The shift towards institutional arbitration: Critically examining Arbitration Act 2019

Zisha Rizvi

THE SHIFT TOWARDS INSTITUTIONAL ARBITRATION:

CRITICALLY EXAMINING THE ARBITRATION (AMENDMENT ACT 2019)

Author: Zisha Rizvi

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I. ABSTRACT

In a globalizing world, the importance of keeping abreast with international developments in the
field of law cannot be emphasized ample. One such pivotal development is the growing
validation of arbitration over traditional litigation, as a means for dispute resolution. This
impulse provided the necessary impetus for India to enact the Arbitration and Conciliation
(Amendment) Act 2019 (hereinafter the 2019 Act). A timely reform to realize India’s aspirations
of being the hub of arbitration- the 2019 Act is not free from its own riddles. It appears to be a
case of noble intentions and a misplaced approach.

With the 2019 Act in background, we must look at the nature of India’s trajectory in recent
years. A large number of our development contracts are inclining towards a public private
partnership. With more relaxed foreign direct investment regime, the role of international
players in the market is also only bound to grow. India also remains one of the most promising
Asian economies- a trait attributed to wealth of demographic divided and large market size-
which inevitably means growth of trade and commerce in the times to come. Commercial horse
sense dictates that given the nature of commercial transactions disputes in tandem cannot be
ruled out. This leaves us to the blaring question of whether we have enough mechanism in place
to address such disputes? There is no doubt that India has one of the most robust laws and a
competent judiciary. However, if we were to look at the India Justice Report 2019, stark
revelations about the state of judicial process have been pointed out. That and the enforcement
of contracts still largely remains a stumbling block for businesses.

This paper examines if the 2019 Act address the issues in the arbitration regime of India.
Keywords: Institutional Arbitration, India, Arbitration Amendment Act 2019, 1996 Act,
UNICTRAL, Challenges, Resolves, International Commercial Arbitration

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II. INTRODUCTION

“Liberty…is the power that we have over ourselves

……private right…established for the advantage of each individual”

In his seminal work De Jure Belli ac Pacis (“On the Law of War and Peace”), which was based
on the work of the Spanish theologist, philosopher and lawyer Francisco de Vitoria and with
which he laid the foundation for modern international law, Hugo Grotius1 coined the famous
phrase above. In international arbitration, the parties exercise this individual power in their
arbitration agreement as an expression of their personal or “private” autonomy.2

Arbitration as a dispute resolution method has gained plausible international acceptance. A

large number of international disputes are today settled through means of alternative dispute
resolution (ADR). The reason attributed to this is the actual advantages that ADR offers over
conventional litigation. The primary advantage of arbitration however relates to the concept of
party autonomy which is reflected in the entire scheme of arbitration- including the provisions
relating to confidentiality, efficiency, timelines and the choice of arbitrator.

Dispute Resolution has a clear impact on both the country’s economy and the global
perception on doing business in a country. In recent years, India has emphasized its willingness
to become a global commercial nerve centre with key initiatives including but not limited to:
facilitating angel investments for start ups, MakeinIndia campaign, increasing investor
confidence by introducing several tax reforms, relaxing the foreign direct investment norms and
so on. With these key developments, India’s ranking in the Ease of Doing Business for 2020 has
moved 14 places up and we now rank 63 out of 190 nations3. Having noted above, one must
understand that once the upward trend of a business cycle4 tends to settle in favor of the ‘trough’

1
Hugo Grotius (10 April 1583 – 28 August 1645), also known as Huig de Groot was a Dutch humanist, diplomat,
lawyer, theologian and jurist
2
Klaus Peter Berger, Institutional Arbitration: Harmony, Disharmony and Party Autonomy Paradox
3
World Bank, Ease of Doing Business 2019
https://www.doingbusiness.org/content/dam/doingBusiness/media/Annual-Reports/English/DB2019-report_web-
version.pdf
4
The term “business cycle” (or economic cycle or boom-bust cycle) refers to economy-wide fluctuations in
production, trade, and general economic activity. Business cycles are identified as having four distinct phases:
expansion, peak, contraction, and trough

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 or ‘contraction’ period, it is the reforms in the legal field that tend to keep the boat afloat by
providing effective contract enforcement, insolvency processes and so on.

