Arbitration And Conciliation (Amendment) Bill, 2018 is introduced in Lok Sabha on 18th July 2018 to amend the Arbitration and Conciliation Act, 1996 to minimise the need to approach the Courts for appointment of arbitrators  with a view to make India a hub of institutional arbitration for both domestic and international arbitration.

The Arbitration and Conciliation Act, 1996 (the Act) was enacted to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards and also to define the law relating to conciliation and for matters connected therewith or incidental thereto. The said Act was amended by the Arbitration and Conciliation (Amendment) Act, 2015 to make arbitration process cost effective, speedy, with minimum court intervention and to maintain ensure of arbitrators.

2. The promotion of the institutional arbitration in India by strengthening Indian arbitral institutions has been identified critical to the dispute resolution through arbitration. Though arbitral institutions have been working in India, they have not been preferred by parties, who have leaned in favour of ad hoc arbitration or arbitral institutions located abroad. Therefore, in order to identify the roadblocks to the development of institutional arbitration, examine specific issues affecting the Indian arbitration landscape, and also to prepare a roadmap for making India a robust centre for institutional arbitration both domestic and international, the Central Government constituted a High Level Committee under the Chairmanship of Justice B. N. Srikrishna, Former Judge of Supreme Court of India.

3. The terms of reference the Committee, inter alia, include,—

(a) to examine the effectiveness of existing arbitration mechanism by studying the functioning and performance of arbitral institutions in India;

(b) to devise a road map to promote institutional arbitration mechanisms in India; and

(c) to evolve an effective and efficient arbitration eco-system for commercial dispute resolution and suggest reforms in the Arbitration and Conciliation Act, 1996.

4. The High Level Committee submitted its Report on 30th July, 2017. With a view to strengthen institutional arbitration in the country, the said Committee, inter alia, recommended for the establishment of an independent body for grading of arbitral institutions and accreditation of arbitrators, etc. The Committee has also recommended certain amendments to the said Act to minimise the need to approach the Courts for appointment of arbitrators. After examination of the said recommendations with a view to make India a hub of institutional arbitration for both domestic and international arbitration, it has been decided to amend the Arbitration and Conciliation Act, 1996.

5. The salient features of the Arbitration and Conciliation (Amendment) Bill, 2018, inter alia, are as follows:—

(i) to amend section 11 of the Act relating to “Appointment of Arbitrators” so as to change the present system of appointment of arbitrators by the Supreme Court or High Court, to a system where the arbitrators shall be appointed by the “arbitral institutions” designated by the Supreme Court or High Court;

(ii) in case where no graded arbitral institutions are available, the Chief Justice of the concerned High Court may maintain a panel of arbitrators for discharging the functions and duties of arbitral institutions;

(iii) to insert a new Part 1A to the Act for the establishment and incorporation of an independent body namely, the Arbitration Council of India for the purpose of grading of arbitral institutions and accreditation of arbitrators, etc.;

(iv) to amend section 23 of the Act relating to “Statement of claim and defence” so as to provide that the statement of claim and defence shall be completed within a period of six months from the date the arbitrator receives the notice of appointment;

(v) to provide that the arbitrator, the arbitral institutions and the parties shall maintain confidentiality of information relating to arbitral proceedings and also protect the arbitrator or arbitrators from any suit or other legal proceedings for any action or omission done in good faith in the course of arbitration proceedings; and

(vi) to clarify that section 26 of the Arbitration and Conciliation (Amendment) Act, 2015, is applicable only to the arbitral proceedings which commenced on or after 23rd October, 2015 and to such court proceedings which emanate from such arbitral proceedings, to address the divergent views given by various Courts.

6. The Bill seeks to achieve the above objectives.

FINANCIAL MEMORANDUM

Clause 11 of the Bill proposes to insert new sections 43A to 43J in the Arbitration and Conciliation Act, 1996.

2. Proposed sub-section (1) of section 43B provides for the establishment of the Arbitration Council of India. Sub-section (2) provides that the Arbitration Council of India shall acquire, hold and dispose of property, both movable and immovable and sub-section (3) of the said section provides that the head office of the Council shall be at Delhi. Sub-section (4) provides that the Council may, with the prior approval of the Central Government, establish offices at other places in India.

3. Sub-section (3) of proposed section 43C provides that the salary, allowances and other terms and conditions of the Chairperson and Members of the Council shall be prescribed by the Central Government and sub-section (4) provides for entitlement of travelling and other allowances of the Part-time Member, to be prescribed by the Central Government.

4. Sub-section (2) of proposed section 43J provides for the qualifications, appointment and other terms and conditions of services of the Chief Executive Officer shall be prescribed by the Central Government. Sub-section (4) of the said section also provides that the Council shall have a Secretariat consisting of such number of officers and employees as may be prescribed by the Central Government. Sub-section (5) of the said section provides that the qualifications, appointment and other terms and conditions of the service of the employees and other officers of the Council shall be prescribed by the Central Government.

5. The financial implication arising from the establishment of the Arbitration Council of India, etc., is estimated at as recurring expenditure of Rs. 17.51 crore per annum and non-recurring expenditure is about Rs. 1.93 crore.

6. It would be difficult to indicate the exact expenditure incurred in the appointment of officers of the Arbitration Council of India, etc. The Bill does not envisage any other expenditure of recurring or non-recurring nature.

MEMORANDUM REGARDING DELEGATED LEGISLATION

Clause 11 of the Bill proposes to insert new sections 43A to 43J in the Arbitration and Conciliation Act, 1996.

2. Proposed sub-section (1) of section 43B provides for the establishment of Arbitration Council of India.

3. Proposed sub-sections (3) and (4) of section 43C, inter alia, provides for—

(a) the terms and conditions of, the service and the salary and allowances payable to, the Chairperson and Members as may be prescribed by the Central Government;

(b) the travelling and other allowances entitled to the Part-time Member as may be prescribed of the Central Government.

4. Proposed section 43-I provides that the Arbitration Council of India, in consultation with the Central Government, may make regulations consistent with the provisions of the Act and the rules made thereunder.

5. Proposed sub-section (2) of section 43J provides that the qualifications, appointment and other terms and conditions of the service of the Chief Executive Officer shall be prescribed by the Central Government. Sub-section (4) of the said section provides that the number of officers and employees of the Secretariat to the Council shall be such as may be prescribed by the Central Government.

6. The matters in respect of which rules and regulations may be made under the aforesaid provisions are matters of procedure and administrative details and it is not practical to provide for them in the Bill itself. The delegation of legislative power is, therefore, of a normal character.

Download Full Text of Arbitration And Conciliation (Amendment) Bill, 2018

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