An overview of the Arbitration Council of India in the light of the Arbitration and Conciliation (Amendment) Act of 2019
This article titled ‘An overview of the Arbitration Council of India in the light of the Arbitration and Conciliation (Amendment) Act of 2019’ has been written by Jahnavi Taneja & Abhayy Pandit.
This article titled ‘An overview of the Arbitration Council of India in the light of the Arbitration and Conciliation (Amendment) Act of 2019’ has been written by Jahnavi Taneja & Abhayy Pandit.
A glimpse of The Arbitration And Conciliation (Amendment) Act of 2019
On July 15th, 2019 – Mr Ravi Shankar Prasad, on behalf of the Ministry of Law and Justice, introduced the Arbitration and Conciliation (Amendment) Bill 2019 in the Rajya Sabha (Upper House). The said Bill was passed by the Upper House on July 18th, 2019 and subsequently by the Lok Sabha (Lower House) on August 1st, 2019. The said Bill acquired the status of an Act post receiving the assent of the President of India on August 9th, 2019 – amending the Act of 1996, the Arbitration and Conciliation (Amendment) Act of 2019 was brought into operation.
The arena of Alternative Dispute Resolution Mechanisms (ADR) seems to be flourishing in contemporary times. After the Arbitration and Conciliation (Amendment) Act 2015, the Arbitration and Conciliation (Amendment) Act of 2019 came in with newer yet necessary additions to the already shining feathers of the ADR Cap of India.
The Amendment Act of 2019 majorly got praise and popularity because of the introduction of the establishment of Arbitration Council of India under Part I-A (Sections 43A-M) of the amended act along with other new features like confidentiality of proceedings, relaxation of time limits, time-bound completion of written submissions, and according to clarity that the applicability of Arbitration and Conciliation (Amendment) Act of 2015 shall only be applicable on the arbitral proceedings which started on or after October 23rd, 2015.
Recommendations By Justice B.N. Srikrishna Committee
The Report of the “High-Level Committee to Review the Institutionalisation of Arbitration Mechanism in India” chaired by Justice Srikrishna (Former Judge, Supreme Court of India) proved to be a significant report rendered by the High-Level Committee and majorly weighed in the 2019 Amendment to the ACA of 1996. This High-Level Committee had the mandate of establishment by the Ministry of Law and Justice via their January 13th, 2017 order. The Committee met for seven elaborate committee sessions and included: Eight Members + 1 Member Secretary + Chairman of the Committee.
The Committee submitted its report to the Government of India on 30th July 2017 and expressed gratitude towards 25 persons who made their valuable contributions to the report – the persons were the likes of Justice Muralidhar (Judge, High Court of Delhi), Arvind P. Datar (Senior Advocate), Aniruddha Rajput (Member, International Law Commission) and also thanked the three-membered team from Vidhi Centre for Legal Policy, New Delhi for their legal research and drafting assistance to the High-Level Committee.
The main objective of drafting this report was succinctly put as:
“promotion of institutional arbitration in India by strengthening Indian arbitral institutions has also been identified as being critical to encouraging dispute resolution through arbitration. Though various arbitral institutions have been set up in India, particularly in the last five years, they have not been preferred by parties, who have leaned in favour of ad hoc arbitration or arbitrations administered by arbitral institutions located abroad.
