THE 2019 AMENDMENTS TO ARBITRATION AND CONCILIATION ACT, 1996

INTRODUCTION

The Arbitration and Conciliation (Amendment) Act, 2019 (hereinafter the ‘Amendment Act’) came into effect on August 9, 2019. The sole intention behind this Amendment Act is to make India a fulcrum of domestic and international Arbitration and to overhaul the older provisions of the Arbitration and Conciliation Act of 1996 (‘The Act’). Since the Amendment Act is into force, the author fundamentally dissects a portion of its provisions to comprehend whether it is, without doubt, a positive development for India to turn into a hub for domestic and international arbitration. This article will also examine what problems the Amendment Act might solve or create or what problems remain or what the loopholes create.

KEY PROVISIONS OF THE AMENDMENT ACT AND ITS CRITICAL ANALYSIS

Setting up of Arbitration Council of India (ACI):- The ACI is an independent body that is established for the promotion of arbitration, mediation, conciliation and other alternative dispute redressal mechanisms. Under section 43D of the Amendment Act, the Arbitration Council of India is envisaged with the functions of:-

  • Policy framing relating the recognizing, grading and reviewing the arbitral institutions and accreditation of arbitrators in those institutes.
  • To conduct training, workshops and courses in the domain of arbitration in affiliating with esteemed law firms, universities and other arbitral institutions.
  • To formulate policies for the updated norms, uniform code of conduct for all Arbitration matters
  • To make recommendations to the Central Government for promoting India as a robust centre of alternate dispute redressal matters, and
  • To maintain a depository of arbitral awards made in India and other foreign jurisdictions.

The establishment of ACI which is an autonomous body was made to change India into a worldwide centre of arbitration. This body will set down guidelines that are international in nature to empower a financially savvy, easy to understand and expedient arrangement of arbitration. However, the Amendment Act excluded foreign professionals from appearing in any alternate dispute resolution proceedings in India. This will certainly dishearten the international parties who yearn to prefer India as their seat of arbitration and cripple down a foreign professional to be appointed as an arbitrator. The said exclusion will seriously contradict the so-called dream of Parliament in making India a global hub of Arbitration.

Power of Supreme Court and High Courts to nominate and grade the arbitral institutions: – Section 11 of the Act, as initially sanctioned, inter alia envisages the designation of the Arbitral Tribunal by Courts if the parties to the arbitration agreement become unsuccessful in appointing the Arbitral Tribunal and the said section is one of the major pillars in which the Act is built. But conversely, the designation of Arbitral Tribunal by Courts was causing inordinate delays. The Amendment Act brings forth Section 11(3A) to the Act whereby the Apex Court and the High Courts are vested with the power to nominate and grade the arbitral institutions in appointing Arbitral Tribunal. For international arbitrations, the parties have to approach the Supreme Court and for domestic arbitration, appointments will be done by the competent High Court.

The fundamental downside of this plan is that it limits parties’ independence in international commercial arbitration through legislative and court intrusion. Even Though the Amendment Act intended to organize the arbitration locus in India, it leaves the prudence to the judiciary and the executive to choose who will be a piece of this change. As per Section 43I of the Amendment Act, the process of grading done by the ACI is intermeddling with excessive government control which may lead to possible bias, bureaucratic hold-up, absence of objectivity and absence of straightforwardness in the process.

Time-bound proceedings: – The amendment act mandates the Arbitral Tribunals to pronounce their awards within 12 months from the date of completion of pleadings[1]. Also, the Amendment Act stipulates that the statement of claim and defence under this section shall be completed within a period of six months from the date the arbitrator or all the arbitrators receiving notice in writing of their appointment.[2] This is intended to remove the time restriction for international arbitrations. Notwithstanding, the tribunals should try to discard international arbitration matters within a year.

It is an accepted practice under the International Chamber of Commerce Arbitration Rules that the arbitrators regularly hold a case at the board hearing, and after meeting with the parties, issue a request on the procedural plan for culmination of pleadings, the conduct of hearings and so forth. But the newly incorporated Sections will lead to squabbles regarding the rules and conduct of an arbitral institution as it neglects the procedural viewpoints innate to a compound international dispute resolution. Also, it confines a tribunal from being in charge of its procedures, then, at that point, it could be difficult to viably lead complex multi-party arbitration agreements including huge documents and papers, where it very well might be difficult to finish pleadings within a period of six months.

Confidentiality of arbitration proceedings: – Under Section 42A of the Amendment Act, the parties, the arbitrator(s) and the arbitral institution to the agreement shall have confidentiality regarding the arbitral proceedings. Exposure of the arbitral award in certain circumstances should be made just where it is important for enforcing or implementing the award.

It is generally expected as it happens in commercial dealings that arbitration procedures will be both private and confidential.[3] Arbitrations are private where the third parties who are not involved with the arbitration agreements or arrangements can’t go to any hearings or have any influence in the arbitration procedures. Section 42A is a welcome step in protecting the interests of the parties who desire to guard the dispute in question from their competitors.

However, this particular section is infected with a serious disease that doesn’t keep up the confidentiality of the statements made by the witnesses, transcribers and other partisans who have attended the arbitration proceedings.

CONCLUSION 

The 2019 Amendment Act is an effort to eliminate a portion of the troubles that were being looked at during the lead of arbitration proceedings and the court procedures emerging under the 2015 Amendment Act. The 2019 amendments to the Act is above and beyond the objective put forth by the precursory Amendment Act. The establishment of the Arbitration Council of India is an auspicious endeavour, executed in its actual soul, it might usher India into becoming one of the all-round world equipped grounds for Alternate Dispute Resolution.

Author(s) Name: Aravind Prakash  (School of Legal Studies, CUSAT)

References:

[1] The Arbitration and Conciliation Act of 1996, Section 23(4), substituted vide The Arbitration and Conciliation (Amendment) Act, 2019 (w.e.f. August 9, 2019).

[2] The Arbitration and Conciliation Act of 1996, Section 23(3), substituted vide The Arbitration and Conciliation (Amendment) Act, 2019 (w.e.f. August 9, 2019).

[3] A confidential process. (n.d.). Andrews on Civil Processes, 179–194. <https://doi.org/10.1017/9781780685106.009> Accessed September 07, 2021

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