Out-Law News 2 min. read
29 Oct 2024, 4:02 pm
The Indian government has opened consultation on proposed amendments to arbitration legislation. The third round of proposed amendments since the Indian Arbitration Act was enacted in 1996, the amendments aim to better align the law with international standards.
The proposed amendments come at a time when various Indian initiatives are being undertaken by arbitration stakeholders to enhance the country’s dispute resolution environment. The amendments aim to promote ease of doing business in India, helping to establish the country as a robust and reliable arbitration forum and prevent the further ‘exporting’ of arbitrations to countries like Singapore, which currently hosts a significant number of disputes involving Indian parties.
The draft bill follows recommendations from an expert committee led by T K Vishwanathan, a former law secretary and Lok Sabha secretary general, who reported on arbitration sector reforms (130-page / 14.94MB PDF) to the Ministry of Law and Finance in February.
The government announced it had begun public consultation on the Arbitration and Conciliation (Amendment) Bill 2024 (72-page / 617KB PDF), which introduces several amendments to the Arbitration and Conciliation Act 1996. The amendments are intended to “provide a further boost to institutional arbitration, reduce court intervention in arbitrations and ensure timely conclusion of arbitration proceedings”, it said.
Among the proposed amendments is the expansion of the definition of ‘arbitration’ to include proceedings conducted wholly or partly by audio-visual electronic means, a new provision for the appointment of emergency arbitrators by arbitral institutions for granting interim measures, the introduction of a time limit of 60 days for filing applications for the appointment of arbitrators, and a requirement that arbitral tribunals decide jurisdictional challenges as a preliminary issue within 30 days - unless they are able to provide reasons for deciding outside this timeframe.
The draft Bill also empowers arbitral tribunals to confirm, modify or vacate interim measures granted by courts or emergency arbitrators.
In addition, the Bill proposes to replace ‘place’ of arbitration with ‘seat’ of arbitration throughout the new legislation - fixing the seat as the place of execution of the contract for domestic arbitrations – and extend the time limit for making arbitral awards from 12 months to 18 months, by consent of the parties involved or by order of the relevant arbitral institution or court.
The draft Bill also provides for appellate arbitral tribunals to be introduced as an alternative to court-based challenges to awards, and proposes that the grounds for setting aside awards be modified and reorganised.
The proposal to introduce an “appellate arbitral tribunal” aligns with recent recommendations from Senior Counsel Janak Dwarkadas, who has championed the creation of specialised arbitration tribunals staffed with “domain experts.” These tribunals would handle arbitration applications and appeals under the Arbitration and Conciliation Act, thereby alleviating the burden on courts already overwhelmed by extensive caseloads.
Scheherazade Dubash of Pinsent Masons said: “Although some critics argue that adding an appellate layer within the arbitration process could introduce additional complexities and delays, the underlying rationale is to have arbitration specialists adjudicate these appeals. This approach is seen as preferable to having judges with limited arbitration experience handle such matters.”
“The introduction of statutory provisions recognising the availability and powers of emergency arbitration in the Act is a welcome addition. This insertion aims to eliminate confusion regarding the validity and enforcement of orders passed by emergency arbitrators. Applying these provisions uniformly and consistently, will promote party confidence in the use of arbitral institutions for interim relief applications,” she said.
“Under the new Bill, the framework surrounding the Arbitration Council of India is strengthened to clarify further how it will oversee arbitrations and arbitral institutions, frame policies and issue guidelines when it is established.”
Mohammed Talib, an arbitration expert at Pinsent Masons, said: “The proposed amendments aim to strengthen India's arbitration framework by promoting institutional arbitration, reducing court intervention, ensuring timely completion of proceedings, and aligning the law with international best practices.”
“These changes seek to enhance India's position as an arbitration-friendly jurisdiction and boost investor confidence in its dispute resolution mechanisms."
Consultation on the draft Bill is expected to remain open until 3 November.