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Legislative reforms to the Indian Law on Arbitration

Significant developments in the Indian law on arbitration have taken place during the last few weeks. This is the first time since 2015 that India has undertaken sweeping reforms of its arbitration regime. We outline the key changes and their impacts.

Amendments to the Indian Arbitration Act, 1996

On 9 August 2019, after the passing of the Arbitration and Conciliation (Amendment) Bill, 2019 by both houses of the Parliament, India's President assented to the Arbitration and Conciliation (Amendment) Act, 2019 (the 2019 Amendments). 1

A Bill containing similar provisions was passed by the Lok Sabha (the Lower House of the Parliament) in 2018 but lapsed before it could be passed by the Rajya Sabha (Upper House of the Parliament).

Key features of the 2019 Amendments are discussed below.

Feature Effect
The establishment of the Arbitration Council of India, an independent body to promote arbitration, mediation and other forms of alternate dispute resolution (ADR) mechanisms.

Among other functions, the Council will frame policies to grade arbitral institutions and create policies regarding professional standards in ADR.
This is a unique provision not present in most arbitration friendly jurisdictions. There are concerns that the Council is a form of governmental regulation in the sphere of arbitration.
The 2019 Amendments allow the Supreme Court and High Court to designate an arbitral institution that parties may approach for appointment of arbitrators in international and domestic arbitrations, respectively. The Act as it stands today requires parties to approach the Supreme Court or the concerned High Court, as applicable. This amendment brings the arbitration regime in India in line with international standards, where appointment of arbitrators is undertaken by institutions such as the Singapore International Arbitration Centre (SIAC).
The Act previously required that tribunals pass an award within 12 months of the constitution of the Tribunal. The 2019 Amendments eliminate this requirement for international commercial arbitrations, while stating that an 'endeavour' may be made to complete proceedings within 12 months of completion of pleadings. The 12-month time limit was found to be too stringent and was criticised by international practitioners. This amendment will therefore be a welcome change for a large part of the international arbitration community.
The introduction of a broad confidentiality provision. The Act did not previously contain a provision regarding the confidentiality of arbitral proceedings. This gap has now been filled by the 2019 Amendments.
The Act now specifically protects an arbitrator from legal proceedings in relation to acts made in good faith or intended to be made under the Act. This amendment is in keeping with international practice and is a positive development.
The 2019 Amendments clarify that the 2015 Amendments to the Act only apply to arbitral proceedings commenced on or after 23 October 2015. The lack of clarity as to the applicability of the 2015 Amendments was a source of numerous proceedings before Indian courts. This confusion was settled by the Supreme Court in Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd.2 With its clarification, the 2019 Amendments seeks to the Supreme Court's decision. This may result in further confusion and litigation.

The New Delhi International Arbitration Act, 2019

The New Delhi International Arbitration Act, 2019 (NDIA Act), 3 which was promulgated on 26 July 2019, establishes and incorporates the New Delhi International Arbitration Centre, which will be an independent institution for the management of arbitration in India. As per Section 14, the objectives of the Centre are to:

  • develop the Centre as a leading institution for international and domestic arbitration;
  • promote research and study, and provide teaching and training in arbitration, conciliation, mediation and other alternative dispute resolution matters;
  • provide facilities and administrative assistance in relation to conciliation, mediation and arbitral proceedings;
  • maintain panels of accredited arbitrators, conciliators and mediators at a national and international level;
  • collaborate with other national and international institutions and organisations;
  • set up facilities in India and abroad with a view to promoting the activities of the Centre.

Interestingly, the Act requires that the Centre shall establish a Chamber of Arbitration, which will maintain a panel of reputed arbitrators. It also provides that the Centre may set up an Arbitration Academy to train arbitrators with a view to enable them to compete at an international level.

This Act replaces an Ordinance 4 issued by the government earlier this year. The Centre is being established to replace the International Centre for Alternative Dispute Resolution (ICADR), which the Act acknowledges failed to "actively engage and embrace developments in the arbitration ecosystem and to create a reputation par excellence keeping pace with the dynamic nature of arbitration."

It remains to be seen whether the Centre will succeed where the ICADR failed.

Key takeaways

The Indian law on arbitration is constantly changing, with the aim of India becoming a commercially friendly jurisdiction.

The latest developments, especially the amendments to the Indian Arbitration Act, are focussed on ensuring speedier resolution of arbitrations seated in India.

In particular, appointment of arbitrators under the Act (which can be a lengthy process) should be quicker. The provision on confidentiality is also an encouraging sign.

However, only time will tell as to the impact and success of the Arbitration Council of India.

For further information, please contact the authors of this article:

Chanaka Kumarasinghe
Partner
D +65 6411 5314 | M +65 9170 3100
E chanaka.kumarasinghe@hfw.com

Sadhvi Mohindru
Associate
D +65 6411 5357 | M +65 9839 6536
E sadhvi.mohindru@hfw.com

Footnotes

  1. http://egazette.nic.in/WriteReadData/2019/210414.pdf
  2. Civil Appeal Nos.2879-2880 OF 2018 (Arising out of SLP (C) Nos.19545-19546 of 2016)
  3. http://egazette.nic.in/WriteReadData/2019/208563.pdf
  4. http://www.prsindia.org/sites/default/files/bill_files/The New Delhi International Arbitration Centre Ordinance, 2019.pdf

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