Arbitration and Conciliation (Amendment) Act- 2019: Key Highlights

The bill passed in the Rajya Sabha on the 18^th July 2019 and in the Lok Sabha on the 1^st August 2019. Subsequently, it received the President’s assent on the 9^th of August, 2019. The major addition to the Act is the constitution of the Arbitration Council of India. In addition, there are a number of minor changes.

The Arbitration Council of India

A new Part IA was added after Part I of the principal act, which relates to the establishment of a new institution: “The Arbitration Council of India”. The recommendation for the formation of the ACI is adopted from the report of the high-level committee constituted, which Justice B.N Srikrishna chaired.

1. The ACI will be located in Delhi.
2. Section 43(B) (1) of the Act gives the onus of establishing the Arbitration Council of India to the Central Government. Furthermore, the act defines the nature of the Arbitration Council of India, which is that of a corporate body with the power to acquire, hold and dispose of property and sue or be sued.
3. Section 43(C) state the composition of the Council

The term of the office of the Chairperson and the members shall be three years. A chairperson cannot be of more than 70 years, and the age of a member has to be less than 65 years. The salaries of the members are to be decided by the Central Government. The procedure for the resignation of the members of the council is also mentioned.

The following are the members, their qualifications and the appointing authority of the different designated posts of the council.

• Chairperson

Qualification: A “Judge of the Supreme Court or, Chief Justice of a High Court or, a Judge of a High Court or an eminent person, having special knowledge and experience in the conduct or administration of arbitration”

Appointing authority: appointed by the Central Government in consultation with the Chief Justice of India.

• Member

Qualification: A practitioner virtuoso in the field of arbitration, having substantial experience in both domestic and international institutional arbitration

Appointing authority: Central Government.

• Member

Qualification: An experienced academician having undertaken research and teaching in arbitration and ADR laws.

Appointing authority: Central Government in consultation with the Chairperson.

• Ex-officio Member

1. Secretary to the Government of India in the Department of Legal Affairs, Ministry of Law and Justice or his representative not below the rank of Joint Secretary–Member.
2. Secretary to the Government of India in the Department of Expenditure, Ministry of Finance or his representative not below the rank of Joint Secretary– Member
3. Chief Executive Officer-Member-Secretary

• Part-Time Member

Qualification: A member of a recognised body of commerce and industry

Appointing authority: Central government on a rolling basis.

Powers and Functions of the Act

The act has given the onus of the ACI to undertake measures in order to “promote and encourage arbitration, mediation, conciliation or other alternative dispute resolution mechanism and for that purpose to frame policy and guidelines for the establishment, operation and maintenance of uniform professional standards in respect of all matters relating to arbitration”

Section 43(D) has mentioned 12 functions of the ACI, which may be categorized as follows:-

1. Promoting ADR in India includes organizing ADR workshops to frame norms to ensure a satisfactory level of arbitration and conciliation.
2. Quality checker of arbitrators and arbitration institutes which includes grading the institutes and individual arbitrators, making a recommendation with regard to the infrastructure etc. The general norms showing the basis for grading arbitral institutions is given in 43(I) of the Act which relates to infrastructure, quality and calibre of arbitrators, performance and compliance of time limits for disposal of domestic or international commercial arbitrations.
3. An advisory body to the central government for a swift resolution of the commercial disputes.
4. Depository of arbitral awards in electronic version.
5. examination body for subjects on Arbitration and Conciliation.
6. In addition to the functions given under section 43(D), the council is given the power to appoint and constitute such Committees of experts as it may consider necessary to discharge its functions.

Removal of Members

Section 43(G)(1) pertains to the removal of a member from office. The section mentions six reasons leading to the removal of a member of the council. These are as follows as given in the Act of 2019. When any person

1. undischarged insolvent
2. engaged at any time (except Part-time Member), during his term of office, in any paid employment
3. has been convicted of an offence which, in the opinion of the Central Government, involves moral turpitude; or
4. has acquired such financial or other interest as is likely to affect prejudicially his functions as a Member
5. has so abused his position as to render his continuance in office prejudicial to the public interest
6. has become physically or mentally incapable of acting as a Member.

OFFICE OF THE CHIEF EXECUTIVE OFFICER shall be responsible for the day-to-day administration of the Council. Thus the officer shall be the administrative officer of the council. The government shall decide the qualifications, appointment and other terms and conditions of whom from time to time.

Appointment of Arbitrators

The Supreme court and the high court have been given the power to designate arbitral institutions on the basis of the gradation released by the council. When the party fails to appoint an arbitrator, the appointment shall be made on application by the arbitral institution designated by the Supreme Court and the High court in the international commercial arbitrations and the domestic arbitrations, respectively.

The new act has fixed the time limit for the disposal of the application for the appointment of arbitrators or arbitrators to a period of 30 days from the date of service of the notice.

Time Limit for the statement of Claims and Defence u/s 23

The time limit for the statement of claims had been fixed for a period of 6 months from the date the arbitrators received the notice of their appointment.

Time Limit for Arbitral Award: Amendment u/s 29(A)

It fixed the time limit for the giving of the arbitral awards of matters other than that of international commercial arbitration should be within a period of twelve months from the date of completion of pleadings.

Confidentiality

A new section 42A was added, which requires the arbitrator, arbitral institution and the parties to maintain the confidentiality of all arbitral proceedings.

Protection of Arbitrators

Section 42B protects the arbitrator from suit or other legal proceedings for actions done in good faith.

Addition of the eighth schedule relating to the qualification and the experience of the arbitrator: The schedule enlists nine qualifications which can make a person eligible to be an arbitrator. The schedule also enlists eight norms that an arbitrator has to follow during his practice.

Applicability of Arbitration and Conciliation Act, 2015:

The Bill states that the 2015 Act shall only apply to arbitral proceedings which started on or after October 23, 2015.

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1. Introduction to Arbitration and Conciliation Act(Opens in a new browser tab)
2. Relevance of ADR in International Law