Arbitration in India has failed to completely get off the ground, as opposed to other foreign territories such as the UK, Singapore the US, etc. Judges have scepticism of the powers of arbitrators and of the arbitration mechanism, resulting in judicial interference and judicial review at any point of the arbitration hearings. Searching for potential ways to deal with the limping arbitration process in India, New Arbitration and Conciliation (Amendment) Bill 2018 incorporating Part IA along with other minor revisions to the Arbitration and Conciliation Act, 1996 has been introduced. Bills would incorporate creation of the New Delhi Arbitration Centre, and promulgation of Arbitration Council of India . The goal of this move is to foster arbitration as an alternative dispute settlement mechanism in India and position India as a world arbitration-friendly entity.
The Bill emphasises the need to establish a multifaceted arbitration board for India. The Council will support the arbitration process and other alternate dispute management methods, rates and accredit arbitral organisations, maintains a registry of electronic arbitration awards, formulates policy and regulations for the implementation of consistent ethical practises in matters of arbitration and appoints arbitrators through designated Institutions by Supreme Court/ High Court.
The composition of the Council shall be
Retired judge of Supreme Court or High Court, appointed as chairman by the Central Government in consultation with the Chief Justice of India;
Arbitration practitioner nominated as the Central Government Member;
Academician having research and teaching experience in the field of arbitration, appointed by the Central Government in consultation with Chairman ;
Secretary to the Central Government in the Department of Legal Affairs and in the Department of Expenditure.
Representative of Ministry of Finance and Ministry of Law and Justice
One representative of a recognised body of commerce and industry, chosen on rotational basis by the Central Government, as a part-time member,
Chief Executive Officer-Member-Secretary, ex officio.
The execution of these goals appears to be complicated, since the rules regulating the Council are ambiguous. The Council shall consist of government nominees, who shall perform administrative functions, appoint and certify arbitrators and the institutions. In addition, the Council will also be directed by the Central Government to undertake such functions as it might find necessary. This intervention of the government in the composition and activities of the Council raises suspicions and possibilities for prejudice and partial care. That doesn’t make it autonomous. Furthermore, the omission of foreign legal experts from the list of those eligible to be arbitrators would preclude several distinguished lawyers who, in every other situation, tend to be arbitrators for dispute resolution in India. Failure to include them could deter overseas parties wanting to hold their arbitration in India, who would want an arbitrator from a neutral country to be on their panel.
Bill gives the right to the Supreme Court and the High Court to nominate arbitral institutions from time to time which have been designated by the ACI. In States where there are no arbitral institutions, the Chief Justice of the High Court concerned has been given the right to maintain a panel of arbitrators who exercise the roles and duties of an arbitral institution and any referral to an arbitrator shall be considered to be a reference to such arbitral tribunal or panel of arbitrators. In effect, the bill allows for constant intervention, interference and nepotism in the judiciary.
The majority of applications for the selection of arbitrators are generally determined by the selection of former judges as arbitrators. After the formation of the ACI, former judges, senior counsel and attorneys would simply become panelled arbitrators, leading to a pool of participants that will serve as a continuation of the current judicial philosophy, instead of genuinely offering an appropriate external dispute settlement process.
COMMITTEE REPORT VS BILL
The Bill turns the recommendations of the Committee on its head. The report of the Committee had recommended that the ACI would serve as a benchmark for assessing arbitral institutions and had categorically emphasized that the ACI would not act as a regulator set up by the government. The ACI would only grade arbitral institutions and therefore only evolve minimum standards for institutions in India. The Bill entirely omits the recommendation concerning the designation of arbitral entities as being optional and not obligatory. This clause was important in order to promote the growth of modern arbitral institutions and was also appropriate to guarantee that the right of the parties to have their disagreement resolved by the arbitral institution of their choosing was not compromised by matters of the rank of the arbitral institutions and, subsequently, by the acknowledgment and compliance of their awards. The ACI was to be an independent and self-sustaining body which is only initially supported by the Government to be managed by the Board members and to be appointed by the Board members. If this important advice is not included, the Bill turns ACI into a regulator rather than an enabler. It is envisaged that the Council would serve as a court of arbitration, creating regulations for the organisations. Moreover, this statutory existence of the Council is counter to the recommendation of the Committee which sought the formation, as the prime promoter of institutional arbitration, of the Arbitration Council of India.
Several other clauses exist which will further impede arbitration rather than promote the development of arbitrary institutions and make India pro-arbitration. The ACI is certainly going to be the new keeper of arbitration and, with its allegiance to current problem-makers, such as the judiciary and the legislature, arbitration in that country is sadly going to be at the mercy of political whim, government power, potential corruption and judicial nepotism.
Establishing ACI has some beneficial consequences, such as retaining arbitration award archives and increasing the standard of awards and organisations for accrediting arbitration agencies. However, a credible risk to governmental interference and to a limitation to party control is the structure and roles of ACI. This through take us back to where we currently have the concept of making India an international refereeing centre. The parliament should reassess the need for a council that acts more as a legislative authority and if such an action is necessary.
AUTHOR – BHUMISHA LODAYA