India still fares badly as compared to most OCED5 countries. For instance, it takes 1,445
days for a company to resolve a commercial dispute through a local first-instance court, almost
three times the average time in OECD high-income economies. This also accounts for close to
39.6% of the claim value. 6In terms of enforcement of contracts, the individual ranking for India
is 163 out of the 190 countries 7 India fares poorly in terms of the quality of judicial processes
(court structure and proceedings, case management, court automation and alternative dispute
resolution).

III. A TRYST WITH THE PAST AND PRESENT

The primary statute governing arbitration in India is the Arbitration and Conciliation Act 1996
(the Act). However one must understand the background in which the Act came into force.

1937 Arbitration Act. It dealt with recognition and enforcement of

foreign awards under the Geneva Convention.
Reasons for
enactment of 1940 Arbitration Act Until 1996, domestic arbitration in India was
Arbitration governed by the 1940 Act and a telling comment on the working of the
Legislations in old Act can be found in a 1981 judgment of the Supreme Court where the
India judge (Justice DA Desai) in anguish remarked ‘the way in which the
proceedings under the (1940) Act are conducted and without an
exception challenged in Courts, has made lawyers laugh and legal
philosophers weep..’. A bare comparison of different provisions of the
Arbitration Act of 1940 with the provisions of Arbitration & Conciliation
Act, 1996 would unequivocally indicate that 1996 Act limits intervention

5
OECD:The Organisation for Economic Co-operation and Development is an intergovernmental economic
organisation with 36 member countries, founded in 1961 to stimulate economic progress and world trade
6
See Bibek Debroy and Suparna Jain (Niti Ayog), Strengthening Arbitration and its Enforcement in India – Resolve
in India
7
World Bank, Ease of Doing Business Report 2019.

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 of Court with an arbitral process to the minimum.

1996 Arbitration and Conciliation Act This Act was aimed to limit
intervention of courts in the arbitral process by providing an exhaustive
scheme of events within the framework of the Act and basing the same
on international standards, the United Nations Commission on
International Trade Law Model Law on International Commercial
Arbitration and the Arbitration Rules of the United Nations Commission
on International Trade Law 1976

2015 Arbitration and Conciliation (Amendment Act) amended the 1996

Act with effect from October 23, 2015. This amendment was aimed at
making the arbitral process more efficient and speedy by providing
timelines for conduct and related provisions. It filled in the gaps in the
1996 Act

2019 Arbitration Amendment Act (the 2019 Act) Enacted upon the
recommendations of the Justice Srikrishna 8 Committee for giving an
impetus to institutional arbitration by making relevant changes.

8
Source: PIB: To make India an international hub of Arbitration…the Department of Legal Affairs, Ministry of Law
and Justice, on 13 January, 2017 constituted a ten Member, High Level Committee under the Chairmanship of
Justice B.N.Srikrishna, Retired Judge, Supreme Court of India. Justice R.V.Raveendran, Retired Judge, Supreme
Court of India, Justice S. Ravindra Bhat, Judge, High Court of Delhi, Shri K.K.Venugopal, Sr. Advocate and
presently Attorney General for India, Shri P.S.Narasimha, Additional Solicitor General of India, Ms. Indu Malhotra,
Senior Advocate, Supreme Court of India, Shri Arghya Sengupta, Research Director, Vidhi Centre for Legal Policy,
Shri Arun Chawla, Deputy Secretary General, FICCI, Shri Vikkas Mohan, Senior Director CII, were the Members
and Law Secretary, Shri Suresh Chandra, was the Member Secretary of the High Level Committee.

The High Level Committee was given the mandate to review the institutionalization of arbitration mechanism and
suggest reforms thereto. The Committee held 7 sittings. It submitted its report on 3 August, 2017 to Shri Ravi
Shankar Prasad, Hon’ble Minister of Law & Justice and Electronics and Information Technology.

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IV. CONCEPTUAL BACKGROUND

The Arbitration and Conciliation Act 1996 (the Act) does not define the
term ‘arbitration’ per se. Section 2 (1) (a) of the Act provides that
Party autonomy and
arbitration arbitration means “any arbitration whether or not administered by
permanent arbitral institution”. A bare reading of the definition thus
provided highlights one important point of inference- that the Act
provides recognition to both ad-hoc and institutional forms of
arbitration. The UNCITRAL Model Law also reflects the vital link
between institutional arbitration and party autonomy. Art. 2 (d) of the
Model Law provides:
“where a provision of this Law […] leaves the parties free to determine
a certain issue, such freedom includes the right of the parties to
authorize a third party, including an institution, to make that
determination”.

