The Arbitration and Conciliation (Amendment) Bill, 2018: A Step forward towards making India a centre of robust alternative dispute resolution mechanism

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Arbitration has come to be the most effective and sought after method of dispute resolution in commercial contracts rather than litigation, which more often than not, turns out to be a long drawn and expensive process. However, international commercial arbitrations in India has not gained as much momentum as the domestic arbitrations due to its limitations, namely, the absence of an impactful institution for international arbitration, existence of a stringent timeline for passing arbitral awards and the involvement of domestic courts in the appointment of arbitrators. To deal with such aforementioned constraints, high level committee was set up which, inter alia recommended setting up of an Arbitration Promotion Council of India and a Specialist Arbitration Bench to deal with and dispose international as well as domestic commercial disputes and as a result Arbitration and Conciliation (Amendment) Bill 2018 (“Bill”) was passed by the Union Cabinet to bring in reforms as under:

Setting up the Arbitration Promotion Council of India (APCI)

  • One of the promising amendment proposed vide this Bill is the introduction and establishment of the APCI, an independent body to lay down standards to grade arbitral institutions and accredit arbitrators and arbitral institutions in India, which shall be chaired by a Judge of the Supreme Court or Chief Justice or Judge of any High Court or any eminent person.
  • Establishment of the APCI and its consequent accreditation will help improve the existing under-performing arbitral institutions and incentivise them to enhance their functioning. This will help foster healthy competition between the institutions to achieve international standards.

Provision for establishment of designated arbitral institutions

Another significant amendment proposed vide the Bill is the establishment of designated arbitral institutions by the Supreme Court or the High Courts, for speedy appointment of arbitrators to resolve disputes. This will help diminish the burden on the Courts as the applications to the Courts pertaining to “court appointed arbitrators” will shift to such arbitral institutions.

Protection of confidential information of parties and providing immunity to the Arbitrator

The Bill also proposes the introduction of a new section which mandates that the arbitrator and the arbitral institutions shall keep confidentiality of all arbitral proceedings except award. This amendment may enhance the trust that Parties may repose in the arbitrator, and help in faster resolution of the disputes. However, the Bill does not contemplate the consequences of breach of the confidentiality obligations by the arbitral institutions. Further, the Bill proposes to provide immunity to the arbitrators from suits or other legal proceedings, for any action or omission done in good faith in the course of the arbitration proceedings thus protecting them in all instances where the decisions/ awards have been passed in good faith.

Concerns and complexities of the Amendment Act, 2015 (Act) addressed by the Bill

Applicability of the Act to certain instances: The applicability of the Act to arbitration matters and court proceedings has also been clarified in the Bill and a new provision has been proposed in the Bill to enunciate cases and matters to which the Act shall not apply, unless the parties to the arbitration thereto agree otherwise.

Exclusion of International Arbitration from the bounds of timeline

A timeline of twelve (12) months was imposed on the Tribunal for issuing arbitral awards under the provisions of Section 29A by the Act. The Bill proposes to exclude international arbitration from the bounds of the aforesaid timeline and make the timelines applicable in cases of domestic arbitration from the date of completion of the pleadings of the parties involved in such domestic arbitrations.

This abovementioned proposed amendment will allow more complex international commercial arbitrations (to be seated in India) which are being governed by institutional rules, by removing the impediment of timelines.

Conclusion

The legislature, in order to improve the Arbitration landscape, both ad hoc and institutional and to clarify the issues that have arisen while and during the practical application of the provisions of the exant laws, have drafted and proposed this Bill. Although, the establishment of the APCI and arbitral institutions appears to be a promising move towards setting up a dedicated body as well as acting as a framework for the promotion of international as well as domestic arbitration, there still seems to be certain lacunae that may require legislative attention. Some of these include ambiguity in the powers and functions of the APCI, possibility of delay in the conduct of arbitral proceedings due to exclusion of timeline in connection with international arbitration, and issue pertaining to protection of confidential information in cases where the matter proceeds to Court or is requisitioned to Court in accordance with the provisions of the Arbitration and Conciliation Act, 1996

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