NEW DELHI: The Union Law Ministry has proposed to strengthen the institutional arbitration process by framing provisions for appellate tribunals to give disputants the option of appealing arbitral awards without resorting to courts.
However, according to the draft amendments to the Arbitration and Conciliation Law released on Friday, this provision only applies to arbitrations conducted under the auspices of an arbitration institution.
The Arbitration and Mediation Law was originally passed in 1996 and is the key legislation governing arbitration in my country. It was previously revised three times in 2015, 2019 and 2021.
In India, arbitration can be either ad hoc (the parties determine the arbitrator and procedural rules) or institutional (the same tasks are performed by a specialized agency).
While India aims to become a global hub for arbitration, low institutional arbitration caseload in the country has been a pain point for the ecosystem, multiple expert panels said.
Proposed amendments to the Arbitration and Conciliation Act show that disputing parties will have the option to appeal arbitration awards to the courts or the Appellate Tribunal. This option will only apply to arbitrations conducted by institutions and not to ad hoc dispute resolution, indicating that the government is pushing to strengthen these institutions.
Mint reported on September 29 that the government is working to strengthen the Indian International Arbitration Center (IIAC) by increasing the caseload of the institution. The International Court of Arbitration is my country’s only arbitration institution directly funded by the central government.
Some legal experts welcomed the proposed amendment, saying it could lead to chaos in the courts.
“Yes, it is expected to help ease the burden on Indian courts by strengthening and simplifying the arbitration framework, limiting court interference (narrowing the grounds for challenge), granting finality to arbitral awards, encouraging institutional arbitration, clearer appointment procedures and reducing the number of arbitrators. burden.
Others, however, are wary. “While the proposed amendment will bring some benefits and advantages, I believe that potential challenges may arise. This amendment will increase the complexity and cost of arbitration for parties. Through this amendment, the appeal tribunal will mean “With the addition of an appellate layer to the arbitration process, this will result in a more complex and delayed award, with both parties paying arbitration fees and then paying appeal fees, thus opening the door to delayed awards and reducing cost-effectiveness,” said Alay Razvi. Worord Juris Managing Partner.
Other proposed changes to the law include omitting mediation from the bill. The Law Ministry proposed that the law will now be called the Arbitration Act.
The proposed amendments also include adding emergency arbitration to provide interim relief to disputants, as well as strengthening the Arbitration Council of India (ACI), a body set up in 2019 to oversee the mechanism, with additional powers. However, to date, the ACI has not been established.
“Emergency arbitration provides parties to a dispute with a mechanism to quickly seek interim relief without lengthy judicial intervention. This can expedite the resolution of commercial disputes and provide immediate relief in urgent cases. However, it is worth noting that while emergency arbitration is a step in the right direction, considering the current arbitration framework and lack of awareness among stakeholders, its effective implementation and success in India may remain a distant goal,” Abhishek, an advocate practicing in Delhi High Court Abhishek Taneja said.
The ACI was created under the 2019 Amendment and has overall powers to determine the model rules and procedures for arbitration in the country. It has also been given powers to supervise arbitrators.
Now, the proposed amendments give more powers to the ACI. The new proposal suspends the central government’s power to fix arbitration fees under the Fourth Schedule of the law. Instead, it provides ACI with the power to determine costs where the costs have not yet been determined by the parties or the arbitral institution.
Under the proposed law, the ACI would also be empowered to frame model procedural rules for arbitral proceedings, which the arbitrators would have to follow in ad hoc cases or where the parties themselves have not decided on a set of rules.
Juris Accord’s Razvi said: “We should also understand that as part of the amendment, the guidelines of the ACI need to be followed, but the body does not exist. This may lead to confusion and increase controversy.”
Crucially, the proposed amendments would also allow arbitration to be conducted via video conferencing. It also allows parties to use digital signatures in arbitration proceedings.
The proposed amendments also tighten the definition of arbitration court
The proposed amendments also tighten the definition of an arbitration “court”, making it clear that the court with territorial jurisdiction over the dispute will hear appeals in arbitral proceedings.
It also gives arbitral institutions greater powers to allow or prohibit prolongation of arbitral proceedings – the same power that the relevant courts have to grant ad hoc arbitrations.
The proposed amendments also link arbitration with the Mediation Act passed last year, saying that if the parties reach a consensus during the arbitration proceedings, it will be recorded as a mediated settlement agreement enforceable under the provisions of the Mediation Act, 2023.
The Law Ministry has sought public comments on these proposed amendments and will provide feedback on the same within the next 15 days.
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