Emergency arbitration provisions likely in Arbitration Act amendment for quick dispute resolution
The government plans to amend the Arbitration and Conciliation Act, 1996, likely during the winter session, to introduce key changes aimed at expediting the resolution of commercial disputes.
NEW DELHI : The Arbitration and Conciliation (Amendment) Bill slated for the winter session of Parliament is likely to provide for emergency arbitration and redefine arbitration to include proceedings through electronic, audio-video means, according to two people aware of the development.
Emergency arbitration allows a party to seek immediate interim relief, even before an arbitral tribunal is created. The draft bill, circulated for comments in October 2024, included both these provisions, including one that allows arbitration institutions to provide emergency arbitrators.
The addition of electronic audio-video means in the definition of arbitration was also a part of the draft bill.
This amendment will be the fourth change to the 1996 Arbitration & Conciliation Act.
“There has been a lot of work on emergency arbitration, like case analysis on major precedents," said one of the people cited above, requesting anonymity.
One of the cases analysed was 2021’s Supreme Court judgement in Amazon.com NV Investment Holdings LLC vs Future Retail Ltd & others, which forms the bedrock of emergency arbitration in the country’s arbitration jurisprudence.
The apex court ruled that an emergency arbitrator is an arbitrator, and awards decreed by that emergency arbitrator are enforceable. Amazon had initiated emergency arbitration in the Singapore International Arbitration Centre (SIAC) in this case.
Email queries sent to the Union law and justice ministry on Thursday remained unanswered.
- The amendment will likely provide explicit legal backing for emergency arbitration.
- Codifying emergency arbitration will resolve the current legislative gap, ensuring that interim awards passed by an emergency arbitrator have clear legal sanction and enforceability in India.
- The bill is set to formally include electronic, audio-video means within the definition of arbitration, legitimizing and encouraging technology-enabled dispute resolution.
- The changes reflect India's strategy to move away from ad-hoc processes and bolster institutional arbitration to establish itself as a competitive global arbitration hub, similar to Singapore.
- The duties and powers of emergency arbitrators will be governed by the Arbitration Council of India, which, however, despite being legislated in 2019, has not yet been formed, posing a potential implementation hurdle.
Domain experts have previously suggested the inclusion of emergency arbitration provisions. A high-level committee for arbitration reforms, chaired by former law secretary T.K. Viswanathan, suggested in 2024 that emergency arbitration be added to India’s arbitration law.
Need for emergency arbitration
According to the high-level committee report, emergency arbitrators are required to meet the demand for swift interim and conservatory measures in commercial disputes. This mechanism allows a party needing urgent relief to seek it immediately, without having to wait for the standard formation of an arbitral tribunal.
Although various arbitral institutions in India permit the use of emergency arbitrators, the awards they issue are currently not explicitly authorized by law, the report said. The lack of statutory recognition for emergency awards is viewed as a significant hindrance to their enforcement.
The Union government’s draft bill, however, stated that the powers and duties of emergency arbitrators will be notified by the Arbitration Council of India (ACI).
The setting up of ACI was introduced in the 2019 amendment as a body to create the rules of procedure for arbitration, as well as guidelines for arbitrators.
But the ACI has yet to be created.
The changes in the definition of arbitration, which include electronic means, are likely to impact dispute resolution by reducing the time taken to reach a decision.
“From our point of view, the biggest catalyst for transformative evolution of ODR (online dispute resolution) has been the recognition and legitimization of technology-enabled dispute resolution mechanisms by courts across the country," said Mohammad Asad Saeed, who works on public policy at Presolv360, an ODR service provider.
He said that tech-enabled dispute resolution has taken off in various cases, including those related to capital markets, as well as for micro, small, and medium enterprises (MSMEs).
In June 2024, the Union government advised all government agencies, including state bodies, to shift domestic public procurement contracts valued over ₹10 crore from arbitration to mediation to curb high costs and long timelines.
The amendment to India's arbitration law assumes importance as high costs, long timelines, and issues related to court intervention have persisted for a long time. India is keen to bolster institutional arbitration, that is, arbitration where procedures are determined by a specialised institution, over ad-hoc arbitration, where everything is decided by parties to the dispute.
Promoting institutional arbitration is central to becoming a global arbitration hub, based on Singapore's model of setting up the Singapore International Arbitration Centre (SIAC), which attracts a significant share of arbitration matters in the world.
The recognition of emergency arbitration in the 2024 draft bill expedites dispute resolution “by ensuring that urgent interim relief is accessible within the arbitral framework itself, without being diverted into overburdened court processes", said Divya Swamy, partner at D&Y Law Chambers.
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