In this blog, the author has discussed the concept of Arbitration and the formation of the Arbitration Council under the Arbitration and Conciliation Act, 2019.
Arbitration is a modern way of dealing with cases of commercial and civil nature, outside the court and with parties' prior consent. The law of arbitration is not a newly based concept; it is a well-versed concept with its history goes back to a long time. The arbitration law of India was governed by the principal act of the Arbitration and Conciliation Act, 1996. The arbitration act, 1940 governed earlier the law of arbitration, but due to its incompetence in various spheres, the act was amended, few reasons of amendment of the principal act were-
There was no proper procedure laid down, as to how to enforce the arbitration process, so it gives lawyers a chance to appeal to the courts in most of the cases.
The ease in appeal of the decision of the arbitrator in court, renders the meaning of arbitration process null, as the cases were pending before the court for long.
The arbitration process was not based on the uniform pattern, one which was laid down later, so the model and rules of the act of 1940 become outdated.
Justice Desai commented on the act, '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 …[1]'
With the coming of the international law, in 21.06.1985, United Nations Commission on International Trade Law adopted (UNCITRAL)[2] model law, a new act was framed and later on adopted.
Since India is the signatory of the New York Convention on enhancing the field of arbitration in-country, accepted the model law laid down in the UNCITRAL, and with some modification, enacted a new law named Arbitration and Conciliation Act, 1996.
Recently the government of India, to bring new advancement in the law of arbitration and promote various alternative dispute mechanisms like mediation and conciliation, bring the change in the act, to make it more efficient to redress the dispute of the people and to encourage more and more people to opt arbitration and conciliation, in place of filing the suit in the court.
The new Arbitration and Conciliation Amendment Act, 2019, comes up with a new setup of a statutory body of Arbitration Council of India, (hereinafter referred to as ACI), the provision of ACI has been laid down-
Section 1 (ca) of the act an "an arbitral institution designated by the Supreme Court or a High Court".
Arbitration Council of India[3]-
The ACI will have its principal seat in Delhi, and the composition[4] of it has been defined by the act as-
The government will make all selections in a consultant with the Chief Justice of India. The purpose of the council[5] is to
"promote and encourage arbitration, mediation, conciliation or other alternative dispute resolution mechanisms and for that purpose, will frame policy and guidelines for the establishment, operation, and maintenance of uniform professional standards in respect of all matters relating to arbitration[6]"
The act lays down the establishment of the arbitral institution by the central government[7] by notification, who will be responsible for the appointment of arbitrators[8] in matters, if in case, the parties do not lay down the procedure to appoint the arbitrator or any party breach the process of selecting arbitrator, then-Supreme Court (in case of dispute arising out of international commercial arbitration) and, High Court (in case of dispute arising out other then International commercial arbitration) may designate the arbitral institution to appoint the arbitrator within thirty days from date of application, fees of the arbitration tribunal is been laid down in Schedule IV of Act, all the works and functions of the arbitral institution will be carefully assessed and graded[9] by the ACI.
The amendment in Section 11, comes in the background of ill practice of appointing partial arbitrator and to ensure that proper justice takes place as you cannot challenge the arbitral award in the court (except under certain circumstance)[10] it is of great importance to ensure that the sole impartial arbitrator has done justice. The supreme court in the various cases[11] has dealt with the situation in which parties appoint the arbitrator, which favors them, and this breaches the principle of natural justice of "Nemo Judex In Causa Sua[12]". This new amendment ensures the appointment of the arbitrator by the concerned courts through the arbitrary institution.
The ACI has been criticized, on the ground that it takes away the right to appoint an arbitrator of parties' own choice the ACI as taken away the right by setting up an institution to appoint the same[13].
Another critical point is the growing involvement of legislatures/government in the judicial process, as the composition is of ex-officio member who will be secretary[14] from the central government and the central government will make the appointment in consultant with the CJI[15]. Still, it, however, breaches the principle of Separation of Power, which is part of the Basic structure[16].
So, through this article, the writer wants to showcase the new leap which the Indian Arbitration law has taken, through the enactment of Arbitration Council of India, this institution will take the arbitration and other various dispute resolution to its perfection while checking and implementing various policies for the betterment of the dispute resolution setups in our country. The new amendment in the arbitration act will undoubtedly ensure the starting of Indian arbitration to perfection.
References:
[1] Guru Nanak Foundation vs Rattan Singh & Sons, AIR 2075 (1981).
[2] GENERAL ASSEMBLY RESOLUTION 31/98.
[3] The Arbitration and Conciliation (Amendment) Act, S. 1A (2019).
[4] The Arbitration and Conciliation (Amendment) Act, S. 43C (2019).
[5] The Arbitration and Conciliation (Amendment) Act, S. 43D (2019).
[6] Mondaq.com. (2019). The Arbitration and Conciliation (Amendment) Act, 2019, Key Highlights - Litigation, Mediation & Arbitration - India. [online] http://www.mondaq.com/india/x/840292/Arbitration+Dispute+Resolution/Recent+Amendments+to+the+Companies+Act+2013 [Accessed 13 March 2020, 02:45 PM].
[7] The Arbitration and Conciliation (Amendment) Act, S. 43B (2019).
[8] The Arbitration and Conciliation (Amendment) Act, S. 11 (2019).
[9] The Arbitration and Conciliation (Amendment) Act, S. 43J and Eighth Schedule (2019).
[10] The Arbitration and Conciliation (Amendment) Act, S. 34 (2019).
[11] Perkins Eastman Architects DPC v HSCC (India) Ltd, Arbitration Application No. 32/2019 decided on November 26, 2019, TRF Ltd. v Energo Engineering Projects Ltd, 8 SCC 377 (2017).
[12] No One Can Be Judge In his Case.
[13] Supra note 7.
[14] Supra note 3.
[15] Id.
[16] Keshvananda Bharti v Union of India, 4 SCC 255 (1973).
Submitted by:
Shubham Gandhi
Dharmashastra National Law University, Jabalpur
(Images used for representative purpose only)