Bill to encourage arbitration of commercial disputes

A bill aimed at improving institutional arbitration by providing for settlement of commercial disputes within six months and other measures was introduced in Rajya Sabha on Monday by Law Minister Ravi Shankar Prasad.

The Arbitration and Conciliation (Amendment) Bill 2019 seeks to make India a hub of domestic and global arbitration for settling commercial disputes.

A previous bill was cleared by Lok Sabha in August 2018 but could not be passed by Rajya Sabha. The bill lapsed following the dissolution of the 16th Lok Sabha.

Successive governments have been pushing to make India a centre of domestic and international arbitration.

The new bill, which amends the 1996 Act, seeks to provide for a robust mechanism to deal with institutional disputes and ensures accountability of the arbitrator.

The amendments will facilitate achieving the goal of improving institutional arbitration by establishing an independent body to lay down standards, make arbitration process more friendly and cost-effective, and ensure timely disposal of cases.

It provides for setting up of an independent body -- Arbitration Council of India (ACI) -- to frame arbitral institution and accredit arbitrators by laying down norms.

The ACI would be mandated to frame rules on how institutions would be graded, norms to be followed, monitoring of quality and performance, and would also encourage training of arbitrators.

The bill is part of the government's efforts to encourage institutional arbitration for settlement of disputes and make India a centre of robust alternative dispute resolution mechanism.

A large number of arbitration cases are conducted in countries such as Singapore, the UK and France. Commercial disputes have increased manifold due to globalisation, industrialisation and liberalisation.

The Bill will amend Section 11 of the Act, to change the present system of appointment of arbitrators by the Supreme Court or a high court, to a system where the arbitrators shall be appointed by "arbitral institutions" designated by the Supreme Court or a high court.

The draft law provides that in case where no graded arbitral institutions are available, the Chief Justice of the high court concerned may maintain a panel of arbitrators for discharging the functions and duties of arbitral institutions.

It also seeks to insert a new Part 1A to the Act for establishment and incorporation an independent body namely, the Arbitration Council of India for the purpose of grading of arbitral institution and accreditation of arbitrators, etc.

The bill will also amend Section 23 of the Act relating to "Statement of Claims and defence" so as to provide that the statement of claim and defence shall be completed with a period of six months from the date the arbitrator receives the notice of appointment.

It also provides that the abritrator, 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 legal proceedings for any action or omission done in good faith in the course of arbitration proceedings.