018
- Institutional arbitration refers to arbitrations that are administered through arbitration institutions under rules and procedures formulated by them.
- The 246th report of the Law Commission of India recommended on promotion of institutional arbitration in India and provided qualified arbitrators to be empaneled with the institution.
- Subsequently it was promoted through the Arbitral council of India (ACI) in the 2019 Amendment.
