Arbitration and Conciliation Amendment Act, 2019

  O n 15 th July 2019 a bill to amend various provisions under the Arbitration and Conciliation Act, 1996 was presented before the Rajya ...

 

On 15^th July 2019 a bill to amend various provisions under the Arbitration and Conciliation Act, 1996 was presented before the Rajya Sabha and this bill became a law after it was passed by Lok Sabha and received the president’s assent on 1^st August, 2019. The 1996 Act provided provisions which dealt with domestic and international arbitration and also defined law for smooth functioning of conciliation proceedings. In general, the two methods of alternate dispute resolution (ADR), includes arbitration and conciliation and these methods were meant to relieve the burden on courts already reeling under pressure of case back-logs. Arbitration allows prompt resolution of the disputes. Basically, arbitration and conciliation is based on an agreement between the parties to amicably nominate a person to hear out their cause of grievance and adjudicate upon the matter in an efficient and swift manner. This is immensely beneficial for keeping the machinery of smooth business in place.

A new section 1 (ca) is introduced now which defines the term ‘Arbitral Institution’ as an institution designated by the Supreme Court or High Court under the Act. The Amendment Act introduces Part 1A which establishes an independent body for the promotion of ADR methods in India. This body will be known as ‘Arbitration Council of India’ (ACI) and will be headquartered at Delhi. The basic function of ACI is maintenance of a depository of arbitral awards made in India or abroad. The composition of ACI is as follows:

1.     Chairperson who is either a judge of the Supreme Court or a judge of a High Court or Chief Justice of a High Court or an eminent person having expert knowledge in arbitration.

2. Other members of the body will include eminent arbitration practitioners and academicians with experience in arbitration and appointees by the government as well.

Earlier before the amendment, in case of a disagreement between the disputing parties upon appointment of an arbitrator, the parties by virtue of section 11 (6) of the act could approach and submit a request to the Chief Justice of the concerned High Court (in case of domestic arbitration) or Chief Justice of the Supreme Court of India (in case of international arbitration) or any other person or institution designated by such court to appoint an arbitrator.  Now under the new amendment act with the insertion of Section 11 (3A), the Supreme Court and High Court may designate this job to an arbitral institution which parties can approach for the appointment of an arbitrator. For appointments of international arbitration, institution will be designated by the Supreme Court, and for domestic arbitration, institution will be designated by the concerned High Court. Also, it is made clear that in case of disagreement, the application for appointment of an arbitrator is to be disposed of within period of thirty days either by Supreme Court or High Court.

In the Earlier Act, there was no provision regarding the time limit for submitting written submissions of claim and defence. In the new amendment act section 23 states that such submissions must be completed within a period of six months from the date the arbitrator or all the arbitrators has received notice in writing of their appointments. Also, other than the international commercial arbitrations, now the arbitral awards will be made by the arbitration tribunal within a time limit of twelve months from the date of completion of proceedings.  . The amendment act clearly signifies that the arbitrators, arbitral institutions and the parties in dispute must maintain confidentiality of all the proceedings except where it becomes necessary to disclose the award for its implementation or enforcement.

Also, the amendment act over rules the observation laid down by the Supreme Court in BCCI vs Kochi Pvt. Limited 2018. It has been made clear that unless the parties agree, the amendments made in the Arbitration and Conciliation (Amendment) Act, 2015 will not apply to the arbitral proceedings that commenced before the amendment act of 2015 i.e., before October 23, 2015.

Thus, the government has initiated efforts to strengthen the arbitration process. Setting up of ACI is a prominent step which can further help India into becoming a global competent jurisdiction of Arbitration. The delegation of powers and introduction to maintain confidentiality is a welcome step towards making India an arbitration friendly jurisdiction.