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Salient Features of the Arbitration and Conciliation (Amendment) Act, 2019
When the United Nations Commission on International Trade Law (UNCITRAL) Model on Commercial International Arbitration was adopted in 1985, countries like India took little time to enact a legislation that governed and regulated arbitration proceedings in accordance with the United Nations Model. In light of this, the Government of India, in a conference in 1993, discussed the Arbitration and Conciliation Act, 1996, and with its introduction, arbitration became an increasingly popular method of Alternate Dispute Resolution in India but there were still flaws in the Act, as pointed out by the Law Commission in one of its reports. Therefore, as an attempt to make arbitration a preferred mode of settlement of commercial disputes and to make India a hub of international commercial arbitration, the President of India, on 23rd October 2015, promulgated an Ordinance - Arbitration and Conciliation (Amendment) Ordinance, 2015, amending the Arbitration and Conciliation Act, 1996[1]. The 2015 Amendment brought significant changes to the principle Act especially with respect to international commercial arbitration, impartiality and independence of arbitrators, powers of the arbitral tribunals, delays in presenting awards, and expeditious proceedings. However, with the unprecedented increase in commercial disputes set off by globalisation, industrialisation and liberalisation, arbitration has become the preferred mode of settling disputes and Indian law governing arbitration was seen to still be behind global arbitration practices[2]. To combat this drawback, the Arbitration and Conciliation (Amendment) Bill, 2019 was introduced in Parliament and the Amending Act came into force on 9th August.
Though arbitral tribunals are functioning in India, they are often not chosen by parties to a dispute as they prefer ad-hoc tribunals or arbitration institutions located in countries like Singapore, France and the United Kingdom. The 2019 amendment seeks to minimize the role of courts and make India a well-equipped Centre for domestic and international arbitration with its objective to strengthen institutional arbitration in the country.
Some features of the Amendment Act are:
- The Amendment Act establishes an independent body known as the Arbitration Council of India (ACI) under Part 1A of the Act. The ACI is headquartered in New Delhi and works for the promotion of arbitration, mediation, conciliation, and other Alternative Dispute Redressal (ADR) mechanisms. Its functions include policy making with regard to grading arbitral institutions, accrediting arbitrators, establishment, operation, and maintenance of uniform professional standards for all ADR matters, and maintenance of a record of arbitral awards made in India[3].
- The ACI will consist of at least 3 members headed by a Chairperson who is either a Judge of the Supreme Court, a Judge of a High Court, Chief Justice of a High Court, or an eminent person with expert knowledge in the conduct of the arbitration. The other members must include an eminent arbitration practitioner, an academician with experience in arbitration, and government appointees[4].
- Under Section 11 of the 1996 Act, parties wishing to settle their dispute through arbitration could approach the High Courts or the Supreme Court to appoint an arbitrator, but as per the 2019 amendment, the High Courts and Supreme Court have the power to designate Arbitral Institutions, accredited by the ACI, which will appoint arbitrators to settle disputes at the behest of the parties[5].
- Section 29A of the 1996 Act was added by an amendment in 2015 and it provided a time limit of “12 months from the date of constitution of tribunal” for the completion of arbitral proceedings. The 2019 amendment has changed the commencement of the timeline to “12 months from the date of completion of pleadings” and has exempted international commercial arbitration from this 12-month limit[6].
- The 2019 Amendment introduces Section 42A that states that confidentiality must be maintained at all times during an arbitration proceeding unless the enforcement of an award requires disclosure of some information[7].
- Section 87 was also a new addition made by the 2019 Amendment. This section states that unless the parties agree, the changes made by the Arbitration and Conciliation (Amendment) Act, 2015 will not be applicable to arbitral proceedings which have commenced before 23rd October 2015[8].
The Arbitration and Conciliation (Amendment) Act, 2019 seeks to encourage Arbitration, Mediation, Conciliation and other methods of ADR with the establishment of the ACI that will ensure professional and uniform standards that meet the global expectation.
[1] Vikas Goel, Highlights of Amendment to the Arbitration and Conciliation Act, 1996 via the Arbitration Ordinance 2015, Mondaq, (Dec. 2, 2015, 3:15 PM), https://www.mondaq.com/india/arbitration-dispute-resolution/448666/highlights-of-amendment-to-the-arbitration-and-conciliation-act-1996-via-arbitration-ordinance-2015.
[2] Vikas Goel, Insight into the Arbitration and Conciliation (Amendment) Act, 2019, Singhania&Partners, (Aug. 27, 2019, 8:08 PM), https://singhania.in/insight-to-the-arbitration-and-conciliation-amendment-act-2019/.
[3] Ahlawat&Associates, Arbitration and Conciliation (Amendment) Act, 2019 notified, InsightSuccess, (Aug. 10, 2019, 3:53 PM), https://www.insightssuccess.in/arbitration-conciliation-amendment-act-2019-notified/.
[4] Ministry of Law and Justice, Arbitration and Conciliation (Amendment) Bill, 2019, PRSIndia, (Sep. 2, 2019, 7:17 PM), https://www.prsindia.org/billtrack/arbitration-and-conciliation-amendment-bill-2019.
[5] Arbitration and Conciliation (Amendment) Act, 2019, No. 33, Acts of Parliament, 2019.
[6] Maneck Mulla, Salient Features of the Arbitration and Conciliation (Amendment) Bill, 2019, Mondaq, (Sep. 18, 2019, 9:07 PM), https://www.mondaq.com/india/Litigation-Mediation-Arbitration/845782/Salient-Features-Of-The-Arbitration-And-Conciliation-Amendment-Bill-2019.
[7] AZB Partners, Arbitration and Conciliation (Amendment) Act, 2019 – Key Highlights, Mondaq, (Aug. 27, 2019, 3:15 PM), https://www.mondaq.com/india/arbitration-dispute-resolution/840292/the-arbitration-and-conciliation-amendment-act-2019-key-highlights.
[8] Arbitration and Conciliation (Amendment) Act, 2019, No. 33, Acts of Parliament, 2019.
- Arbitration
- Amendment Act
- 2019