According to that provision the expression arbitration can be defined as under:

“…Arbitration is the means by which the parties to dispute get the matter settled through the
intervention of an agreed third person. Arbitration is a process that is carried out pursuant to an
agreement to arbitrate the disputed matter.”

The term is not defined in the UNCITRAL Model Law on International Commercial Arbitration
(hereinafter the Model Law) as being “unnecessary”, although a definition had been proposed by
the Secretariat.9 It is not so clear that the UNCITRAL Working Group really believed that a
definition of arbitration was unnecessary so much as that it would have been difficult to
formulate. For example, if a tribunal were given the authority to adapt or supplement a contract
in the light of changed circumstances, would that procedure be “arbitration”?

9
Report of the Working Group on International Contract Practices on the work of its third session, A/CN.9/216,
paras. 15-18, 17; Report of the Secretary-General: Possible Features of a Model Law on International Commercial
Arbitration, A/CN.9/207, paras. 29-30.

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 Nevertheless, some content must be given to the term. Its principal
characteristics are:
- arbitration is a mechanism for the settlement of disputes;
Giving context to the term
- arbitration is consensual;
arbitration10
- arbitration is a private procedure;
- arbitration leads to a final and binding determination of the rights
and obligations of the parties.

Law encourages parties as far as possible, to settle their differences privately either by mutual
concessions or by the mediation of a third person. When the parties agree to have their disputes
decided with the mediation of a third person, but with all the formality of a judicial adjudication,
that may be, speaking broadly, called as arbitration. Arbitration, therefore, means the submission
by two or more parties of their dispute to the judgment of a third person called the “arbitrator”,
and who is to decide the controversy in a judicial manner.

“Arbitration” is thus defined by Romilly M R in the well-known case of Collins v Collins11:

“An Arbitration is a reference to the decision of one or more persons, either with or, without an
umpire of a particular matter in difference between the parties.”

It may also be defined as a mechanism for the resolution of disputes which take place usually
pursuant to an agreement between two or more parties, under which parties agree to be bound by
the decision to be given by the Arbitrator. Precisely, it is an alternative to litigation as a method
of dispute resolution. Commercial arbitration has widely been recognized in different parts of
business world as a means of dispute resolution particularly the 1990s (Lavin, 2009). As
arbitration is subject to the arbitration agreement/clause, Christopher and Naimark (2005) argue
that 90% of international contracts include an arbitration clause.

10
UNCTAD/EDM/Misc.232/Add.38
11
28 LJ CH 186: (1858) 26 Beav 306

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 The question of what was to be included in “commercial” was
squarely faced for the first time during the preparation of the Model
Law adopted in 1985. The New York Convention provides that
what may or not be commercial shall be subject to the local laws of
the states. While there was little disagreement as to the types of
transactions to which it should apply there was great hesitation on
the part of some delegations to expand the definition of
“commercial” beyond what was envisaged in their national law for
“Commercial”-In context other purposes. After much deliberation, the word “commercial”
appeared in the Model Law as a footnote and reads as follows12:

“The term ‘commercial’ should be given a wide interpretation so as

to cover matters arising from all relationships of a commercial
nature whether contractual or not. Relationships of a commercial
nature include but are not limited to the following transactions: any
trade transaction for the supply or exchange of goods or services;
distribution agreement; commercial representation or agency;
factoring; leasing; construction of works; consulting; engineering;
licensing; investment; financing; banking; insurance; exploitation
agreement or concession; joint venture and other forms of
industrial or business co-operation; carriage of goods or
passengers by air sea rail or road.”

