Indian Parliament has recently passed Bill No.100 of 2018 for carrying out amendment in The Arbitration and Conciliation Act,1996. Basically the intention of the Government is to make India an international Arbitration hub. But it should also take care at National level. It seems that ad-hoc Arbitration will be matter of past. Though Section 11(1) and (2) are part of the Act. If the Arbitration Agreement doesn’t contain name of the Arbitrator and name couldn’t be agreed upon by the parties the Section 11 Application for appointment of Tribunal shall be made through institutional Arbitration Body.
The Bill says
“(3A) The Supreme Court and the High Court shall have the power to
designate arbitral institutions from time to time, which have been graded by the Council under section 43F, for the purposes of this Act:
Provided that in respect of those High Court jurisdictions, where no graded arbitral institutions are available, then, the Chief Justice of the concerned High Court may maintain the panel of arbitrators, for discharging the functions and duties of arbitral institution and any reference to the arbitrator shall be deemed to be an arbitral institution for the purposes of this section and the arbitrator appointed by a party shall be entitled to such fee as prescribed under the Fourth Schedule: Provided further that the Chief Justice of the concerned High Court may, from time to time review the panel of arbitrators.”.
So in a state where there is no Institution of Arbitrator available, Chief Justice shall maintain list of Arbitrators.
If party is unable to agree on names on filing Section 11 Petition for appointment of an Arbitrator than designated court shall, “”the appointment shall be made, on an application of the party, by the arbitral institution designated by the Supreme Court, in case of international commercial arbitration, or by the High Court, in case of arbitrations other than international commercial arbitration, as the case may be”;
It means the designated court shall refer the matter to an Arbitration Institution, who will appoint their own Arbitrators. However the Amendment Bill is silent on maintaining panel of Arbitrators by Institution. But a Chapter is inserted
‘PART IA
ARBITRATION COUNCIL OF INDIA
43A. In this Part, unless the context otherwise requires,—
(a) “Chairperson” means the Chairperson of the Arbitration Council of India appointed under clause (a) of sub-section (1) of section 43C;
(b) “Council” means the Arbitration Council of India established under
section 43B;
(c) “Member” means a Member of the Council and includes the Chairperson.
43B. (1) The Central Government shall, by notification in the Official Gazette, establish, for the purposes of this Act, a Council to be known as the Arbitration Council of India to perform the duties and discharge the functions under this Act.
(2) The Council shall be a body corporate by the name aforesaid, having perpetual succession and a common seal, with power, subject to the provisions of this Act, to acquire, hold and dispose of property, both movable and immovable, and to enter into contract, and shall, by the said name, sue or be sued.
(3) The head office of the Council shall be at Delhi.
(4) The Council may, with the prior approval of the Central Government, establish offices at other places in India.
43C. (1) The Council shall consist of the following Members, namely:—
(a) a person, who has been, a Judge of the Supreme Court or, Chief Justice of a High Court or, a Judge of a High Court or an eminent person, having special knowledge and experience in the conduct or administration of arbitration, to be appointed by the Central Government in consultation with the Chief Justice of India—Chairperson;
(b) an eminent arbitration practitioner having substantial knowledge and
experience in institutional arbitration, both domestic and international, to be
nominated by the Central Government—Member;
(c) an eminent academician having experience in research and teaching in
the field of arbitration and alternative dispute resolution laws, to be appointed by the Central Government in consultation with the Chairperson—Member;
(d) Secretary to the Government of India in the Department of Legal Affairs,
Ministry of Law and Justice or his representative not below the rank of
Joint Secretary—Member, ex officio;
(e) Secretary to the Government of India in the Department of
Expenditure, Ministry of Finance or his representative not below the rank of
Joint Secretary— Member, ex officio;
(f) one representative of a recognised body of commerce and industry,
chosen on rotational basis by the Central Government—Part-time Member; and
(g) Chief Executive Officer—Member-Secretary, ex officio.
(2) The Chairperson and Members of the Council, other than ex officio Members, shall hold office as such, for a term of three years from the date on which they enter upon their office:
Provided that no Chairperson or Member, other than ex officio Members, shall hold office as such after he has attained the age of seventy years in the case of Chairperson and sixty-seven years in the case of Member.
(3) The salary, allowances and other terms and conditions of the Chairperson and Members of the Council referred to in clauses (b) and (c) of sub-section (1) shall be such as may be prescribed by the Central Government.
(4) The Part-time Member shall be entitled to such travelling and other allowances as may be prescribed by the Central Government.
43D. (1) It shall be the duty of the Council to take all such measures as may be necessary to promote and encourage arbitration, mediation, conciliation or other alternative dispute resolution mechanism and for that purpose to frame policy and guidelines for the establishment, operation, and maintenance of uniform professional standards in respect of all matters relating to arbitration.
