A Regulatory Body in the field of Arbitration: A Boon or Bane?

By- Anjanee Goel & Diksha Gupta

“I realized that the sincere function of a lawyer was to unify parties…A substantial part of my time throughout the 20 years of my practice as a lawyer was occupied in bringing about private compromise of hundreds of cases. I lost not a thing thereby- not even money, unquestionably not my soul”


Justice delayed is justice denied. Therefore, taking into consideration the high pendency of cases in the courts & cost of litigation and alternative dispute redressal mechanism was made.[1] Arbitration is one of the most important ADR methods.[2] 

According to Black’s law dictionary[3], “Arbitration in practice is the inspection and determination of a matter or matters of dissimilarity between contending litigants, by one or more unofficial persons, nominated by the parties. Compulsory arbitration is that which takes place when the assent of one of the parties is enforced by statutory provision. Voluntary arbitration is that which takes place by mutual and free assent of the parties.”

There are two kinds of arbitration proceedings in India: Institutional arbitration and Ad hoc arbitration. The parties have the recourse to seek alternatives to any one of them counting on their preference and satisfaction.[4]

Arbitration is nothing new to India. India is a land of villages and resolving disputes through ‘Panchayat dar’ is a well known traditional method.[5] It was in the 19th century that a proper legal framework in this field was introduced in India.[6] The foremost law on Arbitration in India was the Arbitration Act, 1899 founded on the English Arbitration Act, 1899 which was elongated to further fragments of British India via section 89, and Schedule II of the Code of Civil Procedure, 1908. And then, in 1996, Arbitration and Conciliation Act, 1996 was enacted, repealing the Act of 1940. 

Furthermore, Section 89 Civil Procedure Code was reintroduced making it mandatory to arrange settlement in all sorts of cases governed by the code.[7] Now, if it is evident to a Civil Judge that there is anything that requires settlement, he is obliged to refer to a dispute settlement. The Civil Judge will formulate the terms of settlement & will refer the matter either through arbitration, conciliation, mediation, or through a judicial settlement like Lok Adalat.

Many Acts have been enacted & repealed in the field of Arbitration. India is a developing nation and with the changing society, the law needs to be changed or modified, as the case may be. Keeping in mind the aim of providing fair & speedy justice of our Constitution[8], on 18th July 2018, Minister of Law and Justice Mr. PP Chaudhary, to amend the Arbitration and Conciliation Act 1996, introduced The arbitration and conciliation bill 2018 in Lok Sabha.

A high-level committee was constituted under the chairmanship of Justice BN Srikrishna to recommend the changes required. The bill was approved by the Lok Sabha but was pending before Rajya Sabha & in the meantime, Lok Sabha was dissolved and the bill was left unapproved. Then, again on 15th July 2019, The bill was reintroduced with some minor changes as the Arbitration and Conciliation (Amendment) Bill, 2019, by Minister for Law Ravi Shankar Prasad which has been approved by the Rajya Sabha on 18th July 2019 and this will lead to a new regime in the field of Arbitration.[9] 

India has set sights on turning into a center point for global jurisdiction similarly to Singapore, wherein the arrangement of arbitrators is assigned according to the Singapore International Arbitration Centre (SIAC) and Hong Kong, wherein the arrangement of authorities is as per the Hong Kong International Arbitration Centre (HKIAC) individually.[10] 

The principle point of the Bill was to give a reasonable system for all the arbitration on or after 23.10.2015 which is suitable for both local and worldwide arbitration. The Bill intends to diagram an appropriate course of events and reinforce institutional arbitration with the goal that it will promptly improve the dispute resolution mechanism in the nation.

The 2018 Bill was introduced recommending several changes and one of them was to establish an independent body called the Arbitration Council of India for the promotion of arbitration, mediation, conciliation, and other alternative dispute redressal mechanisms.  

A major recommendation made underneath the report is the construction of a Council that would assess arbitral institutions in India and set benchmarks. While acquiring this recommendation, the Bill grants competence to the council of forming regulations, which would have enforcement of the law. Thereby completely changing the nature of the body from the one contemplated under the report.