12
See footnote 2 Chapter I, Article 1 (1) page 1

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 An arbitration that takes place in different state (say X) is a foreign
arbitration in any other state (say Y). The question whether the
arbitration is commercial or non-commercial or whether the parties
“International”- in context are from the same country, does not arise. Since even a domestic
arbitration in X is a foreign arbitration in Y, the New York
(as opposed to foreign) Convention shall be applicable for enforcement of any clause
calling for arbitration. In some legal systems the courts will not
come to the aid of a “foreign” arbitration by way of aiding in the
procurement of evidence, granting interim orders of protection or
the like. However, many modern arbitration laws provide that the
courts will aid arbitrations taking place in a foreign State. For
details on the term ‘international’ one must see Section 1 (3) of
the Model Law13

International Commercial Arbitration- Indian context

Section 2(1)(f) of the Arbitration and Conciliation Act of 1996 defined International commercial
arbitration as a legal relationship which must be considered commercial where either of the
parties is a foreign national or resident, or is a foreign body corporate or is a company,
association or body of individuals whose central management or control is in foreign hands.

V. INSTITUTIONAL VS AD HOC DICHOTOMY

An institutional arbitration is one that is administered by a specialist arbitral institution under its
own rules of arbitration14 In contrast, in ad hoc arbitration, parties may establish their own rules
of procedure, or, alternatively, may agree that the arbitration will be conducted without involving
an arbitral institution, but according to an established set of rules, such as the United Nations
Commission on International Trade Law (hereinafter “UNCITRAL Rules”).

13
UNITED NATIONS PUBLICATION Sales No. E.08.V.4 ISBN 978-92-1-133773-0
14
BLACKABY ET AL

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The source of authority

It is important to note that these institutional rules, when selected by parties, are usually
incorporated into the main contract between the parties by means of an arbitration clause, and
effectively become part of the parties’ agreement. This often provides the basis for an
institution’s power to make binding decisions over the parties in relation to arbitral procedure.
Moreover, ensuring that the institutional rules are complied with thus becomes part and parcel of
the institution’s role in safeguarding due process by ensuring that the parties’ agreement to
arbitrate is enforced. Any discussion related to the relationship between institutional arbitration
and party autonomy requires the identification of the essential characteristics of this type of
arbitration. Very often, this determination is made by reference to the traditional “ad
hoc”/“institutional” dichotomy15

Difference between institutional and ad hoc arbitration

Institutional arbitration refers to the administration of arbitration by an institution in accordance

with its rules of procedure. The institution provides support for the conduct of the arbitration in
the form of appointment of arbitrators, case management services including oversight of the
arbitral process, venues for holding hearings, etc. It differs from ad hoc arbitration in that several
aspects of the arbitral proceedings such as appointment of arbitrators, conduct of the arbitral
proceedings, scrutiny of awards, etc. may be determined by the arbitral institution. India has not
fully embraced institutional arbitration as the preferred mode of arbitration despite the existence
of several institutions which administer arbitrations.

The Hornet’s nest for India

The present regulatory framework in India, suffers from the ‘duality syndrome’. Although it
provides for institutional arbitration, there is enough scope for parties to adopt ad hoc arbitration
by approaching the court under the provisions of the 1996 Act. In essence therefore, the

15
Blackaby/Partasides (n 2), No 1.140; Born (n 3), § 1.04 [C]; Gerbay (n 4), § 1.02 [A] [1]; see for a critical
appraisal of these views B Warwas, The Liability of Arbitral

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regulatory framework provides for what can be described as a loose institutional set up.
Bhardwaj (2007) raises concern on another vital area where India is lagging behind other
countries is lack of institutional arbitration in India. In light of the same, disputing parties have
largely opted for ad hoc arbitration as compared to institutional arbitration.16

Ad-hoc arbitration itself is plagued with issues. For instance, the costs are not pre-
determined and charged on sitting by sitting basis without any regulation. Frequent
adjournments, hearing and procedural lethargy leads to delay in delivery of the award 17. ad hoc
arbitrations usually devolve into the format of a court hearing with the result that adjournments
are granted regularly and lawyers too prefer to appear in court rather than completing the
arbitration proceeding 18 . India’s 2019 Act makes a number of changes to the process of
arbitration. In an attempt to structure the process, it introduces the Arbitration Council of India,
the ACI to be the apex body for arbitration. One of the key roles of the ACI is to recognize and
grade arbitration institutions in India, among other functions. This was a crucial aspect in
reforming institutional arbitration- whether one institution or more than one institution is to be
established (NITI AYOG Publication). For instance, China has 230 arbitral institutions while
other countries such as Singapore have only one institution. In case having centers across the
country are preferred, and then choice of cities and the criteria for their selection becomes
critical. In light of the same by enacting the 2019 Act, it appears that India has followed the
Chinese model, where more than one arbitration centers are recognized, taking the total to almost
230 centers. The debate seems to have been settled in favor of the latter.

