Examining the Arbitration and Conciliation (Amendment) Bill 2019
[The following update is brought to you by Amrit Singh, who is an Editor at IRCCL.]
On 15 July 2019, the Minister for Law and Justice, Mr. Ravi Shankar Prasad, introduced the Arbitration and Conciliation (Amendment) Bill, 2019 (2019 Bill) in the Upper House of the Indian Parliament.
The Arbitration and Conciliation (Amendment) Bill 2018 (2018 Bill) was passed by Lok Sabha on 10 August 2018 and was pending before Rajya Sabha. However, the 2018 Bill lapsed as the 16th session of the Lok Sabha was dissolved. The 2019 Bill contains a few minor changes in addition to the amendments that were originally proposed in the 2018 Bill.
The Upper House and the Lower House of the Indian Parliament passed the 2019 Bill on 18 July 2019 and 1 August 2019 respectively.
The significant features of the 2019 Bill are:
Arbitration Council of India
The 2019 Bill seeks to establish an independent body called the Arbitration Council of India (Council). The duty of the Council is to take all such measures as may be necessary to promote and encourage arbitration, mediation, conciliation or other alternative dispute resolution mechanisms and, for that purpose, to frame policy and guidelines for the establishment, operation and maintenance of uniform professional standards in respect of all matters relating to arbitration.
Composition of Council
The Council shall consist of a Chairperson who is either: (i) a Judge of the Supreme Court; or (ii) Chief Justice of a High Court; or (iii) an eminent person having special knowledge and experience in the conduct or administration of arbitration, to be appointed by the Central Government in consultation with the Chief Justice of India.
Apart from the Chairperson, the other members include an eminent arbitration practitioner having substantial knowledge and experience in institutional arbitration, to be nominated by the Central Government–Member, and an eminent academician having experience in research and teaching in the field of arbitration, to be appointed by the Central Government in consultation with the Chairperson–Member and government appointees.
Applicability of the Arbitration and Conciliation (Amendment) Act 2015
The 2019 Bill seeks to omit Section 26 of the Arbitration and Conciliation (Amendment) Act 2015 (2015 Act) and clarify that the same is applicable only to the arbitral proceedings which commenced on or after 23 October 2015 and to court proceedings which emanate from such arbitral proceedings.
Time limit for Arbitral Awards
In the 2015 Act, the statement of claim and defence had to be filed “within the period of time agreed upon by the parties or determined by the arbitral tribunal”. The 2019 Bill seeks to amend Section 23 as it states that the statement of claim and defence shall be completed “within a period of 6 months from the date the arbitrator or all the arbitrators, as the case may be, received notice, in writing, of their appointment”. As per Section 29A of the 2015 Act, the award has to be made within a period of 12 months (extendable to 18 months with the consent of parties) from the date the arbitral tribunal enters upon the reference.
In the 2018 Bill, it was proposed that Section 29A be amended to exclude international commercial arbitrations from the 12-month time limit for rendering an award. The 2019 Bill also introduces the said change and adds a proviso as well which states that the award in the matter of international commercial arbitration may be made “as expeditiously as possible” and “endeavour may be made to dispose off the matter” within a period of 12 months from the date of completion of pleadings.
Appointment of Arbitrators
It is important to note that as per the 2019 Bill, the Supreme Court and the High Court shall have the power to designate arbitral institutions for appointment of arbitrators. So, in case of international commercial arbitrations, the appointment shall be made, on an application of the party, by the arbitral institution designated by the Supreme Court and in other cases, appointments will be made by the institution designated by the concerned High Court.
The 2019 Bill also inserts a new provision for confidentiality of information. It states that the arbitrator, the arbitral institution and the parties to the arbitration agreement shall maintain confidentiality of all arbitral proceedings except an award where its disclosure is necessary for the purpose of implementation and enforcement of award.
Qualifications and Experience of Arbitrator
Interestingly, Section 43J has been added which prescribes the qualifications, experience and general norms applicable to an arbitrator.
The 2019 Bill also inserts a new provision which provides immunity to an arbitrator for his/her actions done in good faith.
Amendment in Section 34
Another welcome change is that the 2019 Bill seeks to replace the words “furnishes proof that” by “establishes on the basis of the record of the arbitral tribunal that”. This amendment is important as it makes it clear that re-appreciation of evidence in not required in a Section 34 proceeding.