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Lok Sabha passes Arbitration and Conciliation Bill (Amendment) 2018

Aug 11, 2018 14:28 IST
Lok Sabha passes Arbitration and Conciliation Bill (Amendment) 2018

The  Lok Sabha on August 10, 2018 passed the Arbitration and Conciliation Bill (Amendment) 2018, which provides for time-bound settlement of disputes as well as accountability of the arbitrator.

The bill was introduced in Lok Sabha by the Minister for Law and Justice, PP Chaudhary on July 18. The bill  seeks to amend the Arbitration and Conciliation Act, 1996.
The Act contains provisions to deal with domestic and international arbitration, and defines the law for conducting conciliation proceedings.  

Key Provisions of the Bill

1. Setting up of Arbitration Council of India: The bill seeks to establish an independent body called the Arbitration Council of India (ACI) for the promotion of arbitration, mediation, conciliation and other alternative dispute redressal mechanisms.  

The council's functions would include:

• Framing policies for grading arbitral institutions and accrediting arbitrators.
• Making policies for the establishment, operation and maintenance of uniform professional standards for all alternate dispute redressal matters.
• Maintaining a depository of arbitral awards (judgments) made in India and abroad.

Composition of the ACI:
The council will consist of a Chairperson who is either a Judge of the Supreme Court or Chief Justice or Judge of any High Court or any eminent person with expert knowledge in conduct of arbitration.

The other members will include an eminent arbitration practitioner, an academician with experience in arbitration and government appointees.

Appointment of arbitrators

  • As per the provisions of the Arbitration and Conciliation Act, 1996, parties are free to appoint arbitrators. 
  • However, in case of disagreement on an appointment, the parties could request the Supreme Court or the concerned High Court or any person or institution designated by such Court, to appoint an arbitrator.
  • Under the Bill, the Supreme Court and High Courts may now designate arbitral institutions, which parties can approach for the appointment of arbitrators. 
  • For international commercial arbitration, appointments will be made by the institution designated by the Supreme Court and for domestic arbitration, appointments will be made by the institution designated by the concerned High Court.
  • In case there are no arbitral institutions available, the Chief Justice of the concerned High Court may maintain a panel of arbitrators to perform the functions of the arbitral institutions.

2. Relaxation of time limits: Under the 1996 Act, arbitral tribunals are required to make their award within a period of 12 months for all arbitration proceedings. However, the amendment bill has proposed to remove this time restriction for international commercial arbitrations.

3. Completion of written submissions: Currently, there is no time limit to file written submissions before an arbitral tribunal. The amendment Bill requires that the written claim and the defence to the claim in an arbitration proceeding, should be completed within six months of the appointment of the arbitrators.

4. Confidentiality of proceedings: The bill provides that all details of arbitration proceedings will be kept confidential except for the details of the arbitral award in certain circumstances.  Disclosure of the arbitral award will only be made where it is necessary for implementing or enforcing the award.

5. Applicability of Arbitration and Conciliation Act, 2015:
  The bill clarifies that the 2015 Act shall only apply to arbitral proceedings that started on or after October 23, 2015.

Significance

The bill is part of the government's efforts to encourage institutional arbitration for settlement of commercial disputes and make India a centre of robust Alternative Dispute Resolution Mechanism.

The amendments will facilitate achieving the goal of improving institutional arbitration by establishing an independent body to lay down standards, make arbitration process more friendly, cost-effective and ensure timely disposal of arbitration cases.

Background

A large number of arbitration cases are conducted outside India in countries like Singapore, London and Paris and around 30 million cases are pending before the courts here.

Due to globalisation, industralisation and liberalisation, the disputes have increased manifold.

The Arbitration and Conciliation Act, 1996, was amended by the Arbitration and Conciliation (Amendment) Act, 2015 in order to make arbitration process user friendly, cost effective and ensure speedy disposal and neutrality of arbitrators.

However, to give a boost to institutional, ad hoc arbitration and to remove some practical difficulties in applicability of the Arbitration and Conciliation (Amendment) Act, 2015, a High Level Committee (HLC) under the Chairmanship of Justice BH Srikrishna, retired SC Judge, was constituted by the Central Government.

The HLC submitted its report on July 30, 2017 and recommended for amendments in the Arbitration and Conciliation Act, 1996. The proposed amendments are as per the recommendations of the High Level Committee.

 

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