There are over 35 arbitral institutions currently functioning in India. The International
Centre for Alternative Dispute Resolution (ICADR) was founded as a society in 1995. It is an
autonomous organization working under the aegis of the Ministry of Law & Justice, Govt. of
India. ICADR has its head office in Delhi and two regional offices in Hyderabad and Bangalore.
In Southern India, the Nani Palkhiwala Arbitration Centre in Chennai is a private institution
incorporated as a Company. Another institution is the Indian Council for Arbitration (ICA)
which was set up in 1965 at the national level under the initiatives of the Govt. of India and apex

16
PwC, Corporate Attitudes & Practices towards Arbitration, Survey 2013
17
2017, HLC Report Justice SN Srikrishna
18
246th Report, Law Commission of India
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 business organizations like FICCI. Recently, the Government of Maharashtra and the domestic
and international business and legal communities have set up a non profit centre called the
Mumbai Centre for International Arbitration (MCIA). There are other micro level institutions as
well functioning to promote arbitration. However there is no single arbitral seat or institution in
the country which is a centre with global repute.

VI. HIGH LEVEL COMMITTEE (HLC) REPORT ON INSTITUTIONALIZING ARBITRATION-

OVERVIEW

The HLC headed by Justice SriKrishan held 7 sittings. It submitted its report on 3 August, 2017
to Shri Ravi Shankar Prasad, Hon’ble Minister of Law & Justice and Electronics and Information
Technology.
The Committee has divided its Report in three parts. The first part is devoted to suggest
measures to improve the overall quality and performance of arbitral institutions in India and to
promote the standing of the country as preferred seat of arbitration. The Committee in this
context have inter alia recommended –
(i) Setting up an Autonomous Body, styled the Arbitration Promotion Council of
India (APCI), having representatives from all stakeholders for grading arbitral
institutions in India.
(ii) The APCI may inter alia recognize professional institutes providing for
accreditation of arbitrators
(iii) The APCI may hold training workshops and interact with law firms and law
schools to train advocates with interest in arbitration and with a goal to create a
specialist arbitration bar comprising of advocates dedicated to the field.
(iv) Creation of a specialist Arbitration Bench to deal with such Commercial
disputes, in the domain of the Courts.
(v) Changes have been suggested in various provisions of the 2015 Amendments in
the Arbitration and Conciliation Act with a view to make arbitration speedier and
more efficacious and incorporate international best practices.

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 The Committee are also of the opinion that the National Litigation Policy (NLP) must promote
arbitration in Government Contracts.
The Committee in Part II of the Report reviewed the working of ICADR working under the
aegis of the Ministry of Law and Justice, Department of Legal Affairs. The Institution was set up
with the objective of promoting ADR methods and providing requisite facilities for the same.
The Committee has preferred for declaring the ICADR as an Institution of national importance
and takeover of the Institution by a statute. The Committee are of the view that a revamped
ICADR has the potential be a globally competitive institution.

As regards the role of arbitrations in matters involving the Union of India, including bilateral
investment treaties (BIT) arbitrations, the Committee in Part III of the Report has inter
alia recommended for creation of the post of an ‘International Law Adviser’ (ILA) who shall
advise the Government and coordinate dispute resolution strategy for the Government in disputes
arising out of its international law obligations, particularly disputes arising out of BITs. The
Committee has emphasized that ILA may be consulted by the Department of Economic Affairs
(DEA), at the time of negotiating and entering into BITs.19

VII. EXAMINING THE 2019 AMENDMENT ACT

The 2019 Act came into force on 30 August 2019 with the exception of provisions relating to
Arbitration Council of India and other provisions 20 . The Act came into force on the
recommendations of the HLC, headed by Justice Srikrishna. Key provisions of the 2019 Act
have been analyzed as under:

1. ESTABLISHING AND ARBITRATION COUNCIL OF INDIA

The Arbitration Council of India (ACI21), to be established as an ‘independent body’ has been
provided with wide powers in relation to grading of arbitration institutions on the basis of several
factors, being the nodal agency for regulating, training and recognizing the arbitral institutions

19
Source: PIB
20
Sectio ns 2, 3, 1 0, 1 4 and 16 o f 201 9 Act.
21
Part 1A of the 2019 Act

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and staff22. The members shall be appointed by the central government and shall include judges,
practitioners, industry representative and government representatives23 .

