Government of India has enacted the Arbitration and Conciliation (Amendment) Act, 2019, with the Bill having received the Presidential assent and notified in the Official Gazette on August 9, 2019.
Subsequently, a high-level committee was set up to provide recommendations on the promotion and development of institutional arbitration in India. Based on its recommendations, the legislature decided to further amend the Arbitration Act by passing the Arbitration and Conciliation (Amendment) Act, 2019 (Amendment Act). The Amendment Act has received the President’s assent on 9 August 2019. All Sections have come into force from 30 August 2019 (except for Sections 2, 3, 10, 14 and 16 which are yet to be made effective).
(a) Arbitration Council of India
The Arbitration Council of India (Council) has been established as an independent body to promote arbitration, mediation, conciliation and other alternative dispute redressal mechanisms. It will act as the nodal agency to drive policy/regulatory reforms in arbitration, strengthen institutional arbitration and promote uniform standards.
(b) Qualifications for Arbitrator
A new Eighth Schedule has been introduced in the Arbitration Act which provides for the qualification, experience and norms for accreditation of arbitrators. Advocates enrolled under the Indian Advocates Act, 1961, persons with law degrees who have been officers in government/autonomous bodies, public sector undertakings, private sector and certain other technical professionals such as chartered accountants, company secretaries and engineers with requisite experience can be appointed as arbitrators under the Schedule.
(c) Appointment of Arbitrators
The Amendment Act has modified Section 11 of the Arbitration Act relating to appointment of arbitrators by courts pursuant to an application by a party. The amendment allows the Supreme Court (in cases of international commercial arbitrations) and the High Courts (in cases of other arbitrations) to delegate appointment of arbitrators to arbitral institutions graded by the Council or in its absence, a panel of arbitrators. Such appointment of arbitrator must be completed within 30 days from the application being made by the parties. Further, the arbitral institutions or panel of arbitrators have the power to determine the fees of the arbitrators, subject to the rates specified in the Fourth Schedule of the Arbitration Act.
(d) Timeline for Completing Arbitrations
The Amendment Act has amended Section 29A of the Arbitration Act to alter the timelines for completing arbitrations. Under the amended section, all parties must file their statement of claim and statement of defence within six months from the date of receipt of notice of appointment of arbitrators. Upon completion of pleadings, arbitration is required to be completed within 12 months therefrom, extendable by another 6 months by mutual consent of the parties. If arbitration is not completed within 18 months from the date of completion of pleadings the court’s permission is required for the arbitration to continue. Additionally, while any application for extension of timeline is pending before the court, the mandate of the arbitrators has specifically been allowed to continue.
The second stage, comprising of pleadings and award on substantive issues. This could
(e) 2015 Amendments Applicable Prospectively
The Amendment Act has inserted a new section clarifying that the 2015 Amendments are applicable only to (a) arbitrations commenced on or after the date from which the 2015 Amendments came into force, i.e., 23 October 2015; and (b) court proceedings arising out of or in relation to these arbitration proceedings. It has been clarified that the 2015 Amendments neither apply to arbitrations commenced before 23 October 2015 nor to court proceedings arising from such arbitrations, even if the court proceedings were filed after the commencement of the 2015 Amendments.