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Arbitration and Conciliation Act, 2018

Lawsuits may not be the best manners in which to resolve disputes, therefore our legal system provides other methods of dispute resolution: NEGOTIATION, MEDIATION and Arbitration And Conciliation, these can be done by parties themselves or under court supervision.

The term arbitration is defined under arbitration and conciliation act 1996, which defines that Arbitration is a process of dispute resolution in where neutral third party i.e., the arbitrator gives a decision after a hearing at which both parties are heard. Later on there was and amendment in 2015 and after that Arbitration and conciliation (amendment) bill 2018 was proposed.

We will be discussing the Arbitration and conciliation (amendment) bill 2018, special emphases on arbitration in this article.

Meaning of Arbitration

Arbitration is a process of settlement of disputes between two parties. In the process of arbitration, the two parties, come into a contract by mutual agreement which is facilitated by a third party. This facilitator is called the arbitrator who is a neutral person, without having any bias for the parties to the dispute. Arbitrator��s decision is binding on both the parties.
The arbitrator is called upon to find the facts, apply the law and grant relief to one or both the parties to the dispute. It is a civilized way of resolving issues, avoiding court proceedings in the capacity of tribunals of their choice.

Arbitration is process where two parties to the dispute comes to a conclusion/settlement without any legal proceedings.

Process of Arbitration

Step I
  • Claimant, appoints its arbitrator, pas the registration fee and files its request for arbitration.
  • SCC, serve the Respondent the request for arbitration.
  • Respondent, appoints its arbitrator and submits an answer to the request for arbitration.
Step II
  • Claimant, pays its part of the advance on cost.
  • SCC, appoints a chairperson and determines the advance on cost
  • Respondent, pays is part on the advance on cost.
Step III
  • SCC, direct arbitral tribunal about the case
Step IV
  • Claimant, submits its settlement of claim in arbitral tribunal.
  • Respondent, submits its statement of defense in arbitral tribunal.
Step V
  • The Arbitral Tribunal, summons the parties to a hearing
Step VI
  • The Arbitral Tribunal, Renders an award.
Background and Formation of Arbitration and conciliation (amendment) bill 2018
In 1996 Arbitration and conciliation act first come into existence which was later amended in 2015 and then amended in 2018.

In the provisions of the 2015 amendment act there are certain practical difficulties, in order to suggest certain ways to improve the efficiency of the arbitral framework in India the amendment bill was proposed. The intention behind the amendment bill of 2018 was to give a boost to institutional arbitration in order to strengthen arbitral institutions in India.

In order to amend the Arbitration and conciliation Act 1996, a high level committee was appointed by the government which was chaired by Justice B.H. Srikrishna. The committee has submitted its report to the central government on July 30th 2017. The union cabinet approved the recommendations provided by the high level committee and tabled these recommendation before the parliament in order to amend the Arbitration and conciliation Act 1996 on march 2018.

Status of Arbitration and conciliation (amendment) bill 2018
Arbitration and conciliation (amendment) bill 2018 has been passed by the Lok Sabha and in the Lok Sabha it was introduced by the Minster for law and justice. This amendment bill essentially provides for time bound settlement of disputes and accountability of the arbitrator.

Provisions of Arbitration and conciliation (amendment) bill 2018
The first important provision of the bill is regard to setting up of Arbitration Council of India (ACI). This proposed bill seeks to establish ACI which will be an independent body and it will be responsible for the promotion of arbitration, mediation, conciliation and other alternative dispute redressal mechanism.

Functions of ACI
Firstly, Framing policies for arbitral institutions and accrediting arbitrators. Secondly, the council shall also be responsible for the establishment, operation and maintenance of uniform professional standards for all dispute redressal mechanism. And thirdly, ACI should maintain the depository of arbitral awards made in India or abroad.

Composition of ACI
  1. The council should be headed by the chairman. Qualification of chairman is that, he/she should be either the judge of supreme court or chief justice/ judge of any high court or any eminent person with expert knowledge in the conduct of arbitration.
  2. Eminent arbitration practitioner
  3. An academician
  4. Government appointees

Appointment of arbitrator

According to the original act, Arbitration and conciliation Act 1996, parties are free to appoint the arbitrator. In case of disagreement between the parties to the dispute in accordance of appointing an arbitrator, both parties can request the supreme court, or the concerned high court, or any person that is appointed by the supreme court or high court who is given the power to appoint the arbitrator.

In case of international commercial arbitration, the supreme court is designated for making the appointments and in case of domestic arbitration the high court is designated to make the appointment.

The second important provision of the Arbitration and conciliation (amendment) bill 2018 is relaxation of the time limits.
Under the original act, Arbitration and conciliation Act 1996, the arbitral tribunals are requested to make their award within 12 months for all the arbitral proceedings. The amendment bill has proposed to remove the time restriction for international commercial arbitration.

Written submission under the original act, Arbitration and conciliation Act 1996, there is no time limit to file submissions before the arbitral tribunal. But according to the amendment bill, 2018 the written submissions for the claim and defense to the claim should be completed within 6 months of the appointment of the arbitrators.

The third important provision of the Arbitration and conciliation (amendment) bill 2018 is confidentiality of proceedings.
According to the amendment bill, 2018 it provides that all the details of the arbitration proceedings will be confidential. So proceedings will be kept confidential except for details of the arbitral award in certain circumstances

The fourth important provision of the Arbitration and conciliation (amendment) bill 2018 is applicability of arbitration and conciliation act, 2015
The original act of 1996 was amended in 2015, therefore the amendment bill 2018 clarifies that 2015 act shall only apply to arbitral proceedings that started on or after October 23, 2015. Any arbitral proceeding started before 23rdOctober 2015 shall not come under the purview of the amendment act of 2015.

Arbitration and conciliation (amendment) bill 2018 encourages institutional arbitration. It can make India a center of robust Alternative Dispute Resolution Mechanism.

It provides and independent body i.e. ACI, to lay down standards for arbitration to make arbitration process is effective and efficient. The main purpose of Arbitration and conciliation (amendment) bill 2018 is to provide quick settlement/resolution of commercial dispute by private Arbitration.

Written By Saloni Aggarwal

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