Critical Comment:

Setting up a central regulatory body for arbitral institutions in itself is a welcome step. However,
there are certain concerns that must be addressed. First, a bare reading of the provisions in the
2019 Act provides that the government is empowered to remove any member on the ground of
‘abuse of position’ in addition to other grounds24. The term is not defined which leaves room for
wider interpretation. It leaves a question on the ‘autonomous’ working of ACI free from
government control. On the contrary, the direct representation of the government in the
composition of ACI may leave an otherwise private mechanism prejudiced- classic case of
conflict of interest.

Second, the constitution of the ACI does not address the major issue of multiple institutions
itself. Perhaps some direction about the number of institutions on the basis of regions and/or
practices may have been a wiser step. For instance four regional/zonal institutes or institutes on
the basis of practice area like maritime, aviation would have been a more This would also have
been in line with Niti Ayog conference on the arbitration, where the unanimous suggestion was
that India needs to have one central arbitral institution with regional offices in key commercial
cities such as Mumbai, Delhi, Bangalore, Hyderabad etc.

2. COURTS AND THE APPOINTMENT OF ARBITRATORS

Section 11 of the 1996 Act has been amended. Accordingly, the Supreme Court (in case of
international commercial arbitration) and High Court (in case of domestic and other) is
empowered to designate arbitral institutions (graded by the ACI) 25 , upon request by parties.
Where no such graded institutions are available, the High Court may maintain a panel of

22
Section 43D (2) of 2019 Act
23
43C
24
See 43G (1) (a) to (f)
25
Section 3A inserted in the 1996 Act

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arbitrators for discharging the function and duties of arbitral institutions. The application shall be
disposed of within 30 days26.

Critical Comment:

It can be argued that the above practice is in line with global trends. However, the author argues
that one size fits all approach is not tailor made for India. The present scheme of appointment of
arbitrator only adds to the burden of an already brimming judiciary. It gives the whole
‘separating judiciary from arbitration’ concept a miss. Appointment of arbitrator is an
administrative function and involvement of judiciary at the nascent stage of arbitration is not a
wise step. The role of judiciary should have been limited to questions of law, enforcement and
the likes. It is at this stage, that the application should lie with a regulatory body who should be
tasked with maintaining the panel of arbitrators in case no institutes are available.

3. QUALIFICATIONS FOR ARBITRATOR- TAKING AWAY THE GLOBAL ELEMENT

Section 43J and newly added Eight Schedule provide for the qualifications required to be an
arbitrator. Accordingly, any person having following shall be eligible:
- An advocate within the meaning of Indian Advocates Act, 1961 having 10 years of
experience;
- A chartered accountant within the meaning of Chartered Accountant Act 1949 having 10
years experience;
- A cost accountant and a company secretary (registered) and having 10 years of
experience;
- Officer of Indian Legal Service
- Administrative officers, engineers and technical professionals with relevant experience27

Critical Comment

26
Section 3 (13) as amended
27
See section(vi) to (ix) for details

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The provisions set out above are anti thesis to the concept of party autonomy. A bare reading of
amendment suggests that there is a bar on appointment of foreign practitioners as arbitrators. The
non-participation of foreign professionals means that foreign parties will be reluctant to see India
as a neutral third-party seat, and it may well be reduced to handling disputes where one of the
parties is Indian. This will act as catch-22 in making India an international nerve centre for
arbitration.

4. AMENDMENT TO TIMELINE S

In the case of a domestic arbitration, the time-period of 12 months (extendable of course by

another 6 months subject to consent by the parties, and thereafter by the Court) for the
conclusion of the proceedings is now to be reckoned from the date of completion of pleadings
instead of from the date of constitution of the arbitral tribunal28. The parties shall file statement
of claim and defence within 6 months from date of notice of appointment of arbitrator.29

Critical Comment: The non binding nature of this provision to international commercial
arbitration reveals the fundamental reluctance in our frame of reference to international matters.
For one, you can either regulate them or leave them but not act appealable to such instances.
While 29A (a) (1) hopes that international awards will be made within twelve months, there are
no guidelines about what happens if they are not so done. Does the provision provide an
indefinite timeline?

