Arbitration and Conciliation (Amendment) Bill 2019

The Upper House on Thursday passed the Arbitration and Conciliation (Amendment) Bill 2019 which is intended to amend the existing law on arbitration in India. The bill, which was introduced in the House on Monday by the Union Law Minister Ravi Shankar Prasad, has been brought forth with the objective to institutionalize the procedure surrounding arbitration in India. It attempts to promote arbitration as the way forward in the case of commercial disputes in place of the seemingly tedious and time-consuming procedure which is in operation presently. This is broadly-based on the recommendations of the High-Level Committee headed by Retd. Justice B. N. Srikrishna whose report was issued in July 2017.

It must be noted that the bill had been passed by the 16th Lok Sabha in August 2018. However, the same had lapsed before it could be approved by the Rajya Sabha, owing to the dissolution of the Lower House earlier this year.

The bill can be seen as a governmental effort towards establishing an arbitration regime in India which would be on the lines of the Tokyo-based Japan International Dispute Resolution Centre, the Hong Kong International Arbitration Centre (HKIAC), the London Court of International Arbitration (LCIA), and the Singapore International Arbitration Centre (SIAC). According to claims, this would prove to be instrumental in taking India’s ease-of-doing business up a notch and attract foreign investment.

Amongst the characteristic features of the bill is the setting up of an independent body called the Arbitration Council of India (ACI) which would be empowered to frame arbitral institutions as well as grade or accredit the arbitrators. Thus, the bill seeks to change the procedure to be adopted for the appointment of arbitrators as provided under Section 11 of the Arbitration and Conciliation Act, 1996. Under the new regime, the arbitrators shall be appointed by the arbitral institutions designated by the Supreme Court or the High Court, as the case may be. In the absence of designated arbitral institutions, a panel of arbitrators maintained by the Chief Justice of the concerned Court shall discharge their functions and responsibilities.

In addition to the above, the bill also imposes a time frame for the Statement of Claims and Defence. The same shall now have to be completed within a period of six months from the date of the receipt of the notice of arbitration by the arbitrator.

Provisions have also been introduced for the maintenance of confidentiality of the arbitral proceedings. Moreover, the bill provides immunity to the arbitrators against any legal action for anything done in good faith.

Amidst discussions held in the House, Shri Ashwini Vaishnav, Member of Parliament from Odisha, was one out of the majority of the members who lent their support to the bill. He presented an interesting analogy in support of the bill which compared today’s complex economy to the door of an aircraft which, although looks simple, has as many as 500 parts being sourced from different parts of the world. This complex commercial scenario involving multiple stakeholders, he stated, definitely requires a mechanism which is flexible. Thus, arises the need for a strong arbitration framework.

Critics have, on the other hand, pointed out that the bill in its present form consists of several striking inconsistencies and ambiguities. One of several claims is that the statutory time-limit imposed upon one of the many phases of the arbitration procedure takes away from the flexibility of the procedure. This is due to the pre-existing 2015 amendment which requires the time-bound completion of the arbitration procedure within 12 months, which may extend to 18 months, from the date of the reference. As a result, the arbitrator would be under the undue responsibility to rush through the remaining phases of the arbitration. In view of the above and such other ambiguities, the intervention of the Courts to resolve the same would become necessary. Hence, the precise purpose of the bill to alleviate the need to resort to the Courts, would be defeated.

In conclusion, the amendment of the arbitration procedure is a welcome step in view of the manifold increase in commercial disputes and for the simplification of the dispute resolution mechanism. However, a step as significant as this ought to have been more carefully planned out using a concrete strategy to ensure that the benefits outweigh the harm.

Submitted By-

Aditi Srivastava

Student Reporter, INBA