The Arbitration and Conciliation (Amendment) Bill, 2018: What's in store for you?
Published: Apr 20, 2018
By Punit Dutt Tyagi, Executive Partner, Lakshmikumaran and Sridharan
THE Arbitration and Conciliation Act, 1996 ("Act") is set to be amended by the Arbitration and Conciliation (Amendment) Bill, 2018 ("Bill"). The primary focus of the amendment seems to promote institutional arbitration by establishing the Arbitration Council of India ("ACI") and address the practical difficulties which have surfaced post the implementation of the Arbitration and Conciliation (Amendment) Act, 2015 ("2015 Amendment").
The Bill, which was approved by the Cabinet of Ministers, on 7th March 2018, is based on the recommendations made by a High Level Committee (HLC) chaired by Justice Srikrisna. The Bill attempts to bring India in line with global arbitration practices. Interestingly, even before being introduced in the ongoing session of the Parliament, Bill has been red-flagged by the Supreme Court (Board of Control for Cricket in India v. Kochi Cricket Pvt Ltd - 2018-TIOLCORP-08-SC-MISC) and has found itself in the middle of a controversy.
Proposed Amendments:
1. Establishment of the Arbitration Council of India:
The primary focus of the Bill is to promote institutional arbitration and reduce court intervention. To further this, the amendment establishes the Arbitration Council of India. Amongst other functions, the Arbitration Council (ACI) will grade arbitral institutions and accredit arbitrators by laying down policy and guidelines, for the operation, and maintenance of uniform professional standards in respect of all matters relating to arbitration. ACI shall also maintain an electronic depository of all arbitral awards.
This move shall ensure that minimum standards are set and met. Complex Arbitrations require arbitrators with prior experience in respective fields, it is expected that the grading system shall cater to this need reducing the reliance on international arbitral institutions.
2. Appointment of Arbitrators:
To give teeth to the ACI and the Arbitral Institutes accredited with it, and to ensure that they do not get reduced to one of the many brick and mortar arbitration institutes perishing to oblivion, the Bill overhauls Section 11 of the Act. Thereby changing the mechanism of the appointment of arbitrators. To put it in simpler words, in the event that the parties fail to appoint the arbitral tribunal through the mechanism provided in the agreement, Arbitral Institutes designated by the Supreme Court and the High Courts will be responsible for the appointment of the arbitrators.
At this juncture, it is interesting to note that there is nothing in the Bill which requires that arbitration clauses in the agreement must provide for application of the rules of the institution. Whether this is likely to take away party autonomy,remains to be seen when the Bill passes.
Despite this change, it is evident that this move will reduce the burden on the Courts while making the current arbitral process seamless and more efficient.
The Bill also proposes to omit sub-section 6Aof Section 11 of the Act. With the omission of 6A, the appointment of the arbitrators by the Arbitral Institutes becomes an administrative function. All challenges concerning existence of the arbitration agreement and the jurisdiction of the Arbitral Tribunal, will have to be made under Sec 16 of the Act.
3. Revision of Timelines:
The 2015 Amendment proposed timelines that have been impossible to adhere to in complex arbitrations. It has been observed that parties have invariably agreed to extend the time by 6 months.
To address this issue, the Bill amends Section 23 and Section 29 A. The parties will have to mandatorily complete the filing of their pleadings within a period of six months from the date of the appointment of the arbitrator/s with the clock starting to tick from the date on which the pleadings have been completed. Resultantly, the arbitration proceedings will now have to be completed within 12 months from the date of the completion of pleadings and not from the date on which the arbitrator enters reference.
Additionally, International Commercial Arbitrations will no longer be bound by the impediment of timeline that was unrealistic to achieve in certain cases.
The Bill also amends section 17, to restrict the power of the arbitral Tribunal to pass interim. Parties will no longer be able to seek interim measures, after the arbitration award has been passed by the arbitral Tribunal.
4. Confidentiality and Immunity provisions:
Keeping up the global trends, the Bill inserts section 42 A to provide that the arbitrator and the arbitral institutions shall keep confidentiality of all arbitral proceedings except the award. Further, a new Section 42B protects an arbitrator from suits or other legal proceedings for any action or omission done in good faith in the course of arbitration proceedings. No consequences of a breach of such confidentiality have been contemplated by the Bill. What becomes of this confidentiality, once the Award, whether final or interim, is challenged before the Courts is something that is yet to be addressed.
5. Applicability of 2015 Amendment:
The Bill inserts Section 87 to clarify that unless parties agree otherwise, the 2015 Amendment shall not apply to: (a) arbitral proceedings which have commenced before the commencement of the 2015 Amendment; (b) court proceedings arising out of or in relation to such arbitral proceedings irrespective of whether such court proceedings are commenced prior to or after the commencement of the 2015 Amendment and shall apply only to arbitral proceedings commenced on or after the commencement of the 2015 Amendment and to court proceedings arising out of or in relation to such arbitral proceedings. However, the Supreme Court has forewarned against this insertion as it immediately puts all important amendments on a back burner.
Though the Bill has its heart in right place the ACI has to formulate to regulations which address the concerns of the Indian Arbitration Regime in order to successfully achieve the objective of the Bill. Whether the legislature pays heed to the well-meaning advice of the Supreme Court or not, is something that only time will tell.
(The views expressed are strictly personal.)