It was in this context that the High-Level Committee (“Committee”) was set up to identify the roadblocks to the development of institutional arbitration, examine specific issues affecting the Indian arbitration landscape, and prepare a roadmap for making India a robust centre for international and domestic arbitration.” (High-Level Committee Report, 2017, p.3)
The Report is structured to have three parts – only Part I pertains to the recommendation of setting up an Arbitration Council of India, the gist of the structure of the report was explained as such:
“In Part I of this report, the Committee recommends the strengthening of institutional arbitration in India through measures such as the grading of arbitral institutions, the accreditation of arbitrators, the creation of a specialist arbitration bar and bench, and the provision of governmental and legislative support for institutional arbitration. The Committee also recommends further amendments to the ACA to clear ambiguities in the legislation and promote the use of India as a seat of arbitration. Part II pertains to the ICADR (International Centre for ADR) and Part III pertains to the BIT (Bilateral Investment Treaty) arbitrations concerning the Union of India.” (High-Level Committee Report, 2017, p.3)
Thus, the High-Level Committee’s Report rendered 10 Key Recommendations, and the very first recommendation enlisted was titled “Arbitration Promotion Council of India”. Therefore, the idea for the establishment of the Arbitration Council in India was adopted from the High-Level Committee Report on Review of the Institutionalisation of Arbitration Mechanism in India.
Arbitration Council Of India (ACI)
The key recommendation of the High-Level Committee, which was accepted as a part of the Bill proposed in 2019, has now amended the Arbitration and Conciliation Act of 1996 to add Section 2 (ca), i.e. the definition of “arbitral institution”, which has helped in the foundation of the Arbitration Council of India (ACI) which acquired a statutory status by means of Part I-A (titled, Arbitration Council of India) added by way of Arbitration and Conciliation (Amendment) Act 2019.
The Arbitration Council of India seeks to be the first independent government body for the promotion of all means of alternate dispute resolution mechanisms (ADR) as an “arbitral institution” – arbitration, conciliation, mediation, negotiation etc. The provisions related to the ACI are under Part I-A – which includes thirteen provisions from Sections 43A to 43M of the amended Act of 2019.
Scheme of Part I-A:
| SECTION | HEADING/ TITLE |
| S.43A | Definitions |
| S.43B | Establishment and Corporation of Arbitration Council of India |
| S.43C | Composition of the Council |
| S.43D | Duties and Functions of Council |
| S.43E | Vacancies, etc., not to invalidate proceedings of Council |
| S.43F | Resignation of Members |
| S.43G | Removal of Member |
| S.43H | Appointment of experts and constitution of Committees thereof |
| S.43I | General norms for grading of arbitral institutions |
| S.43J | Norms of accreditation |
| S.43K | Depository of awards |
| S.43L | Power to make regulations by Council |
| S.43M | Chief Executive Officer |
Section 43A acts as the definition clause for the newly added Part-I, providing definitions for “chairperson”, “council”, and “member”. Section 43B lays down the provisions related to the nature of ACI’s establishment which in accordance with the text of the provision, shall have the status of a “body corporate,” i.e. it will be bestowed with characteristics like perpetual succession, common seal, acquire/hold/dispose of property, power to enter into a contract and to sue or be sued.
The provision also lays down that ACI’s formation shall be notified by the Official Gazette, and its headquarters are to be situated in New Delhi. However, ACI, on prior permission from the Central Government, may be allowed to establish offices at other places in India.
Section 43C gives the composition of the council (refer to chart below) – along with the composition (which shall be of 7 in total), this section also lays down the qualification criteria of all the members of the ACI. All members (except the ex-officio members) are supposed to have substantial knowledge and experience (be it in research, teaching or practical) in the field of Arbitration.
The Chairperson necessarily has been an eminent person from the Higher Judiciary (i.e. High Court or Supreme Court); Members are supposed to be eminent arbitration practitioners and eminent academicians; Ex-Officio members are supposed to be Secretary to the Government of India in the Department of Legal Affairs (Ministry of Law and Justice) and Secretary to the Government of India in the Department of Expenditure (Ministry of Finance); the Part-Time Member shall represent a recognized body of commerce and industry, and the Member-Secretary shall act as the Chief Executive Officer (CEO) of the Arbitration Council of India (ACI).
All members (except the ex-officio members) shall have a tenure of three years. And, all members (except the ex-officio members) nominated shall not be above the age of 70 years (in case of Chairperson) and shall not be above the age of 67 years (in case of other members, not ex-officio members). The salaries, allowances, terms and conditions of all members except (ex-officio members) are to be determined by the Central Government.