The fundamental explanation behind proposing the Arbitration Council of India (ACI) to be an administrative body is because of the way that the Government of India is the biggest litigator in India, and ACI should make genuine endeavors to defeat the inadequacies of the Arbitration and Conciliation (Act). 

As per the Bill[11], the principal elements[12] of the ACI would be as per the following; 

  • Confining policies for reviewing arbitral foundations and certifying arbitrators. 
  • Making arrangements for the foundation, activity, and support of uniform proficient standards for all alternative dispute redressal matters. 
  • Keeping up a store of arbitral awards (decisions) made in India and overseas.

The committee suggested the nomination of a prominent overseas practitioner appointed by the Attorney General of India on the governing body of the council. The overseas practitioner can help in introducing international best practices, and, more eminently, permit the council to be viewed positively by foreign counterparts, taking into account that the government wishes to encourage international arbitration in the nation. Nevertheless, this suggestion has been discarded.

Additionally, the report only expounded on the council acknowledging professional institutes that come up with granting of credit to arbitrators such as the Chartered Institute of Arbitrators.

Nevertheless, the 2018 Bill permits the council to scrutinize the grading of arbitrators. This generates a concern, that is, whether the council can also unequivocally look at arbitrator accreditation? If so, it again creates a huge issue of conflict of interest.[13]

The bill was based on the recommendations of the committee but, while finalizing the bill, it was slightly modified. 

The Bill suggests that the Arbitration Council of India will be led by the Chairperson who might be Chief Judge of a High Court or a Supreme Court judge or High Court or a prominent individual with expert information in the lead of arbitration. Besides, the council will incorporate prominent specialists, academicians, and government deputies with involvement in the arbitration. The Secretary to the Government of India in the Legal Affair, Ministry of Law and Justice, or a delegate, another part from the Government of India in the Department of Expenditure, Ministry of Finance, or an agent could likewise be considered for being the individuals from the council. There would likewise be one delegate from the Commerce and Industry on a rotational premise and lastly, a Chief Executive Officer or a Secretary ex officio could likewise be the individual of the committee.[14] 

The Committee had suggested that the Judge who has retired from the Supreme Court or High Court who might be selected by the Chief Justice of India will head the Arbitration Council of India. Different individuals in the council are imagined to be prominent professionals, academicians, and government nominees with involvement in arbitration as will be named by the Central Government. The Committee has additionally suggested that a chosen one member from the Ministry of Law and Justice and another delegate from the Commerce and Industry office on a rotational premise, as chosen by the Ministry of Commerce and Industry, would likewise be available. Lastly, the Committee suggested that there ought to likewise be the existence of one overseas expert who has generous information and involvement with the field of arbitration. 

Arbitration is without a doubt getting increasingly mind-boggling with each passing amendment. In spite of the fact that the usage of the Bill is yet to be evaluated, the governing body should pay special mind to a far-reaching correction covering all the grounds as opposed to executing a piecemeal in a short time frame which will make a question in the International legal framework as it might reflect as a beginner in the organization of the other worldwide arbitration jurisdiction.[15]

The enactment of the 2019 Act is a long-awaited step in rationalizing India’s Arbitration Laws. The 2019 Bill, much like the 2018 Bill, is full of various issues and glaring irregularities with the Committee Report and legal point of reference. Further, the 2019 Bill proposes changes, for example, the formation of a government regulator through the Arbitration Council of India, which has no point of reference in any arbitration-friendly jurisdiction. The Act aims to provide a suitable time framework & procedure for the proceedings and also aims to strengthen the alternative dispute redressal mechanism. Hence, the present need for reforms to bring a regulatory body, proper time framework, legal framework in the enforcement transparency and accountability needs to be addressed in the Bill. 

This is a welcome measure to make India more arbitration-friendly. It is definitely a positive step in the ADR reforms, if implemented in its true spirit, & is a well-intentioned piece of legislation that aims to balance the interests of the parties. Only the time test will show whether the changes introduced by the Bill will attain the objectives that it aims to achieve and resolve the concerns that it asserts to address, however, the provisions appear to be exhaustive,. The provisions inspire confidence in the arbitration proceedings, and further clarity can be realized only when all the rules & regulations are in place. 