(2) For the purposes of performing the duties and discharging the functions
under this Act, the Council may—
(a) frame polices governing the grading of arbitral institutions;
(b) recognise professional institutes providing accreditation of arbitrators;
(c) review the grading of arbitral institutions and arbitrators;
(d) hold training, workshops and courses in the area of arbitration in
collaboration of law firms, law universities and arbitral institutes;
(e) set up, review and update norms and ensure satisfactory level of arbitration and conciliation;
(f) act as a forum for exchange of reviews and techniques to be adopted for
creating a platform to make India a robust centre for domestic and international arbitration and conciliation;
(g) make recommendations to the Central Government on various measures to be adopted to make provision for easy resolution of commercial disputes;
(h) promote institutional arbitration by strengthening arbitral institutions;
(i) conduct examination and training on various subjects relating to arbitration and conciliation and award certificates thereof;
(j) establish and maintain depository of arbitral awards made both in India
and overseas;
(k) make recommendations regarding personnel, training and infrastructure
of arbitral institutions; and
(l) such other functions as may be decided by the Central Government.
43E. The Council may, appoint such experts and constitute such Committees of experts as it may consider necessary to discharge its functions on such terms and conditions as may be specified by the regulations.
43F. The Council shall make grading of arbitral institutions on the basis of criteria relating to infrastructure, quality and caliber of arbitrators, performance and compliance of time limits for disposal of domestic or international commercial arbitrations, in such manner as may be specified by regulations.
43G. The qualifications, experience and norms for accreditation of arbitrators shall be such as specified in the Eighth Schedule:
Provided that the Central Government may, after consultation with the Council, by notification in the Official Gazette, amend the Eighth Schedule and thereupon, the Eighth Schedule shall be deemed to have been amended accordingly.
43H. The Council shall maintain an electronic depository of all arbitral awards made in India and such other records related thereto in such manner as may be specified by the regulations.
43-I. The Council may, in consultation with the Central Government, make
regulations, consistent with the provisions of this Act and the rules made thereunder, for the discharge of its functions and perform its duties under this Act.
43J. (1) There shall be a Chief Executive Officer of the Council, who shall be responsible for day-to-day administration of the Council.
(2) The qualifications, appointment and other terms and conditions of services of the Chief Executive Officer shall be such as may be prescribed by the Central Government.
(3) The Chief Executive Officer shall discharge such functions and perform such duties as may be specified by regulations.
(4) There shall be a Secretariat to the Council consisting of such number of
officers and employees as may be prescribed by the Central Government.
(5) The qualifications, appointment and other terms and conditions of the service of the employees and other officers of the Council shall be such as may be prescribed by the Central Government.’.
Explanation for a layman about the Bill.
So there is nothing which suggests that Institution shall maintain Panel. It appears that the same may not be under purview of IAC. However Arbitration Institution can be best described now as There is Federation of Co-operative Society under e.g. Maharashtra Co-operative Societies Act,1960 but internal management and membership bye-laws to be prepared by Federation Societies. This is missing from the Bill. The language of Section 43D that uniform standard of ethics will be prepared. But no clarification of model Bye laws or Rules that govern these institutions. It may create confusion in future if there is absence of uniformity of Rules governing Institutions.. Eg. Model Bye-laws of co-operative Housing Society. Last we have seen Bombay Law Society who conducts Solicitors exams. You give exam if you pass you will be admitted to membership of said society and will be awarded title of Solicitor. This Bill is half way mark. Still many changes will come with passage of time.
Eighth Schedule to the Bill provides who can be an Arbitrator.
It is clarified that
“87. Unless the parties otherwise agree, the amendments made to this Act by the Arbitration and Conciliation (Amendment) Act, 2015 shall—
(a) not apply to—
(i) arbitral proceedings commenced before the commencement of
the Arbitration and Conciliation (Amendment) Act, 2015;
(ii) court proceedings arising out of or in relation to such arbitral proceedings irrespective of whether such court proceedings are commenced prior to or after the commencement of the Arbitration and Conciliation (Amendment) Act, 2015;
(b) apply only to arbitral proceedings commenced on or after the commencement of the Arbitration and Conciliation (Amendment) Act, 2015
and to court proceedings arising out of or in relation to such arbitral proceedings.”.
concluding Notes:
At the end it’s seen that contesting parties don’t agree to all the things. It would be interesting to see what happens when parties don’t agree to Institution due to several reasons from penal to payment and other facilities. Mind well Institutional Arbitration is only when parties to dispute don’t agree on names. As Section 11(1) and (2) still find space in the Section. Institution comes into play only in case of non agreement on names. Lets try with it. “Sophisticated way to resolve disputes.” Hope in all this main purpose of getting Justice is achieved and not forgotten.
We need to wait to become an Act. Time will say whether ad-hoc Arbitration under Section 11 (1) and (2) will succeed or Institution Arbitration. It would have been proper to press for Institutional Arbitration for Corporate having a particular amount of turn-over or amount involved in the dispute. It is expected to get more international arbitration in India under this system of Institutional Arbitration. For common individual only economic remedy left is Mediation.
Shruti Desai
14th August,2018
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