- The Rajya Sabha has passed the Arbitration and Conciliation (Amendment) Bill that seeks to make India a hub of arbitration for settling commercial disputes within a stipulated time.
- The New Delhi International Arbitration Centre (NDIAC) Bill, 2019, which seeks to replace an ordinance issued in March, 2019, has also been passed by Rajya Sabha.
- Arbitration is a form of alternative dispute resolution (ADR).
- In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court.
- Under this procedure, a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a decision on the dispute.
- Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transactions.
Arbitration in India
- Arbitration in India is governed by Arbitration and Conciliation Act 1996. It is based on the 1985 UNCITRAL Model Law on International Commercial Arbitration, and the UNCITRAL Arbitration Rules 1976.
- The Act provides for the procedure of arbitration proceedings in India and steps of arbitration.
- The disputing parties can either opt for a separate arbitration agreement to be signed between them or include an arbitration clause in the main contract between the parties.
Poor dispute resolution process in India
- Justice system operates at a very slow pace in India, due to which there is a huge backlog at every level of the judiciary. On an average, it takes twenty years for a real estate or land dispute to be resolved.
- India takes as much as 1,420 days and 39.6% of the claim value for dispute resolution.
- Ranking: So far as the quality of judicial processes is concerned (court structure and proceedings, case management, court automation and alternative dispute resolution), once again, India has a poor ranking. Globally, India stands at 163 in the ranking of 189 economies on the ease of enforcing contracts
Major Arbitration hubs outside India:
- As of now, global arbitration hubs include Paris, London, Singapore, Hong Kong, Geneva and New York.
- Foreign companies entering into business contracts with Indian companies usually prefer a foreign city for resolution of disputes. This is due to the abysmally low perception of the legal environment in India.
- The slow justice system only reiterates the need for reforms not only in speeding up dispute resolution, but also having a strong in-country mechanism for out of court dispute resolution.
Making India an Arbitration Hub
- Successive governments have been pushing to make India a centre of domestic and international arbitration by bringing in changes in law for faster resolution of commercial disputes.
- India’s economic reforms will become effective only if the nation’s dispute resolution provisions are in tune with international regime.
- It will result in quality experts being available in India and also an advantage in terms of cost incurred.
- A conducive, vibrant and commercial ecosystem and environment will also promote ease of doing business.
Tap into the available resources
- India has diverse and useful human resources in law as well as other disciplines which can help support and sustain the arbitration ecosystem in India.
- Major Indian cities have the necessary infrastructure to help International arbitrators.
About: The Arbitration and Conciliation (Amendment) Bill, 2019
- It seeks to amend the Arbitration and Conciliation Act, 1996. The Act contains provisions to deal with domestic and international arbitration, and defines the law for conducting conciliation proceedings.
Arbitration Council of India
- The Bill seeks to establish an independent body called the Arbitration Council of India (ACI) for the promotion of arbitration, mediation, conciliation and other alternative dispute redressal mechanisms.
- Its functions include
- Framing policies for grading arbitral institutions and accrediting arbitrators
- Making policies for the establishment, operation and maintenance of uniform professional standards for all alternate dispute redressal matters
- Maintaining a depository of arbitral awards (judgments) made in India and abroad
- Composition of the ACI
- 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 conduct of arbitration
- Other members will include an eminent arbitration practitioner, an academician with experience in arbitration, and government appointees.
Appointment of arbitrators
- Under the 1996 Act, parties were free to appoint arbitrators. In case of disagreement on an appointment, the parties could request the Supreme Court, or the concerned High Court, or any person or institution designated by such Court, to appoint an arbitrator.
- Under the current Bill, the Supreme Court and High Courts may now designate arbitral institutions, which parties can approach for the appointment of arbitrators.
- For international commercial arbitration, appointments will be made by the institution designated by the Supreme Court.
- For domestic arbitration, appointments will be made by the institution designated by the concerned High Court.
- In case there are no arbitral institutions available, the Chief Justice of the concerned High Court may maintain a panel of arbitrators to perform the functions of the arbitral institutions.
- An application for appointment of an arbitrator is required to be disposed of within 30 days.
Relaxation of time limits
- Under the 1996 Act, arbitral tribunals are required to make their award within a period of 12 months for all arbitration proceedings.
- The current Bill seeks to remove this time restriction for international commercial arbitrations. It adds that tribunals must endeavour to dispose off international arbitration matters within 12 months.
Completion of written submissions
- Currently, there is no time limit to file written submissions before an arbitral tribunal.
- The Bill requires that the written claim and the defence to the claim in an arbitration proceeding, should be completed within six months of the appointment of the arbitrators.
Confidentiality of proceedings
- The Bill provides that all details of arbitration proceedings will be kept confidential except for the details of the arbitral award in certain circumstances.
- Disclosure of the arbitral award will only be made where it is necessary for implementing or enforcing the award.
About: New Delhi International Arbitration Centre (NDIAC) Bill, 2019
- The Bill seeks to provide for the establishment of the NDIAC to conduct arbitration, mediation, and conciliation proceedings. It declares the NDIAC as an institution of national importance.
- It also seeks to acquire and transfer undertakings of the
International Centre For Alternative Dispute Resolution (ICADR) to the
New Delhi International Arbitration Centre (NDIAC) with effect from
March 2 this year.
- The ICADR is a registered society to promote the resolution of disputes through alternative dispute resolution methods (such as arbitration and mediation).
- The Bill seeks to transfer the existing ICADR to the central government. Upon notification by the central government, all the rights, title, and interest in the ICADR will be transferred to the NDIAC.
- The NDIAC will consist of seven members including:
- A Chairperson who has been a Judge of the Supreme Court or a High Court, or an eminent person with special knowledge and experience in the conduct or administration of arbitration
- Two eminent persons having substantial knowledge and experience in institutional arbitration
- Three ex-officio members, including a nominee from the Ministry of Finance and a Chief Executive Officer (responsible for the day-to-day administration of the NDIAC), and
- A representative from a recognised body of commerce and industry, appointed as a part-time member, on a rotational basis.
Term and superannuation
- The members of NDIAC will hold office for three years and will be eligible for re-appointment.
- The retirement age for the Chairperson is 70 years and other members is 67 years.
- Promoting research, providing training and organising conferences and seminars in alternative dispute resolution (ADR) matters
- Providing facilities and administrative assistance for the conduct of arbitration, mediation and conciliation proceedings
- Maintaining a panel of accredited arbitrators, mediators and conciliators
- The NDIAC will establish a Chamber of Arbitration which will maintain a permanent panel of arbitrators.
- Further, the NDIAC may also establish an Arbitration Academy for training arbitrators and conducting research in the area of alternative dispute resolution.