In the last eight years, the Indian Arbitration and Conciliation Act 1996 [‘Arbitration Act’] has undergone three rounds of amendments in 2015, 2019 and 2020-21. These amendments were pragmatic and were much needed for arbitration as a mode of dispute resolution to survive. The latest round of amendments aims to modernise the Indian arbitration law with current international arbitration practice and to extract the efficiency from arbitration, which is normally expected by the parties involved including practitioners. This approach reflects India’s commitment to becoming a global arbitration hub.
To complement the three earlier rounds of amendments, the courts in India have also demonstrated a hands-off approach by (largely) upholding the finality of foreign awards and enforcing them under the New York Convention. Moreover, the introduction of the India International Arbitration Centre (IIAC) Conduct of Arbitration Regulations 2023 (introduced in September 2023) and other institutions, such as the Mumbai Centre for International Arbitration, further demonstrate India’s commitment to mainstreaming institutional arbitration and distancing itself from ad hoc arbitration, which has traditionally been the default mode.
The Arbitration and Conciliation (Amendment) Bill 2024 [‘2024 Bill’] intends to promote institutional arbitration over ad hoc arbitration, limit court intervention, and establish fixed time periods for completing court processes in aid of arbitration. This includes processes related to referring parties to arbitration, appeals under Section 37(1) stemming from Sections 8, 9, and 34, as well as the time frame for disposing of jurisdictional objections.
Notable Changes To Arbitration Act
Accepting Current Realities
The 2024 Bill introduces Section 2(1)(a) to the Arbitration Act, inserting 'audio-video electronic means' as a provision to conduct arbitration proceedings virtually. This provision aligns with the norms of the post-pandemic world and international arbitration best practices, ensuring that arbitration remains flexible, overcomes any geographical constraints, and reduces associated costs.
In light of the Mediation Act 2023, the 2024 Bill has proposed to omit any references to ‘conciliation’ in the Arbitration Act.
Institutional Arbitration As Opposed To Ad Hoc Arbitration
The 2024 Bill provides impetus to institutional arbitration by introducing the following amendments:
'Arbitral institution' Section 2(1)(ca): The 2024 Bill defines ‘arbitral institution’ as “a body or organisation that provides for conduct of arbitration proceedings under its aegis, by an arbitral tribunal as per its own rules of procedure or as otherwise agreed by the parties.”
Arbitration Institution’s powers - Section 29A: Arbitration Institution to have powers to extend the time for publication of award, reduction of arbitrators' fees as a result of delay in publication of award, and to substitute arbitrators.
Fixed Time Periods In Aid Of Arbitration Proceeding
For India seated arbitrations (domestic and international), the 2024 Bill proposes specified time limits for completion of steps in aid of arbitration process. Some of these changes proposed in the 2024 Bill are:
Section 8 – Referring Parties to Arbitration: introduces a 60-day time period within which an application under Section 8 of the Arbitration Act, to refer parties to arbitration in terms of the arbitration agreement, must be decided by courts.
Section 11 – Appointment of Arbitrator by Court: provides that Section 11 petition must be filed within 60 days of failure to appoint an Arbitrator.
Section 16 - Jurisdictional Objections: introduces a 30-day time period within which jurisdictional objections under Section 16 of the Arbitration Act must be decided as a preliminary issue by the Tribunal.
Section 37(1) – Appealable Orders (referring Parties to arbitration, interim protection, appointment of arbitrator and setting aside of an award): introduces a 60-day time period for appeals and this time period will begin from the date when an appealable order is received by the aggrieved party.
Interim Measures In Aid Of Arbitration
Section 9(2) - Time to commence Arbitration: introduces a 90-day time period to commence an arbitration proceeding. The time period begins from the filing of an application under Section 9 of the Arbitration Act and not from the date of grant of interim protection by the Court.
Section 9 A- Emergency Arbitrators: introduces the concept of ‘emergency arbitrator’, through which an aggrieved party can apply for interim measures before the constitution of an arbitral tribunal. This provision applies to all India seated commercial arbitrations and to foreign seated commercial arbitrations (unless parties specifically opt out of such provision).
Limiting Court Intervention
Appellate Arbitral Tribunal’ – Section 34-A: introduces the concept of an ‘Appellate Arbitral Tribunal’. This concept entails that arbitration institutions in India may provide in their respective rules for parties to choose an appellate arbitral tribunal as the forum to challenge an arbitral award, while excluding the courts' jurisdiction.
Fees Of The Arbitral Tribunal
Section 11(14) and 11 A: provides for deletion of the Fourth Schedule and allows the Arbitration Council to determine the fees of the Arbitral Tribunals.
Rate of Interest – Section 31(7)(b): introduces an interest rate to be calculated at 3 percent above the repo rate, replacing the current mechanism of 2 percent above the prevailing rate of interest.
Allocation of Costs – Section 31-A(3)(c): allows Tribunal’s discretion in allocating and awarding costs after evaluating whether any party has made a frivolous application, claim or counterclaim.
Conclusion
The 2024 Bill builds on the earlier three rounds of amendments and addresses gaps in the Arbitration Act in line with international best practices. It remains to be seen how these proposed amendments are received in practice by the arbitration user community, including both clients and practitioners. ‘Yesterday’s solutions are today’s problems’ - Peter Senge. The effects of the 2024 Bill are yet to be seen. June 2024 saw the publication of Office Memorandum – Guidance for Arbitration and Mediation in Contracts of Public Procurement by Ministry of Finance which made its displeasure with (domestic) arbitration evident. The 2024 Bill does not accommodate any of the concerns noted in the Office Memorandum (except institutionalising arbitrations) of the Ministry. That said, the commitment of the Government to promoting arbitration, is evident in adopting international best practices and to not lay waste an effective tool in dispute resolution, whether in domestic or international commercial arbitration. From an arbitration practitioner’s point of view, the suggested amendments are welcome as they are prescriptive and leave no room for assumptions, at least in the Indian context.
Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the publication.
