Recent Changes In Arbitration Law

The Arbitration and Conciliation Act, 1996, (the Act) was the first attempt at a comprehensive overhaul of India's arbitration laws. The inspiration was taken from the UNCITRAL Model Law on International Commercial Arbitration. The Act has been amended in the years 2015, 2019, and 2021. These amendments filled the gap by inserting institutional arbitration, time-bound awards, and procedural inefficiencies. There still existed certain concerns in the Act. In order to strengthen the Act further and remove these uncertainties, the Arbitration and Conciliation (Amendment) Bill, 2024 (the Bill) was introduced. Let’s move forward with the analysis of the Bill. 

Key Provisions Of The Bill

The Bill was introduced to make certain amendments to the Act. Some of the key changes are as follows: 

Redefining Arbitration And Related Terms

• The Bill omits the words "as also to define the law relating to conciliation" from the long title of the principal act. This omission gives the impression that there is a changed focus on arbitration.

• The term "arbitration" is broadened to encompass arbitrations wholly or partly conducted through audio-video electronic means.

• A new definition for "audio-video electronic means" is introduced to encompass various communication technologies used for conducting arbitral proceedings.

• The term "arbitral institution" is revised to mean a body that provides for the conduction of arbitration proceedings under its guidance.

• A definition of "emergency arbitrator" has been introduced. 

Defining "Court” & Reducing Court Intervention

• A new section 2A that defines "court" on the basis of arbitration seat is hereby inserted. So, for domestic arbitration, the High Court with territorial jurisdiction over the seat becomes the "Court".

• In the absence of a determined seat, the High Court having jurisdiction over the subject matter of the dispute shall be the relevant one.

• The Bill seeks to reduce court intervention by providing that where parties have agreed to an appellate arbitral tribunal, no applications for setting aside an arbitral award can be made before a court.

The Arbitration Council Of India

• The Bill provides for the constitution and functions of the Arbitration Council of India. The Council shall promote and encourage arbitration.

• The Council is authorized to recognize arbitral institutions, establish standards for arbitrators, and maintain a depository of arbitration cases.

• The Council can also provide criteria for recognizing arbitral institutions, issuance of model codes of conduct by arbitrators and establishing a model arbitration agreement. 

• It is also empowered to hold workshops, training and courses on arbitration. 

Promoting Institutional Arbitration

• The Bill allows parties or the arbitral tribunal to arrange administrative assistance from an institution, including an arbitral institution.

• The Council shall accredit arbitral institutions.

• This provision further states that, when arbitrating outside of an arbitral institution, the arbitral tribunal should take into account the model rules of procedure or guidelines issued by the Council.

Introducing Emergency Arbitrators

• The Bill allows arbitral institutions to appoint emergency arbitrators for interim measures before the formation of an arbitral tribunal.

• Orders issued by emergency arbitrators shall be treated as if they were orders of the arbitral tribunal.

Streamlining Arbitration Procedures

• The Council will draft model arbitration agreements to be used by parties.

• Applications by referring parties for arbitration shall be dealt with within 60 days.

• When an application for interim measures is filed, arbitral proceedings must commence within 90 days.

• The arbitral tribunal shall rule upon any challenges as to its jurisdiction as a preliminary matter not later than thirty days after receipt of the application.

Time Limits For Arbitral Awards

• The Bill provides that parties may agree to extend the six-month time limit for making an award. In the absence of such an agreement, an application for the extension can be filed.

• The Bill states that an arbitral institution or a court can extend the mandate of the arbitrator after the initial period. It also directs the arbitration tribunal to order a reduction in fees, if any delays are attributable to the tribunal.

Clarifying The Seat Of Arbitration

• The Bill uses the term "seat" of arbitration instead of "place," which is the international standard.

• The Bill allows for two methods of definition regarding the seat of arbitration. One option permits parties to freely agree on the seat. The second option defines that the seat of arbitration shall be the place where the contract/arbitration agreement was executed or where the cause of action arose.

Electronic Means In Arbitration

• According to the Bill, the proceedings may be conducted through audio-video electronic means as determined by the Council.

• Update the definition of ‘arbitration’ to include arbitration carried out wholly or partly by means of audio-video electronic means.

Fees Of Arbitral Tribunal

• The fees of the arbitral tribunal shall be determined by the Council unless the parties agree on it or an arbitral institution determines otherwise.

• The Fourth Schedule of the Principal Act will be removed.

Appellate Arbitral Tribunal

• The Bill declares that arbitral institutions may form an appellate arbitral tribunal that deals with the applications made under Section 34 to set aside an arbitral award.

• During deciding application, the appellate arbitral tribunal will follow the procedures provided by the Council. 

Setting Aside Of Arbitral Awards

• The Bill provides that it is mandatory for the court/appellate arbitral tribunal to first formulate the specific ground for setting aside the award before hearing the application. 

• It also provides that the parties while making an application for setting aside an arbitral award, must make a disclosure regarding any challenge pending or decided in respect to the arbitral award. 

Implications Of The Bill

The implications of the Bill are very far-reaching:

• Reduced Litigation: The institutional arbitration and appellate arbitral tribunals are expected to reduce court intervention and litigation burden.

• Efficiency and Timeliness: The imposition of time limits on different stages of arbitration and electronic means will undoubtedly speed up the process of arbitration.

• Clarity and Certainty: The new definitions, especially 'seat' of arbitration, make the arbitration process clearer and more certain for the parties involved in arbitration.

• Professionalism: The formation of the Arbitration Council of India will enhance the professionalism of arbitration in India.

Conclusion

The Arbitration and Conciliation (Amendment) Bill, 2024, represents a significant step towards modernizing India's arbitration landscape. By refining definitions, promoting institutional arbitration, and streamlining procedures, the bill aims to reduce court intervention, enhance efficiency, and foster greater clarity and certainty in arbitration proceedings.