It is important for the parties, arbitrators, lawyers,  to familiarise themselves with the changes and understand the impact on their operations. 

However, the enforcement of a regulatory body in the field of Arbitration is a question on hand since the conflict of interest in India is a matter of grave concern.  

Although these initiatives are encouraging, the 2019 Amendment Act alone may not be able to spur international arbitration in India. For the development of any jurisdiction as international Arbitration depends on a number of factors apart from having favorable local laws. The performance of laws, rules, and regulations; expansion of competent institutions; availability of conducive infrastructure for Arbitrations – all these amongst others go into the development of an arbitration hub. However since the Government has taken these measures for conducive laws to support Arbitration, it could be rationally be expected that other factors too may fall in place sooner than later.

India is frequently condemned as a “non-accommodating” arbitration jurisdiction by the worldwide network. The 2019 Amendment endeavors to take this analysis head-on, anyway in one’s view, it makes a greater number of misses than hits simultaneously. Although a positive development, yet, India is far away from turning into a global arbitration centre.

[1] Ukey, K. (2015). ‘Arbitration, Conciliation and Mediation – Alternative Disputes Resolution Mechanism – A Bane or Boon’: An Analytical Study of Indian Arbitration and Conciliation Act 1996, and A peek into the global scenario. Retrieved 20 July 2020, from http://pezzottaitejournals.net/pezzottaite/images/ISSUES/IJEBEPV4N1.pdf.

[2]  Indian Council of Arbitration- Transforming India into a Global Arbitration venue. (2010). Retrieved 20 July 2020, from http://www.icaindia.co.in/april-june.pdf.

[3] Garner, B. A., & Black, H. C. (2009). Black’s law dictionary. 9th ed. St. Paul, MN: West.

[4]  Kumar, A. (2017). ARBITRATION ORGANISATIONS IN INDIA – Singhania And Partners. Retrieved 20 July 2020, from https://singhania.in/arbitration-organisations-in-india/.

[5] Indian Council of Arbitration- Transforming India into a Global Arbitration venue. (2010). Retrieved 20 July 2020, from http://www.icaindia.co.in/april-june.pdf.

[6] Arbitration Act, 1899.

[7] Section 89 of C.P.C. was repealed by Section 49 of the Act 10 of 1940 and again reintroduced by Section 7 of the Act 46 of 1999 with effect from 1-7-2002.

[8]Agarwal, N. (2019). ADR : A boon to achieve speedy justice – LawOrdo. Retrieved 20 July 2020, from https://www.lawordo.com/adr-a-boon-to-achieve-speedy-justice/.

[9] Goswami, D. (2019). Light Of The Day For The Arbitration Council Of India Through Arbitration And Conciliation (Amendment) Bill, 2019 – Litigation, Mediation & Arbitration – India. Retrieved 20 July 2020, from https://www.mondaq.com/india/arbitration-dispute-resolution/834386/light-of-the-day-for-the-arbitration-council-of-india-through-arbitration-and-conciliation-amendment-bill-2019.

[10] Id.

[11] Id.

[12] The Arbitration and Conciliation (Amendment) Bill, 2019. Retrieved 20 July 2020, from https://prsindia.org/billtrack/arbitration-and-conciliation-amendment-bill-2019.

[13]  Kabra, A. (2018). Arbitration Council: The Birth Of A New Regulator? – Litigation, Mediation & Arbitration – India. Retrieved 20 July 2020, from https://www.mondaq.com/india/arbitration-dispute-resolution/689482/arbitration-council-the-birth-of-a-new-regulator.

[14] Goswami, D. (2019). Light Of The Day For The Arbitration Council Of India Through Arbitration And Conciliation (Amendment) Bill, 2019 – Litigation, Mediation & Arbitration – India. Retrieved 20 July 2020, from https://www.mondaq.com/india/arbitration-dispute-resolution/834386/light-of-the-day-for-the-arbitration-council-of-india-through-arbitration-and-conciliation-amendment-bill-2019.

[15] Id.


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