Section 43D lays down the duties and functions of the ACI, which can be divided into two categories – purposes and functions. Thus, the purpose of the ACI is two-fold:
- Promotion and encouragement of all alternative dispute resolutions mechanisms;
- Frame policy and guidelines for the establishment, operation and maintenance of uniform professional standards in matters related to the arbitration.
The functions of the ACI include the framing of the policies to govern the grading of arbitral institutions; to provide for standards for the accreditation of arbitrators; hold training, workshops and courses in the arena of arbitration; maintain a depository of domestic arbitral awards; make recommendations to the Central Government regarding personnel training and infrastructure of the arbitration institutions amongst others and perform such other functions as may be decided by the Central Government.
Section 43E states that any vacancy or defect in composition or any irregularity in the procedure shall not affect the merits of the proceedings, i.e. shall not invalidate the proceedings of the Council. Section 43F lays down that any member or even Chairperson of the Council may resign office by handing in a written notice but may be instructed to serve for three months after receipt of notice or till the appointment of a successor, whichever is earlier.
Section 43G gives the grounds of removal of a member from his office – if he becomes undischarged insolvent, gets any paid employment during his tenure, is convicted of an offence involving moral turpitude, has financial or other interest that prejudices his role as a member, has abused the power of his position prejudicial to the public interest or has become physically or mentally incapable of acting as a Member.
Section 43H says that the Council may appoint such experts and committees as it deems fit to fulfil the functions of the Council. Section 43I states that the Council must formulate grading norms by including infrastructure, quality and calibre of arbitrators, performance and compliance of time limits, etc., in the criteria for such a grading system. Section 43J states that such norms for the accreditation of the arbitrators shall include norms as per qualifications and experience – that shall be specified in the Eighth Schedule to the Act.
Section 43K provides that a digital repository of domestic arbitral awards shall be maintained by the Council. Section 43L gives the Council the power to make regulations consistent with the provisions of this Act to discharge the functions and duties bestowed upon it. Section 43M, entitled “Chief Executive Officer”, lays down that the CEO shall be responsible for the day-to-day administration of the Council; the Central Government shall appoint the CEO; he shall discharge duties and functions consistent with the regulations, and he shall be assisted by a Secretariat that shall have officers and employees as prescribed by the Central Government.
Observation
The formation of the Arbitration Council of India (ACI) is a most-awaited and welcome step by the legislators. The formation of the ACI has assisted in making India seem like a promising arbitration-friendly destination for conducting resolution proceedings via alternative dispute resolution mechanisms (ADR) in the global arena.
The ACI shall actively promote the inclination towards ADR domestically and shall indirectly gear up to be open for being the seat for the resolution of international disputes. The formation of ACI seems like a step up the ladder, climbing towards an Indian ICADR (International Centre for Alternative Dispute Resolution) like the infamous Singapore International Arbitration Centre (SIAC) and Hong Kong International Arbitration Centre (HKIAC).
Authored by: Jahnavi Taneja & Abhayy Pandit
5th Year Law Students of B.A.LL.B.(H), Amity Law School Noida, Amity University Uttar Pradesh
Bibliography
- Arbitration and Conciliation (Amendment) Act, 2019.
- High-Level Committee to Review the Institutionalisation of Arbitration Mechanism in India, “Report of the High-Level Committee to Review the Institutionalisation of Arbitration Mechanism in India” 2017, (Date Accessed: Aug. 28th, 2020, 3:07 PM), Available Here
- PRS Legislative Research, “The Arbitration and Conciliation (Amendment) Bill, 2019”, (Date Accessed: Aug. 28th, 2020, 11:11 AM), Available Here
- The Gazette of India, Date Accessed: Aug. 29th, 2020, 1:32 PM), Available Here