5. OTHER AMENDMENTS

1. Blanket confidentiality provision30 cement in letter and spirit the objectives of arbitration.
2. The provisions that no suit or proceeding shall lie against the arbitrator for anything done
in good faith or intended to be done under the Act31- strengths the position of arbitrators.

28
Section 6 of 2019 Act amending Section 29 A of 1996 Act
29
Section 5 of 2019 Act amending Section 23 of 1996 Act
30
Section 42A inserted by 2019 Act
31
Section 42B inserted by

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 3. Clarifying the term ‘furnishes proof’ to mean ‘establishes on the basis of record of the
arbitral tribunal that’ for an application under Section 34 of the 1996 Act- is also a step
towards vesting more authority with the tribunal.

6. EXPLORING THE LACUNAE

1. No express provisions for an arbitration bench: As on date, Indians fare extremely poorly
in appointment as international arbitrators. As per LCIA 32 data for 2015, out of 449
appointment of arbitrators last year, there were no Indians. Similarly, even though most
Indian arbitrations are seated in Singapore, SIAC report for 2015 records that out of 126
arbitrator appointments, only 3% were Indians.33 This is a clear case in point showing
that Indians are excluded from the system of international arbitration. While the HLC
suggested some form of arbitration bar/bench, there appears to be little in the Act to
address this concern. This is left at the discretion of the ACI although the Act itself
should have provided guidance.
2. Institutions and Better Opportunity: the LCIA closed its Indian operations in 2016 citing
‘market feedback’ that Indian parties were content with existing practices and did seldom
use LCIA clause in their agreements. This reflects a general lack of exposure and attitude
of businesses in shunning away from ADR. There needs to be some form of impetus from
the government in increasing awareness about arbitration, funding for institutions and the
procedures adopted by them.
3. Ensuring Uniformity: How the ACI will determine uniformity in procedures adopted by
different arbitral institutions remains to be seen in practice. The Act does not provide any
guidelines on the conduct of the institutes, their structure, secretarial staff qualifications
and so on. Perhaps, ACI will issue guidelines to address this lacunae, we can only remain
hopeful.

32
London Court of International Arbitration
33
QMUL Arbitration Survey

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VIII. NEW DELHI INTERNATIONAL ARBITRATION CENTRE -NDIAC
One of the recommendations of the High-Level Committee was to revamp the International
Centre for Alternative Dispute Resolution (ICADR) established in 1995. Accordingly, the New
Delhi International Arbitration Centre Bill 2019 received presidential assent on 26 July 2019 and
the New Delhi International Arbitration Centre Act 2019 (NIAC Act) came into force. The Act is
deemed to have come into force on 2 March 2019.

In line with the provisions of the same, NDIAC shall oversee both domestic and international
arbitration in the India and shall be an institution of national importance. It shall take over the
ICADR infrastructure and regulation.

A. Section 3 of the Act provides for the establishment of NDIAC as a body corporate having
perpetual succession, a common seal with power to acquire, hold or dispose of property and
power to enter into contract and to sue and be sued in its own name.

B. Section 5 of the Act provides that the NDIAC shall consist of:

 one Chairperson (who has been a judge of the Supreme Court or of a High Court or an
eminent person, having special knowledge and experience in the conduct and
administration of arbitration)

 two eminent persons (having substantial knowledge and experience in institutional

arbitration, both domestic and international) as full-time or part time members

 one representative of a recognised body of commerce and industry as part-time member

 Secretary to the Department of Legal Affairs, Ministry of Law and Justice or his
representative not below the rank of Joint Secretary

 Financial Adviser to be nominated by Ministry of Finance, and

 the Chief Executive Officer of the NDIAC as Member ex-officio.

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C. The Chief Executive Officer34 shall be responsible for the day-to-day administration of the
NDIAC. The Act (section 23) also provides for the establishment of a Secretariat consisting of a
Registrar (who shall supervise the activities of the NDIAC), Counsel (dealing with matters
relating to domestic and international arbitration) and other officers and employees.

