The Amendment to Arbitration Laws in India
The latest amendment to the Arbitration and Conciliation Act of 1996 which governs arbitral proceedings in India, has been passed with the clear objective of implementing the policy of “ease of doing business in India” and working towards making India a hub for international commercial arbitrations.
The much awaited amendment was assented to by the President on the 9th of August 2019, and builds on the approach of institutionalizing all arbitral proceedings, aligning ad-hoc proceedings with institutional arbitral proceedings, further reducing court intervention and ensuring confidentiality as well as imposing limits on the time provided for filing reply submissions.
Firstly, the Arbitration Council of India has been constituted by way of this amendment, whose function will be that of designating arbitrators when called upon by private parties, which was previously performed by the Supreme Court of India in respect to international commercial arbitration agreements. However, the appointment of arbitrators in domestic arbitration agreements will continue to be performed by the respective High Courts.
Secondly, Section 23 of the Arbitration Act, which relates to the time period for filing reply submissions (statements of claims and defence), has been amended, providing that it shall be compulsorily completed within 6 months from the appointment of the arbitrator.
Thirdly, in Section 45 of the Act, which relates to intervention of the court in international commercial arbitration, the words “prima facie” have been added. Subsequent to the amendment, in a matter of international commercial arbitration, a court may refuse to refer the parties to the arbitral tribunal only if it prima facie finds such agreement to be null and void, inoperative or incapable of being performed, thereby prohibiting the taking of evidence and hence further reducing intervention.
Fourthly, Section 42A has been added, which provides that proceedings before an arbitral tribunal shall be done confidentiality and such an obligation is imposed on all interested parties involved.
Lastly, a Schedule of guidelines have been provided which enumerate the qualifications and general requirements of an arbitrator.
The legislature has ensured the implementation of these objectives by the appointment of the Arbitration Council of India which will act as the director and facilitator of all arbitral proceedings conducted in India.
It shall be the function of the Arbitration Council of India of encouraging arbitration, mediation, conciliation or other alternative dispute resolution mechanisms and for that purpose framing policy and guidelines for the establishment, operation and maintenance of uniform professional standards in respect of all matters relating to arbitration in India.
In conclusion, this marks a turning point in India’s International Commercial Arbitration and will ensure that the objective of making India an attractive destination for dispute resolution will be gradually achieved whilst attracting more foreign investment to the country.