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EXORDIUM
Conflict is a constituent of life. It is neither good nor bad. However, what is imperative is exactly how we bring about or handle it. Arbitration modus operandi is over and over again vivacious in resolving the conflict. Alternative Dispute Resolution (ADR) designates a multiplicity of streamlined resolution mechanisms intended to resolve matters in debate more adroitly and efficiently when the ordinary negotiation route misses the mark. It has endured a remarkable transformation, budding from the time of village seniors meeting under a banyan tree and determining disagreements to the phase of attaining a constitutional acknowledgment. The idea of justice brings forth the understanding of the rule of law, of the tenacity of conflicts, of associations that make bylaws and of those who administer it. Alternative Dispute Resolution (ADR) is avant-garde to the Formal Legitimate Structure. It is a flipside to litigation. The overstrained bench of the court is a datum of the century. The said system originates from the discontent of many populaces from the conventional courts and the desire for metamorphosis of dispute resolution. The arbitration panorama has endured extensive transformation in recent times. After the Arbitration and Conciliation (Amendment Act) 2015 made headway, and now after three years, the Union Cabinet has cleared the Arbitration and Conciliation Act (Amendment) Bill 2018. While the bill comes with a promise to cover the practical difficulties in the Amendments of 2015, it also brings with it the necessary adaptation to a business-friendly environment. The amendments of 2018 based on High-Level Committee chaired by Justice B.N Srikrishna focuses on Institutionalization of Arbitration Mechanism apart from cost-effective, prompt as well as least court interference facets. Whether the objective of organizing institutional arbitration will help in making India investment friendly or in promising investment friendly India for the next election propaganda, will be a subject matter of discussion in coming times. Whatever be the agenda for the amendments, all that matters is the benefit it brings to the people at large. It is beyond doubt that the Amendments of 2015 and 2018, which came after a long gap has paved the mode for a more arbitration-friendly legal milieu.
When the poorly drafted Repeal and Saving clause of Arbitration and Conciliation Act, 2015 gave rise to litigations on the question of applicability of amended provisions on arbitration and court proceedings continuing under the Act of 1996, the Apex Court provided much-needed clarification by way of judgment in BCCI v Kochi Cricket Pvt Ltd. Though the judgment came with a progressive interpretation and made it clear that the amended Arbitration Act will be applicable to arbitral proceedings and court proceedings only if they commence after the Amendment Act came into force. However, the Court refrained itself from offering an interpretation on retrospective applicability of the amendment to Section 34 and the ball was passed on to the legislature by directing that copies of the judgment to be given to Ministry of Law and Justice and the Attorney General for India to consider desirability of certain proposed Amendments to the Act touching upon the issue of retrospective/prospective operation of the Act. Whether the legislature was successful in covering all loopholes in previous amendments in the bill of 2018 will remain a question of a debate at least in the legal circuits. But we hope this is not the beginning of another saga of uncertainties.
The law commission report which came last year has put forward certain arduous change to pluck the dodges in arbitration act and bring it at par with global standards propagating the slogan of ease of doing business in India.
The legislature puts to rest persisting uncertainties about the applicability of Amendment Act to existing arbitrations and arbitration-related court proceedings. The new Bill put forward that unless parties agree otherwise, the Amendment Act shall not apply to arbitral proceedings that have initiatedafore the Amendment Act as well as to court proceedings stemming from such arbitral proceedings, notwithstanding of whether such court proceedings began prior to or after the commencement of the Amendment Act. This, however, poses a difficulty for the litigants where the court proceedings arising out of arbitration proceedings culminated under the old act but filed after commencement of the Amendment Act will now become a low priority for expeditious disposal especially in the wake of new cases that come with statutory limitation for disposal under the amended act. Moreover, the retrospective applicability given to the provisions will have its consequences as the same may become an additional ground for pending appeals where the objecting court had taken into account the amended provisions for deciding petitions arising under the old Act. The said retrospective applicability may also be contended as hammering the rationale of landmark decision of the Court in BCCI v Kochi Cricket Pvt Ltd. Nonetheless, this amendment has a promising aspect to change the scenario of arbitration litigation in coming few years and may help foster the confidence of investors in the country.
The appointment of the Arbitrators whether it is a judicial or an administrative decision has long been a concern of debate. The union cabinet has not dwelled with it but has proposed a framework towards the expeditious and regulated appointment of arbitrators. It has provided for 60 days period post service of the notice for appointment of arbitrators to expedite the entire matter in the arbitral procedure and introduced a new sub-section in section 11 of the act. Another imperative facet of the Bill is that the appointment of the arbitrator would be by an arbitral institution nominated by the Supreme Court of India in case of international commercial arbitrations and High Court in case of domestic arbitrations. This is a significant step towards strengthening institutional arbitration as it would result in the prompt selection of arbitrators by doing away with the prerequisite of filing application for appointment of arbitrators before the Court. The recent example of Sun Pharmaceutical Industries Ltd vsFalma Organics Ltd , whereby the Supreme Court appointed Mumbai Centre for International Arbitration to arbitrate disputes in an international dispute between the parties is a stepping stone to represent India matching up the standards of professionalism of other countries in resolving disputes.
Assigning the responsibility of hiring arbitrators to the Chairman/Head of a specific Arbitral Establishment i.e., Arbitration Council of India (ACI) instead of courts as proposed by the Arbitration & Conciliation (Amendment) Act Bill, 2018 is a holistic approach which can exhilarate ADR Mechanisms as it will significantly lessen the substantial burden on courts thereby disposing of the applications in an expeditious manner.
