The Author, Kavya Awasthi is a 4th year student of National Law University Odisha.
The new Amendment Act of 2019[1] appears to not focus on the administrative- judicial debate initiated in the judicial corridors of India, but on limiting the scope of intervention under section 11 of the Act. The Act endorses the establishment of an independent statutory body called the Arbitration Council of India (ACI) [2] under the newly inserted Part 1A of the Act.[3]
This institution will be delegated with the accountability of grading arbitral institutions and identifying institutions that provide authorization for arbitrators across India. Under the amended section 11 of the Act, the parties will have to approach arbitral institutions for the appointment of arbitrator without having to approach the court in this regard. This is in the line with the competence- competence principle of an arbitral tribunal itself determining its own jurisdiction.[4] The courts shall elect such institutions, based on their evaluation by the ACI.[5] The Act also proposes to delete the sub- section 6(A) and 7 of section 11 of the Act. However, the Act is passed only in Rajya Sabha and awaits the clearance from the Rajya Sabha to become an Act.[6] All these said changes are shall be implemented under the newly inserted sub- section (3A).
Section 11 of the Arbitration and Conciliation Act, which provides for the appointment of arbitrators, has been subject to significant judicial scrutiny. Prior to the 2015 amendments, the section gave the Chief Justice134 or any person or institution designated by him the power to appoint an arbitrator where: (a) the parties have not agreed on a procedure for the appointment of arbitrator(s) and the default appointment procedure under section 11(3) or section 11(5) fails; or (b) the parties have agreed upon an appointment procedure and such agreed procedure has not been followed.
The 2015 amendments to section 11 are geared towards facilitating speedy disposal of section 11 applications by: (a) enabling the designation of any person or institution as an appointing authority for arbitrators in addition to the High Court or Supreme Court under section 11; (b) limiting challenges to the decision made by the appointing authority; and (c) requiring the expeditious disposal of section 11 applications, preferably within the prescribed 60-day time period.
While these amendments no doubt facilitate the speedy disposal of section 11 applications to a large extent, they do not go all the way in limiting court interference. Pursuant to the amendments, the appointment of arbitrators under section 11 may be done: (a) by the Supreme Court or the High Court; or (b) by a person or institution designated by such court in exercise of an administrative power following section 11(6B). In either case, the amendments still require the Supreme Court / the High Court to examine whether an arbitration agreement exists, which can lead to delays in the arbitral process as extensive evidence and arguments may be led on the same.
In order to overcome these complexities, the Amendment Act of 2019 reduces the extensive involvement of courts, thus facilitating an impetus to institutional arbitration. Moreover, the Act throughout has relied on the cornerstone of speedy disposal for which it has also proposed to reduce the maximum duration of disposal of the dispute to 30 days.
It can further be observed that the 2019 Act, much like the 2018 Act, is fraught with multiple issues and glaring inconsistencies with the judicial precedent with regard to section 11 of the Act. Further, the 2019 Act proposes changes such as the creation of a government regulator through the ACI, which has no precedent in any arbitration-friendly jurisdiction.
While the aim of the 2019 Act is to promote arbitration, and strengthen institutional arbitration in India, the proposed changes to the Arbitration and Conciliation Act may force India to take two steps back as an arbitration-friendly jurisdiction. The amendments under the 2019 Act should be seriously reconsidered, as in its present form; it is likely to give rise to several serious issues. Whilst some of these issues may be resolved over time through judgments of the court, it would be wise to resolve these ambiguities at this stage to avoid spending valuable judicial time and resources. Further, foreign parties may not be inclined to seat their arbitrations in India, till such time that these issues are resolved.
[1] The Arbitration and Conciliation (Amendment) Bill, 2019.
[2] The Arbitration and Conciliation (Amendment) Bill, 2019 (paragraph 3(i)).
[3] The Arbitration and Conciliation (Amendment) Bill, 2019: Statement of Objects and Reasons (paragraph 6).
[4] Amokura Kawharu, Arbitral Jurisdiction, 23 NZ University Law Review, 238, 243 (2008).
[5] The Arbitration and Conciliation (Amendment) Bill, 2019 (paragraph 3 (ii)).
[6] < https://www.prsindia.org/billtrack/arbitration-and-conciliation-amendment-bill-2019> accessed on 20th August, 2019.
Picture Source :