The government wants to amend the law to promote institutional arbitration. peppermint

New Delhi: The Union Law Ministry has proposed to strengthen the process of institutional arbitration by making provisions for appellate arbitral tribunals, giving disputants the option to appeal against arbitral awards without going to courts.

However, according to the draft amendment to the Arbitration and Conciliation Act released on Friday, this provision will be available only for arbitrations conducted under the aegis of arbitration institutions.

The Arbitration and Conciliation Act, originally passed in 1996, is the principal law governing arbitration in the country, and has previously been amended three times in 2015, 2019 and 2021.

In India, arbitration can be either ad hoc, where the parties determine the arbitrators and rules of procedure, or institutional arbitration, where similar functions are performed by a specialized institution.

According to various expert panels, low caseload in institutional arbitration in the country has been a pain point in the ecosystem, even as India aims to become a global arbitration hub.

The option to appeal against arbitral awards to a court or appellate tribunal for disputes will be available only for arbitrations conducted by institutions and not for ad-hoc dispute resolutions, the proposed amendment to the Arbitration and Conciliation Act suggests, which the government will consider. Is insisting. Strengthen these institutions.

Mint reported on September 29 that the government is working to strengthen the India International Arbitration Center (IIAC) by increasing the institution’s caseload. IIAC is the only arbitration institution in the country which is directly funded by the Central Government.

Some legal experts welcomed the proposed amendments, saying they could lead to deregulation of the courts.

“Yes, it will reduce the burden on Indian courts by strengthening and streamlining the arbitration framework, limiting court intervention (reducing the grounds for challenge), making arbitration awards final, encouraging institutional arbitration, and reducing the clear appointment process. This is expected to help reduce litigation over appointments, making the overall process time-bound,” said Gauhar Mirza, partner, Cyril Amarchand Mangaldas.

However, others are cautious. “Although the proposed amendment will provide some benefits and advantages, in my opinion potential challenges may arise. This amendment will increase the complexity and arbitration costs for the parties. With this amendment, appellate arbitration tribunals are meant to add a layer of appeal. will occur within the arbitration process, leading to greater complexity and delay in adjudication, with parties paying for arbitration and later paying for appeals, opening the door to delays in adjudication and making it less cost effective, ” said Alai Razvi, Managing Partner, Accord Juris.

Other proposed changes to the law include removing conciliation from the Act. The Law Ministry proposed that this law will now be called the Arbitration Act.

The proposed amendments include introducing emergency arbitration for interim relief to disputants, as well as strengthening the Arbitration Council of India (ACI), a body created in 2019 to regulate the mechanism, with additional powers. However, ACI has not been formed till date.

“Emergency arbitration provides a mechanism for disputes to seek rapid interim relief, bypassing the need for lengthy judicial intervention. This can expedite dispute resolution in commercial matters, thereby providing immediate relief in urgent cases. However, it is worth noting that while emergency arbitration is a step in the right direction, its effective implementation and success in India may still be a distant goal, given the current arbitration framework and lack of awareness among stakeholders,” Abhishek said. Taneja, a lawyer who practices before the Delhi High Court, said.

ACI was created through a 2019 amendment with broad powers to lay down model rules and procedures of arbitration in the country. It was also given powers to regulate intermediaries.

Now, the proposed amendments provide more powers to the ACI. The new proposal suspends the central government’s powers to set fees for arbitration under the Fourth Schedule of the law. Instead, it grants fee-adjudicating powers to the ACI in cases where the fee has not been decided by the parties or the arbitration institution.

ACI also has powers to make model rules of procedure for arbitration proceedings under the proposed legislation, to be followed by arbitrators in ad-hoc cases, or where the parties themselves have not decided on a set of rules.

Juris Accord’s Razvi said, “We must also understand that there is a need to follow ACI’s code as part of the amendment, but the body is no longer in existence. This may lead to confusion and increase in disputes. “

Importantly, the proposed amendment will also allow arbitrations to be conducted through video conferencing. It also allows parties to use digital signatures for arbitration proceedings.

The proposed amendment also tightens the definition of courts for arbitration

The proposed amendment also tightens the definition of “courts” for arbitration, clarifying that courts with territorial jurisdiction over the dispute will hear appeals from the arbitration process.

It also provides greater powers to arbitral institutions to grant or deny extension of the arbitration process – with the same power being granted to the relevant courts for ad hoc arbitrations.

The proposed amendments link arbitration with the Arbitration Act passed last year, adding that if the parties come to a consensus during arbitration proceedings, it shall be recorded as an enforceable arbitration agreement as per the provisions of the Arbitration Act, 2023. Will go.

The Law Ministry has sought public feedback on these proposed amendments and it is likely to be given within the next 15 days.