Section 11(3)(a) has been added which provides for construction of an autonomous body being the ACI with an outlook to grade arbitral institutions along with accreditation of arbitrators under section 43F. 43F provides the general norms for grading of arbitral institutions. According to sec 43F the council shall make grading of arbitration on certain criterion such as quality and competence of arbitrators, observance of time restrictions for disposal of domestic or international commercial arbitrations. A judge of the SC or Chief Justice or Judge of any HC or any eminent person shall be appointed as the Chairperson of the ACI in addition to this other members shall comprise of academician as well as legislative nominations. Where there are no graded arbitral institutions, then Chief Justice of High Court shall assess the panel.
In addition to this ACI would expedite the speedy appointment of arbitrators by nominated arbitral bodies by the SC or the HC devoid of having any requisite to approach that is to file a formal application for appointment in the court of law in this respect. The domino effect may be an unbiased and neutral arbitrator-a step to fair justice.
The Bill, 2018 also has an addition to schedules by including“Eighth Schedule”, which makes available a list of qualifications needed to be an arbitrator. The said credentials make 10 years’ experience as a lawyer or a Chartered Accountant or an Engineer or technocrat or a former Executive mandatory. The state of affairs is quite reasonable as this step is towards qualitativeappointmentswhich will foster the arbitration mechanism in the country. In addition to this, it will helpstrengthen thefaith of the people towards arbitration as mode of resolution.Parties have more faith in judges of HC and SC but having an arbitrator who is well versed with legal knowledge and also the requisite technical knowledge is indeed a great package for the litigants. A group of the competent and experienced arbitrators will transform the all-inclusive insight about the institution.
Bill, 2018 makes a sincere effort to do away with the incongruences’ introduced by section 29A of the amended Act 2015. The operation of section 29A had made it problematic for arbitral tribunals to conclude proceedings within the agreed time perimeter as the stage of pld_insd txa_jings and recording of evidence often made the rendering of an award within the prescribed time limit nugatory. The Bill seek out to counter the discrepancy innate in section 29A by bringing about the 12-month cut-off period starting from the date of conclusion of pld_insd txa_jings of the parties as disparate to the date of the arbitrators entering upon reference. Section 29 is read with section 23 which provides the time required for pld_insd txa_jing. Section 23(4) has been inserted in the Bill, 2018 stating that the statement of claim & defense shall be concluded within a time span of 6 months from the appointment of the arbitrator. The cumulative effect of the same is that 1 year has been extended to 1.5 years for the reason that time span of 6 months has been given for conclusion of pld_insd txa_jings. Meaning thereby arbitration tribunal and parties have got the time period of 1.5 years that is an extension of 6 months which has perhaps been well thought-out from a practical point of view seeing the difficulty that has crept in after the introduction of 2015 Amendment.
Furthermore, the proviso to this section also authorized the courts to deduct the fee of the tribunal should the delay be attributable to the same and vested the courts with the power to substitute one or all the arbitrators on the tribunal. Therefore, merely in terms of broadening the scope of judicial interference in arbitral proceedings and destroying party autonomy, section 29A posed some challenges to the independence of the arbitral regime in the country.
According toSection 42A,the arbitrator and the arbitral bodies shall keep up the privacy of all arbitral proceedings except for the award. This would place India on the same base with jurisdictions such as Hong Kong, New Zealand, France which have definite lawmaking provisions directing privacy of arbitration proceedings. However, how far the confidentiality be taken when the awards will be challenged before the Courts and the record of the matter will be summoned in the Court is a question left unaddressed by the legislature.
Section 42B provides arbitral protection to the arbitrator from any legal proceedings against him in case of omission done by him in bona fide during the arbitration process. Bill also antedates that except parties reach a decision then, the Amendment Bill shall not apply to arbitral proceedings that have initiated prior the Amendment Bill and to court proceedings arising out of or in relation to such arbitral proceedings notwithstanding of whether such court proceedings began prior to or after the commencement of the Amendment Bill or to court proceedings arising out of or in relation to such arbitral proceedings. Although the omissions referred in this section are subjective and wide, yet the provision in less likely to impact the notion of ‘fair justice’ especially in view of the qualitative appointments of arbitrators promised by the Act.
The objective behind the insertion of these two sections is to make sure that the parties are entitled to a translucent as well as justifiable arbitral route, deprived of any inadvertent ruptures of material.
Section 17 of the principal act states interim measures. Interim measures can be granted by courts under section 9 of the Act as well as under section 17 by the Arbitral Tribunal.Nonetheless, the amendment to Section 17 is an attempt to bring at par the powers of the Arbitral Tribunal and that of a Court. Now the arbitral tribunal is empowered to pass the same kind of orders as that passed by the court under section 9 of the act. The interesting change is there was no rule of law with respect to the enforcement of such orders; however, the cabinet has approved the amendment which allows such orders which will have the same effect as if there were the orders of the court. Interim measures mean mid relief provided under the prior act even after the adjudication of an award but before the filing of execution petition but according to the Amendment Bill, 2018 application under section 17 can be filed only up until the conclusion of an award. This amendment will surely come to the aid of the bona fide parties.
In the end, like any other new legislative instruments, Amendment Bill, 2018 lay open to critical appraisal nevertheless this doesn’t imply that Bill failed to attain its objects. Further exhilaration and legal appreciation of Arbitration forms would certainly be of no benefit until and unless such laws are executed effectively. Inconsistencies related to the Amendment Bill, 2018 is indeed a new voyage towards a veracious route, towards a more supportive line of attack to arbitration in India. The proposals made in the bill are without a doubt expected to strengthen the structure for established arbitrations in our state by creating ACI. Till the time, arbitration arises as the corresponding mechanism to the legitimate system; actions must be taken to boost more voluntary use of ADRs.
Authors-
Ms. Sonia Madan, Advocate, LexCommerci with Ms. Aditi Lakhanpal.
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