Arbitration and Conciliation (amendment) Bill was already passed by the Rajya Sabha. Photo: Mint
Arbitration and Conciliation (amendment) Bill was already passed by the Rajya Sabha. Photo: Mint

Why the new Arbitration and Conciliation (amendment) Bill, 2019 is important

  • The government, in consultation with the Chief Justice of India, will appoint the chairperson of the ACI
  • The Bill seeks to remove time restriction for international commercial arbitrations and says tribunals must try to dispose of international arbitration matters within 12 months

New Delhi: Lok Sabha has passed the Arbitration and Conciliation (Amendment) Bill, 2019 which is aimed at making India an international arbitration hub.

The bill, already passed by the Rajya Sabha, aims to establish an independent body called Arbitration Council of India (ACI) for promotion of arbitration, mediation, conciliation and other alternative dispute redressal mechanisms.

ACI’s functions would include framing policies for grading arbitral institutions and accrediting arbitrators, making policies for establishment, operation and maintenance of uniform professional standards for all alternate dispute redressal matters, and maintaining a depository of arbitral awards made in India and abroad.

As per Section 43B of the Act, the Arbitration Council of India will have perpetual succession and a common seal, with power, subject to the provisions of the Act, to acquire, hold and dispose of property, both movable and immovable, and to enter into contract. It can sue or be sued.

The government, in consultation with the Chief Justice of India, will appoint the chairperson of the ACI. The chairperson has to be a judge of the Supreme Court or Chief Justice of a high court or a judge of a high court or an eminent person, having special knowledge and experience in the conduct or administration of arbitration.

In the case of international commercial arbitration, appointments will be made by the institution designated by the Supreme Court.

In case of high court jurisdictions, where no graded arbitral institution is available, Chief Justice of the concerned high court may maintain a panel of arbitrators to discharge functions and duties. An application for appointment of an arbitrator is required to be disposed of within 30 days.

For domestic arbitration, appointments will be made by the institution designated by the concerned high court.

The Bill seeks to remove time restriction for international commercial arbitrations and says tribunals must try to dispose of international arbitration matters within 12 months.

Why is the arbitration bill important?

1. Putting India on the world map in arbitration proceedings - It aims to make India an international arbitration hub by providing facilities for settlement of commercial disputes.

“India is qualified to have a centre of international arbitration as it has enough qualified lawyers, and has skill and training facilities," Law Minister Ravi Shankar Prasad said replying to a debate on the bill. “India should not accept imperialism in the field of arbitration. The best would be when Indian arbitrators are sought globally. We want India to become a hub of international arbitration."

It aims to make the arbitration of excellent quality, bestowing responsibility on the ACI to hold trainings, workshops, courses, frame policies, guidelines and update norms to ensure satisfactory level of arbitrations, arbitral institutions and the arbitrators.

2. To reduce burden on courts- Presently, in case of any dispute with respect to appointment of Arbitrators, parties have to approach the Supreme Court or the High Court for appointment of Arbitrators or to resolve their dispute. With the huge backlog of cases, the courts are already overburdened. An effective ACI will share this burden of the court and even facilitate speedy appointment of arbitrators. This would further aid quick resolution of disputes outside the court.

3. To provide exhaustive list to choose an arbitrator- The parties to an arbitration agreement can choose their own arbitrator, this choice is sacrosanct to arbitration process.

The essence of choosing an arbitrator of choice is not circumscribed by the nine broad qualification criteria as provided in the provisions of the bill. The list is broadly phrased and includes the choice of arbitrators from advocates, chartered accountant, cost accountant, company secretary, person with technical knowledge and experience etc.

4. To speed up arbitration process- The bill provides for statement of claim and defence to be completed within six months from the date the arbitrator receives the notice of appointment. This will fasten the entire process of arbitration. Earlier, parties would take a lot of time to submit their pleas. Now the time can be efficiently used for arbitration proceedings.

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