A Summary on India Arbitration and Conciliation (Amendment) Act of 2019

Over the past few decades, arbitration has grown to be one of the preferred techniques of dispute resolution due to various reasons. Such as;

*Independence of applicable laws,

*Ability to choose (and challenge) the arbitrator

*And the growing need for tribunals with technical knowledge of various areas of law or industry.

A careful analysis of the (number of) developments of the legal framework surrounding arbitration in different jurisdictions will further substantiate the above sentence.

The popularity of international commercial arbitration and flexibility of arbitral proceedings have obligated lawmakers to reconsider the laws surrounding arbitration proceedings

This led to the rise to the need for a robust set of guidelines to govern various aspects of arbitration matters.

The principal act of arbitration in India is the Arbitration and Conciliation Act of 1996 (the Act) and recently passed the Arbitration and Conciliation (Amendment) Act 2019 (the Amendment Act).

This article aims to explain the recent Amendment Act in India to provide the readers with an understanding of its implications. This statute has brought about various changes.

And these changes will provide clarity of information in the following process:

  1. the appointment process of arbitrators,
  2. the role of the judicial system,
  3. the establishment of a dedicated regulator, to govern arbitration and related affairs,
  4. the qualifications of arbitrators and a set code of guidelines for arbitrators to follow.

The Amendment Act places reliance on the country’s judicial system. To appoint arbitral tribunals amending section 11 (3A) of the Act.

The Chief Justice of any state is also conferred with the authority, to maintain a body of arbitrators. And to carry out the functions of an arbitral tribunal in jurisdictions, where there are no existing graded tribunals.

The Amendment Act has also stated that the Supreme Court must appoint the arbitral tribunal, in case of international commercial arbitrations. And the High Court do the same in other arbitrations.

Furthermore, subsection 10 of the same section which had conferred the Supreme Court and the High Court to make such schemes that they deem fit for:

(i) appointment procedure as per subsection 4

(ii) to make the appointment as per subsection 5 in the event the parties fail to agree on a procedure.

Another important amendment with regards to subsections 11 through 14 (of the same section), has been incorporated in the Amendment Act.

In the event there have been many requests made to various tribunals, the request made to the first tribunal would be deemed to be considered. The timeline for the completion of the statement of claim and statement of defence has also been inputted onto section 23. This new subsection confines the completion to take place within six (6) months. From the date of written receipt on the notice for appointment of the arbitrator(s). The timeline for the issuance of the arbitral award has also been amended to a period of twelve (12) months from the conclusion of pleadings.

Note Arbitral award (in arbitrations other than international commercial arbitration) as per Article 29A (1) of the Act.

And when it comes to matters of international commercial arbitration, the award will be issued as possible and will be tried to be disposed of within twelve (12) months from the conclusion of pleadings.

A confidentiality clause has also been included alongside section 42A of the Act, whereby the parties to the arbitration, the arbitrator, and the arbitration institution are mandating to maintain the arbitration itself.

But, this clause does not include the arbitral award in matters where the same should be disclosed for its enforcement. Another major overhaul of this amendment statute is the establishment of the Arbitration Council of India (the Council) as per section 43B. The Council, a body corporate, will be established with a head office in Delhi to perform its functions as laid down in the Amendment Act.

The Council’s primary duties must include the responsibility to take the necessary following steps.

  1. to promote arbitration,
  2. to promote other forms of alternate dispute resolution (such as mediation, conciliation etc.)
  3. and to make a framework of policies towards the same.

The lawmakers aim to standardize the section of alternate dispute resolution. As the Council should set our guidelines to establish, operate and maintain certain uniformity in arbitration matters.

Accordingly, the Council must constitute the following members: –

The Amendment Act has further listed down the responsibilities of the Council. This includes the framing guidelines to govern the grading system of arbitrators, providing recognition to institutions, reviewing the grading system, conducting training and workshops, updating guidelines and policies, advise the Central Government on matters relating to arbitration, hold examinations and issue awards, maintain an electronic record of all arbitral awards, and the like. Further, the statute has prescribed the qualification and required for arbitrators in India and a set of guidelines.

These guidelines state that an arbitrator shall or should: –

  1. be an individual with a repute on fairness and application of objectivity in settling conflicts
  2. be impartial and not be involved in any relationship that could compromise their impartiality
  3. not be involved in legal predicaments and/ or issues that he needs to arbitrate
  4. not be convicted of cases of immoral or financial nature
  5. have substantial knowledge of laws and regulations
  6. have substantial knowledge of domestic and international laws on arbitration and industry practices
  7. be able to understand contractual obligations and duties in various kinds of disputes (civil and commercial) and have the ability to apply legal reasoning (and principles) and judicial decisions
  8. be able to write reasonable arbitral awards