ARBITRATION COUNCIL OF INDIA: AN OVERVIEW

Introduction

Arbitration is one of the most highly sought Alternate Dispute Redressal Systems. It involves solving the dispute outside the court, which saves the parties from lengthy proceedings, is highly flexible, legally recognized, and leads to speedy redressal. This method ensures cost-saving and is highly advantageous to the parties to suit. The Council, like a corporation, is a lawful entity with never-ending succession and a common seal, as well as the authority to acquire and dispose of property (movable and immovable) in its name. It can also enter into a contract and is capable of suing or being sued. [1]The Arbitration and Conciliation (Amendment) Act, 2019, was approved by Parliament to make India a hub for international arbitration. The Central Government established a committee under the chairmanship of Justice B.N. Srikrishna, a former judge of the Supreme Court of India, made India a prominent hub for domestic and international institutional arbitration. The central government has the authority to establish the Arbitration Council of India under section 43B of the Arbitration and Conciliation (Amendment) Act, 2019, to fulfil the responsibilities and powers stipulated by the Act. The Council’s headquarters are in Delhi, and it has the authority to open offices across India with the acceptance of the Central Government.

Composition of the Council

The Council is made up of the members as per Section 43C[2] of the Arbitration and Conciliation Act. A person who has been a Judge of the Supreme Court or High Court or a Chief Justice of High Court or any significant person with expertise in arbitration is appointed as a Chairperson by Central Government after consulting the Chief Justice of India. A renowned arbitrator with experience and expertise in both domestic and international arbitration proceedings is appointed as a member of the council. Further, the Central Government, after consulting the Chairperson, designates a distinguished academic researcher with competence in teaching and research in arbitration. Also, a delegate of a recognized chamber of commerce and industry is permitted by the Central Government on a rotating basis. The tenure of the Chairman is 70 years of age or three years at once, whichever is prior. However, the tenure is 67 years or three years at once for members, whichever is earlier. The Ex-officio has no tenure as such. The Salaries, allowance, etc., of the Chairperson, are prescribed by the Central Government.

Duties and Functions of the Council

The council is required to perform various Duties and Functions such as –

1) establishing policies for rating arbitral institutions.

2) recognizing professional institutes that provide arbitrator accreditation.

3) examining how arbitral institutions and arbitrators are rated.

4) holding arbitration-related training, workshops, and courses.

5) creating, analysing, and adjusting rules to ensure a suitable level of arbitration and conciliation.

6) operating as a channel for the sharing of ideas and methodologies to be used in the field of arbitration and conciliation.

7) serving as a platform for exchanging ideas on how to make India a stable centre for both domestic and international arbitration.

8) providing suggestions to the central government on various actions that make business conflicts easier to resolve.

9) strengthening arbitral institutions to encourage institutional arbitration.

10) conducting exams and training on a variety of topics related to arbitration and conciliation, and grant certifications for the same.

11) developing and maintaining a depository for Indian arbitral awards.

12) performing any other duties that the Central Government deems appropriate.

According to Section 43E, no act or proceeding of the Council shall be void in case of vacancy or flaw in the Council’s constitution, failure in the appointment of a person acting as a Council Member, and irregularity in the procedure of the Council.[3]Section 43F provides that the Chairperson or a Full-time or Part-time Member may resign from his position by sending a written (signed) notice to the Central Government. However, unless the Central Government permits him to give away his office early, the chairperson or Full-time Member shall remain in office until the expiration of three months from the date of receipt of such notification, or until a person is validly chosen as his successor assumes the office, or until his term of office expires, whichever comes first.[4] Section 43G of the Constitution states that the Central Government has the authority to withdraw a Member from office if he is a bankrupt who has not been discharged, has worked in any paid capacity during his period of office, (excluding part-time); has been convicted of a crime involving moral turpitude according to the Central Government; has acquired a pecuniary or some other interest that could threaten his capacity to carry out his responsibilities as a member; has exploited his position to the degree where his continued employment is against the public interest; has become physically or mentally unable to function.[5]

Section of the members of the council

The Council may select experts and create expert committees from time to time as it deems appropriate to conduct its activities, subject to the terms and circumstances outlined in the regulations.[6] The Council grades arbitral institutions based on benchmarks such as infrastructure, arbitrator quality and calibre, performance, and adherence to time constraints to resolve local or international commercial arbitrations, as prescribed by the order.[7] Section 43J states that the qualifications and regulations for accreditation should be as mentioned in the Eighth Schedule. According to this schedule, a person is not capable of becoming an arbitrator unless he:

1) Is an advocate as per Advocates Act, 1961 and has 10 years of experience.

2) Is a Charted Accountant as per Charted Accountants Act, 1949 and has 10 years of practice experience.

3) Is a Cost Accountant as per Cost and Works Accountant Act, 1959 and has 10 years of experience.

4) Is a Company Secretary as per the Company Secretaries Act, 1980 and has 10 years of experience.

5) Has been an Indian Legal Services officer.

6) Has been an officer with an engineering degree and has an experience of 10 years.

7) Has been a senior level officer with sufficient administration experience[8]

The arbitrator shall be required to be impartial and neutral and must not get involved in any legal conflicts. He should have not been convicted of any economic offence. He needs to be well versed with the Indian Constitution, Principles of Natural Justice, Commercial Laws, Labour Laws, Law of Torts, etc. Further, he must, possess a deep understanding of national and international laws and understands elements of contractual obligations.[9] The Council is required by Section 43K to preserve an electronic database of arbitral awards made in India.[10] The Council shall have a Chief Executive Officer responsible for its everyday activities as per Section 43 M. The Central Government lays down the terms of appointment of the CEO.[11]

Conclusion

Arbitration is the future of India and is growing at an unimaginable rate. The Arbitration Council no doubt will function as a game-changer in the world of Alternate Dispute Resolution. It helps in solving a lot of problems such as grading arbitral institutions, policy-making, and determining the qualifications of the arbitrators and arbitral institutions. This makes sure that the ADR work is continued effectively and efficiently. It will surely motivate parties to solve more and more cases by following ADR remedies in India.

Author(s) Name: Sapna Sharma (Department of Laws, Panjab University, Chandigarh)

References:

[1] “Company Law – ICSI” <https://www.icsi.edu/media/webmodules/publications/FinalCLStudy.pdf> accessed April 23, 2022

[2] Arbitration and Conciliation (Amendment) Act, 2019, s 43C.

[3] Arbitration and Conciliation (Amendment) Act, 2019, s 43E.

[4] Arbitration and Conciliation (Amendment) Act, 2019, s 43F.

[5] Arbitration and Conciliation (Amendment) Act, 2019, s 43G.

[6] Arbitration and Conciliation (Amendment) Act, 2019, s 43H.

[7] Arbitration and Conciliation (Amendment) Act, 2019, s 43I.

[8] Arbitration and Conciliation (Amendment) Act, 2019, s 43J.

[9] Arbitration and Conciliation (Amendment) Act, 2019, s 43J.

[10] Arbitration and Conciliation (Amendment) Act, 2019, s 43K.

[11] Arbitration and Conciliation (Amendment) Act, 2019, s 43C.