In yet a further drive to support India's ambition to become a hub for both domestic and international commercial arbitration, the Arbitration and Conciliation (Amendment) Bill 2018 (2018 Bill) is making its way through the Indian Parliament. The 2018 Bill has already been passed by the Lok Sabha (lower house) and is awaiting approval by the Rajya Sabha (upper house).
The 2018 Bill clarifies previous amendments made to the Arbitration and Conciliation Act 1996 (1996 Act) in 2015 (2015 Amendments) and makes several other significant modifications.
Key features of the amendments under the 2018 Bill are:
- Creation of the Arbitration Council of India
- Streamlining the process for arbitrator appointments
- Addressing issues in relation to the length of arbitral proceedings
- Limiting appeals to awards
- Enhancing confidentiality and arbitrator immunity
The Arbitration Council of India (ACI)
The 2018 Bill proposes the establishment of an independent and separate body, the ACI, which will be presided over by:
- a Judge of the Supreme Court;
- a Chief Justice of a High Court;
- a Judge of any High Court; or
- any other eminent person with expert knowledge of arbitration.
The remaining body of the ACI will comprise experienced arbitration academics, arbitration practitioners and government appointees.
The ACI's ambit is to promote and encourage arbitration, mediation, conciliation and other alternative dispute resolution mechanisms in India. It will also be responsible for grading arbitral institutions, accredit arbitrators, frame norms for alternative dispute resolution and maintain an electronic repository of arbitral awards made in India.
The 2018 Bill proposes a list of qualifications for arbitrators to be ACI accredited, but it is silent on whether restrictions will apply to those who do not meet these criteria. This needs clarification because the proposed qualifications do not take foreign qualified lawyers into account and they introduce a bureaucratic hoop for individuals to jump through. There is currently no provision dealing with the impact of an unaccredited arbitrator purporting to act - would the award be rendered ineffective?
Given that the Government of India is a party to multiple arbitrations and will have a hand in appointments to the ACI, the impact of this on the evolution of the ACI should be closely monitored.
Appointment of arbitrators
Under the 1996 Act, parties are free to appoint arbitrators and, if they cannot agree, they can apply to the Supreme Court, the relevant High Court (or any person or institution designated by such court) to appoint an arbitrator.
With a view to strengthening the arbitral institutions (there are over 35 in India) and reducing the burden on local courts, the 2018 Bill enables the Supreme Court (for international commercial arbitrations) and the relevant High Court (for domestic arbitrations) to assign authority to specific institutions - parties can approach those institutions direct for appointments.
The 2018 Bill also proposes a time limit of 30 days for concluding applications for the appointment of arbitrators, providing welcome expediency to the process.
Length of the arbitral proceedings
A recurring complaint in relation to arbitration in India is the length of time it takes from commencement to award.
To counter this, the 2015 Amendments introduced a time limit of 12 months for the conclusion of arbitral proceedings (including making the award), extending to 18months by mutual consent of the parties. Any extension beyond 18 months, requires court approval. This was a bold approach, but the provision has been criticised for imposing an unnecessary burden and unrealistic timetables for certain matters.
The 2018 Bill seeks to exclude international commercial arbitrations from this onerous deadline. For domestic arbitrations, the 2018 Bill proposes a period of 6 months to close pleadings and states that the 12month period should only begin from the date when pleadings are complete. This allows 24 months from the commencement of domestic arbitrations before court approval of any extension is required. The 2018 Bill also clarifies that when an application for an extension is made, the arbitrators do not become functus officio whilst it is pending.
Limits on appeal to awards
The 2018 Bill seeks to restrict applications to set aside awards. It proposes limiting the documents that can be filed at court in any such application, to only those documents that were originally presented in the arbitration.
Confidentiality of the proceedings and arbitrator immunity
The 2018 Bill introduces a new provision which requires the parties, arbitrators and arbitral institutions to keep all details of the arbitral proceedings confidential. This does not apply to the award where its disclosure is necessary for the purposes of implementation and enforcement.
The 2018 Bill also gives arbitrators immunity from legal proceedings for anything which is done (or intended to be done) in good faith under the 1996 Act. This should encourage individuals to take up appointments, eventually increasing the pool of arbitrators in India.
Applicability of the Arbitration and Conciliation (Amendment) Act 2015
A lacuna in the 2015 Amendments created uncertainty as to whether they applied to existing arbitrations and to related court proceedings that commenced before the 2015 Amendments came into force on 23 October 2015.
The 2018 Bill has clarified that the 2015 Amendments only apply to arbitral proceedings (and any related court proceedings) that commenced on or after 23 October 2015.
It has long been recognised that the 2015 Amendments fell short of the overhaul that the 1996 Act desperately needed. The 2018 Bill is a step in the right direction and (by Indian standards) is a fairly speedy response to criticism. Whether it will have the desired effect and propel India to the forefront of viable contenders for international arbitration remains to be seen. The introduction of the ACI could be a retrograde step as it increases the potential for government interference and bureaucracy: in order to thrive, international arbitration needs autonomy. The 2018 Bill does not address any of the prominent issues that the international arbitration community has been grappling with in recent years. Crucially, there is no mention of emergency arbitrators or third party funding.
If the 2018 Bill is approved in its current form, India will have missed an opportunity to build on the strident approach of the 2015 Amendments and to lead the international arbitration community.