PRATSS BRO

International commercial arbitration has been the chosen method for resolution of business
disputes for several decades as it offers the advantage of not going to the regular courts and
thus saving oneself from the bother of the legal maze. However, in the process of conducting
Arbitration and enforcing the award passed by the tribunal, parties often used to take recourse
to the Courts. Many matters reached till the Apex Court in order to achieve the finality in the
adjudication process. Thus, instead of speedy redress of business disputes, international
commercial arbitration has begun to be viewed, and not wrongly, as another tier in the already
cumbersome process.
Making India as the hub of International Arbitration has been one of the pioneering initiatives
of the Prime Minister Shri Narendra Modi led NDA Government. In pursuit of same the
Parliament enacted the Arbitration and Conciliation Act, 2019 (the Act) in order to make the
arbitration regime in India at par with international standards.
The Act establishes an independent body called Arbitration Council of India (ACI) for
promotion of arbitration, mediation, conciliation and other alternative dispute redressal
mechanisms. The government, in consultation with the Chief Justice of India, will appoint the
chairperson of the ACI. The chairperson has to be 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. ACI’s functions would include
framing policies for grading arbitral institutions and accrediting arbitrators, making policies
for establishment, operation and maintenance of uniform professional standards for all alternate
dispute redressal matters, and maintaining a depository of arbitral awards made in India and
abroad. The Amendment Act empowers the Supreme Court (in the case of an international
commercial arbitration) and the High Court (in cases other than international commercial
arbitration) to designate arbitral institutions for the purpose of appointment of arbitrators. Such
arbitral institutions will be graded by the Arbitration Council of India.
The Act seeks to put India on the world map in arbitration proceedings and make Indian
Arbitrators sought globally. The aim is to reduce the burden of the Courts from appointing the
arbitrators so as to ensure speedy appointment of arbitrators and to provide the parties with a
variety of arbitrators from the panel to ensure the sacrosanct right of parties to appoint their
own arbitrator is appreciated. The underlying idea is that instead of the court stepping in to
appoint arbitrator(s) in cases where parties cannot reach an agreement, the courts will designate
graded arbitral institutions to perform that task (per Sections 11(4)–(6).1
The ACI is also entrusted with the function of reviewing the grading of arbitrators (Section
43D(2)(c)). The qualifications, experience and norms for accreditation of arbitrators shall be
such as specified in the Eighth Schedule, as introduced by the 2019 Amendment (Section 43J).
The Eighth Schedule stipulates nine categories of persons (such as an Indian advocate or cost
accountant or company secretary with certain level of experience or a government officer in
certain cases inter alia) and only those are qualified to be an arbitrator.
In BCCI v. Kochi Cricket Private Limited2, the Supreme Court had gone so far as to express
its displeasure with the then pending proposal to render the 2015 Amendment prospective in
nature. The Supreme Court had urged a re-think in this regard. However, Parliament has
specifically disregarded the advice of the Supreme Court, and through the 2019 Amendment
expressly made the 2015 Amendment prospective in nature i.e. the provisions of the 2015
Amendment would only apply to cases where the arbitration was invoked post October 23,
2015. The all-encompassing language makes the applicability of the 2019 Amendment
prospective not only to arbitration proceedings themselves but also related court proceedings.3

The Act introduces the confidentiality of arbitral proceedings, relaxes the stringent time-period
for completion of arbitration proceedings as prescribed by the 2015 Amendment to a certain
extent and trims down the scope of challenge under Section 34 as it expressly clarifies that the
challenge has to be made by the party concerned on the basis of the record of the arbitral
tribunal alone, thereby expressly barring reference to material which was not placed before the
arbitral tribunal.

The provision of interim measures by the arbitral tribunal has been reduced by the removal of
the power of arbitral tribunal of granting interim measures after the making of the arbitral
award. Thus now only the after the making of an award and before its enforcement, it is the
concerned Court only which can be approached for interim measures under Section 9 of the
1996 Act.

1
http://arbitrationblog.kluwerarbitration.com/2019/08/25/the-2019-amendment-to-the-indian-arbitration-act-a-
classic-case-of-one-step-forward-two-steps-backward/.
2
(2018) 6 SCC 287.
3
Dr. Amit George, “The 2019 Arbitration Amendment Act and the changes it ushers in - A Primer”,
Another substantial change brought by the Act is that Section 45 is now placed at equal footing
with Section 8 the 1996 Act as regards the nature of the determination required to be made by
a Court. Thus now the scope of enquiry by the Court with regards to the reference of arbitration
is now restricted only to the extent of prima facie examination of the arbitration agreement for
both domestic as well as international commercial arbitration.

In India, arbitration is skewed towards Ad-Hoc rather than an Institutional setup. Ad-Hoc
Arbitration includes “only” the tribunal and the parties to the disputes and the parties and the
tribunal alone are responsible for organizing their procedure and determining all aspects of the
arbitration – such as, the number of arbitrators, theirappointment, the laws applicable and the
procedures for overseeing the arbitration. Institutional Arbitration includes one additional
“participant” (i.e, a formally recognised arbitral institution) and the institution aids and
administers the arbitral process. Essentially, the contours and the procedures of the arbitral
proceedings are determined by the institution designated by the parties. Each institution follows
its own rules, provides its pre-determined arbitration framework, and has its own method of
administration to facilitate the process. While the former is considered to be more flexible,
cheaper and faster if administered in a spirit of co-operation, the latter is deemed to be based
on expertise, efficiency and an organized set up. As a result of the structured procedure and
administrative support provided by institutional arbitration, it provides distinct advantages,
which are unavailable to parties opting for ad hoc arbitration

The Act mainly aims at institutionalizing the arbitration scene in India as institutional
arbitration is the norm for commercial dispute resolution in most advanced jurisdictions. The
obvious inclination towards Institutional Arbitration is because features like fixed arbitrator’s
fees, administrative expenses, qualified arbitration panel, rules governing the arbitration
proceedings etc., helps in the smooth and orderly conduct of arbitration proceedings and also
provides an essence of reliability and credibility to the process. India’s poor record in
enforcement of contracts is not surprising given the notoriously high pendency of cases and
endemic delays in Indian courts. Therefore, there is a need to provide viable alternatives to
litigation. Arbitration is often the first alternative amongst these—it holds the promise of
flexibility, speed and cost-effectiveness.