E. The objects of the NDIAC have been defined under section 14 of the Act as follows:

 to bring targeted reforms to develop itself as a flagship institution for conducting

international and domestic arbitration;

 to promote research and study, providing teaching and training, organising conferences
and seminars on arbitration, conciliation, mediation and other alternative dispute
resolution mechanisms;

 to provide facilities and administrative assistance for conciliation, mediation and arbitral
proceedings;

 to maintain panels of accredited arbitrators, conciliators and mediators both at national

and international level or specialists such as surveyors and investigators;

 to collaborate with other national and international institutions and organisations for
ensuring credibility of the NDIAC as a specialised institution in arbitration and
conciliation;

 to set up facilities in India and abroad to promote the activities of the NDIAC;

 to lay down parameters for different modes of alternative dispute resolution mechanisms
being adopted by the NDIAC; and

 such other objectives as it may deem fit with the approval of the Central Government.

As per section 15 of the Act, the NDIAC shall strive:

 to facilitate the conduct of international and domestic arbitration and conciliation in the
most professional manner;

34
Section 21 of the NDIAC Act

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  to provide cost effective and timely services for the conduct of the arbitration and
conciliation at national and international levels;

 to promote studies in the field of alternative dispute resolution and related matters and to
promote reforms;

 to undertake teaching and to provide for diffusion of knowledge of law and procedures on
alternative dispute resolution and related matters and to award certificates and other
academic or professional distinction;

 to impart training in alternative dispute resolution and related matters to those who are
handling arbitration, conciliation and mediation;

 to cooperate with other societies, institutions and organisations, national or international

for promoting alternative dispute resolution; and

 to perform such other functions as may be entrusted to it by the Central Government for
promoting alternative dispute resolution.

F. Chamber of Arbitration and Arbitration Academy

The NDIAC shall establish a Chamber of Arbitration which shall empanel arbitrators and also
scrutinise the applications for admission to the panel of arbitrators. Section 28 of the Act
provides that the Chamber of Arbitration shall consist of experienced arbitration practitioners of
repute (at national and international level) and persons having wide experience in the area of
alternative dispute resolution and conciliation.

Further, NDIAC may establish an Arbitration Academy35 to train arbitrators, particularly in the
area of international commercial arbitration; to conduct research in the area of alternative dispute
resolution and allied areas.36

IX. CONCLUDING REMARKS

35
section 29 of the NDIAC Act
36
Ganesh Chandru, Lexology

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 India’s back foot approach in establishing a central arbitration institution has resulted in
again for other jurisdictions.37 The 2019 Act is a step in the positive direction but makes
more misses than hits. Perhaps, the legislature needs to involve non-partisan experts from
across the industry for comments to have well framed provisions.

On another note, the establishment of NDIAC is an excellent initiative. It must be

ensured (and demonstrated) that NDIAC will have ‘hands-off’ approach from the
Government. If this can be achieved, NDIAC certainly has the potential to be the flagship
arbitral institution in India and an institution of international repute in the years to come.
It cannot be so that the arbitral institution be totally immune from government control. However,
the institution should enjoy some immunities and privileges. The operational funding is to be
provided by an agency at the outset and thereafter, the institution should operate so as to self-
generate the development funding. Establishing a stable and vibrant eco-system for the arbitral
institution is the next significant consideration. The institutions in themselves should be credible,
independent, efficient and transparent which is a challenge in India looking at its diversity.
Further, the leadership of the institution should be vibrant and should be supported by well-
trained support staff for qualitative arbitration and library apart from physical and technological
infrastructure. Effective use of technology such as e-filing, creating database of cases, big data
analytics, Online Dispute Resolution, video conferencing needs to be scaled up and be put to
extensive use in the process of arbitration. One example being video conferencing as no
adjournment would be required, cases can be registered on line, voluminous papers can be
instantly transmitted, and testimony of experts can be recorded through video conferencing.
Having strong and credible arbitral institution is essential since institutes serve as centres of
learning for establishing a culture think-tank for discussion. This would be useful for students,
professionals and perhaps even for the judiciary to discuss and deliberate on the subject through
seminars, journals and case-law. This in turn would help in developing journals on the subject,
on creation of a bar, evolution of best practices and honing of rules on the subject –all of which
would contribute to the soft law.

37
In an independent survey, lawyers pointed out that parties from India chose Singapore as the choice of jurisdiction
for it has a government instituted arbitration center (Financial Times). Indian parties were the top foreign user of the
SIAC with 153 new cases in 2016.

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