Arbitration and Conciliation

Arbitration and Conciliation (Amendment) Bill, 2018
With an aim to ease out the process of Arbitration and Conciliation, the Cabinet approved the Arbitration and Conciliation (Amendment) Bill, 2018 for its introduction in the Parliament. The Arbitration and Conciliation Act, 1996 was previously amended in 2015 whereby provisions related to the applicability of International Commercial Arbitration and those with respect to the time period of arbitral award were discussed. The High Level Committee constituted by the Central Government and chaired by Justice B.N. Srikrishna submitted its report in July, 2017 and came up with recommendations to improve the state of Institutional Arbitration. The set of recommendations are enshrined in the 2018 Bill. The Bill primarily provides for the establishment of a statutory body called Arbitration Council of India “ACI”, for promoting institutional arbitrations; amendment in Section 29A of the Act; introduction of Section 42A & 42B and the introduction of Section 87.

Let us now have a look at the salient features of the Bill:
Speedy appointment of arbitrators: The Bill does away with the necessity to approach the Supreme Court or the High Court with respect to the appointment of arbitrators. The parties, as proposed, may approach the designated arbitral institutions for such appointments.

Establishment of Arbitration Council of India (ACI): The Bill provides for the establishment of ACI which shall be a body corporate. It is envisaged that the Chairperson of ACI shall be a person who has been a Judge of the Supreme Court or Chief Justice or Judge of any High Court or any eminent person. Further, the other Members would include an eminent academician etc. besides other Government nominees. The Bill further provides that ACI shall also be responsible to grade arbitral institution and accredit arbitrators by laying down norms and take all such steps as may be necessary to promote and encourage arbitration, conciliation, mediation and other ADR Mechanism and for that purpose evolve policy and guidelines for the establishment., operation and maintenance of uniform professional standards in respect of all matters relating to arbitration and ADR mechanism. In addition to this, the Council shall also maintain an electronic depository of all arbitral awards.

Proposed amendments as mentioned in the Bill:
Amendment to sub section (1) of Section 29A: As proposed in the Bill, International Arbitration is to be excluded from the bounds of timeline and further to provide that the time limit for arbitral award in other arbitrations shall be within 12 months from the completion of the pleadings of the parties.

Insertion of Section42A regarding confidentiality: A new section 42A is proposed to be inserted to provide that the arbitrator and the arbitral institutions shall keep confidentiality of all arbitral proceedings except award.
Insertion of Section 42B for the protection of Arbitrator for actions carried out in good faith: A new section 42B protects an Arbitrator from suit or other legal proceedings for any action or omission done in good faith in the course of arbitration proceedings.

Insertion of Section 87 to supplement the amendment Act of 2015 : The proposed Section provides that (a) Arbitral proceedings .which have commenced before the commencement of the Amendment Act of 2015 (b) Court proceedings arising out of or in relation to such arbitral proceedings irrespective of whether such court proceedings are commenced prior to or after the commencement of the Amendment Act of 2015 and shall apply only to Arbitral proceedings commenced on or after the commencement of the Amendment Act of 2015 and to court proceedings arising out of or in relation to such Arbitral proceedings.

How is the new Bill going to impact businesses?
The Bill of 2018 rightly compliments the present Government’s intention to improve India’s rank on the index of ease of doing business. This is because the ease of doing business and the ease of dispute resolution are interlinked. The establishment of ACI would make it easier for corporates to dispose of their disputes. Also, with the ease of provisions with regard to the appointment of arbitrators, companies would not indulge in spending huge sums for the appointment of arbitrators via courts.
The Bill also provides that the parties via a filed application can seek a stay on an award given by arbitral tribunal; and the award can also be challenged within three months and that period can be extended to more thirty days with sufficient cause. Furthermore, the appointment of an independent Arbitrator by the ACI would make sure that the decisions delivered are fair and unbiased; and consequently, the chances of getting those decisions challenged would be low.

Thus, after analysing the various aspects of this Bill, it can be said that India has taken a huge step to keep pace with the global expectations. This Bill will not only be a positive development for India’s strive to match the standards of International Arbitration but also be a very positive approach towards business growth nationwide. However, it will be interesting to see how far this Bill meets the expectations when enacted.