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Arbitration and Conciliation (Amendment) Act, 2019: An overview

The Government of India wanted to make the country a center of domestic and international arbitration by bringing several changes in the existing Act. In order to implement this, a high-level committee was set up to provide recommendations and development of arbitration in India. Based on this the new Act was introduced the Arbitration and Conciliation (Amendment) act, 2019. This Amendment Act has got President's assent on 9 August 2019.

The main objective of this Act is the implementation of an effective arbitration structure, promote institutional arbitration, and to resolve some uncertainties resulting from 2015 amendment. it provides several amendments, crucial ones are discussed in this article.

Some of the remarkable changes in the Amendment Act are as follows:

Arbitration Council of India (ACI):

The Amendment Act, 2019 introduces Part IA (section 43A to section 43M) for the creation of Arbitration Council of India for the advancement of various forms of alternative dispute resolution like conciliation, mediation, and arbitration. The authority of nominating the members of the Arbitration Council is given in the hands of the Central Government.

The main functions of this council are as follows:

  1. making guidelines for the establishment, process, and preservation of uniform professional standards for all alternate dispute redressal matters
  2. enclosing policies for grading arbitral institutions and approving arbitrators.
  3. maintaining the collection of Arbitral Awards and assist the Central government on matters related to alternative dispute resolution. Hence, the arbitration council is performing a major role in developing and encouraging arbitration in India.

Appointment of Arbitrators

prior to amendment parties was allowed to appoint arbitrators with their mutual agreement and in case of difference in selection, both the parties had to reach the supreme court in international cases and High Court in domestic cases. and it took three to six months to complete the whole process of appointment of arbitrators.

But the amendment act modifies Section 11 and provides that the Supreme Court of India will designate the arbitral institution for the appointment of arbitrators (in international commercial arbitration) whereas the High Court will designate arbitral institutions in case of national arbitrations. These arbitration institutions must have been graded by the Council.

It is mandatory that these arbitral institutions must complete the process of selection within thirty days from the acceptance of the request for the arbitrator's appointment. The determination of arbitrator's fees shall be done as per the rates specified in the Fourth Schedule of the Act if parties have not pre-decided any fee schedule for the same. This Schedule is applicable only in case of domestic arbitration.

Qualification and experience of an Arbitrator

In Amendment Act 2019, a new Eighth Schedule has been inserted which provides various norms, qualifications, and experiences for endorsement of arbitrators. There are nine categories specified in this Schedule which also include Advocates registered under Indian Advocates Act of 1961. It also introduces some general standards or norms like being a person with the status of fairness and integrity, unbiased, independent, and most important without any conflict of interest.

Foreign enrolled lawyers and foreign officers are not eligible as arbitrators in India.

Timely Conduction of Proceedings

section 29A has been amended by the Amendment Act to modify the timelines for carrying out the process of arbitration. It introduces some changes according to which a statement of claims and defense will need to be completed within six months from the date the arbitrator receives notice of their appointment.

After completion of proceedings, it is required that arbitration must be completed within twelve months, therefore, extendable by six more months by mutual consent of the parties. If arbitration is not finished within eighteen months from the date of completion of pleadings there is a need to get the court's approval for the arbitration to continue. this amended section is compulsory only for arbitration where all parties are Indian.

The amendment also delivers that if during the period of an application for extension of time for the making of the award is awaiting before the court the command of the arbitrator shall continue till the disposal of the application.

Confidentiality

The Act provides Section 42A which states that all the details and particulars of the arbitration proceedings will be kept confidential excluding facts of the arbitral award in certain situations like if the disclosure is necessary for the implementation or execution of that arbitral award. Hence, India joins the list of nations that have confidential arbitration proceedings.

Interim orders by arbitral tribunals

Section 17 of the previous act explains that arbitral tribunals have the power to pass interim orders at any time from the date of establishment till the date of implementation of award. But then again the 2019 amendment act limits the power of the tribunal to pass orders only till the passing of the award.

Hence, if any party needs an interim protection afterward passing of the award, It has to reach the suitable court having discretion given under section 9 of the act. In ordinary language, it is stated that under section 9 an application can be entertained by the courts either before the formation of the arbitral tribunal or after passing the award.

Furnishing Additional proof

It elucidates that at the phase of challenging the award, the court will not look into any material except the record of the arbitral tribunal. Supreme court of India recently in compilation with amendment act established that under section 34 of the act the courts while exercising their powers should restrain their inspection only to the arbitral records.

Applicability of arbitration and conciliation (amendment) act, 2015

Basically section 87 of the act provides that 2015 amendment shall not apply with the arbitration proceedings or any court proceeding arising out of it started prior to 23rd October 2015.

Conclusion
The 2019 Amendment act has certain goals for removing the difficulties which were being faced during the conduct of arbitration proceedings and court proceedings arising out of them. To merge Indian arbitration with current international practices some effective statutory changes are made and it is a great step for the current scenario of India.

Now arbitral tribunals will have a full period of one year for the whole process of arbitration and passing the award this is because of the distinct timelines given for the completion of proceedings. With an upsurge in the role of arbitral institutions, it would likely to get a boost.

It gives an explanation with respect to the applicability of the 2015 amendments with forthcoming effect for removing any kind of confusion. Also, there are some limitations in this amendment act like foreign registered lawyers are not eligible for the Indian arbitration and this condition could hinder India to become an attractive destination for international arbitration.

Written By: Meenakshi Gupta - 4th-year student at Ideal Institute of Management and Technology and School of Law, affiliated by GGSIPU.  

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