India announces further amendments to the Arbitration Act to strengthen institutions and clarify previous reforms

According to this press release, on 7 March 2018, the Indian Cabinet approved a draft Bill to amend the Arbitration and Conciliation Act, 1996 ("Arbitration Act"). The press release indicates that the Bill will focus on building institutional support for arbitration by establishing a new body, the "Arbitration Council of India" ("Council"), to grade arbitral institutions, develop guidelines for the accreditation of arbitrators and promote the use of arbitration and ADR. It also suggests that the Bill will impose a duty of confidentiality on all aspects of an arbitration, except that the Council will maintain an electronic repository of all awards (with perhaps the implication that awards will also be published in some form). Finally, the press release notes that aspects of the 2015 Amendments will be clarified, including the controversial twelve month time-limit for tribunals to render awards and the somewhat ambiguous application of the 2015 Amendments to existing proceedings.

The proposed amendments derive from recommendations made by the Srikrishna Committee that was set up to review the Arbitration Act. We reviewed the report here.

Removing the 12 month time limit for international arbitrations

One of the most striking changes made in the 2015 Amendments to the Arbitration Act (discussed here), was the new Section 29A which provides that arbitral tribunals must issue their awards within twelve months of being constituted, with a six month extension with the parties' consent, and any further extensions requiring the permission of the Indian court. Following the Srikrishna report, the press release suggests that international arbitrations will be exempt from this time-limit, and that where it applies, the twelve month period will henceforth commence from the date of completion of the parties' pleadings.

The press release indicates that the Bill will also clarify how precisely the 2015 Amendments will apply to existing arbitrations and arbitration-relation court proceedings commenced before the 2015 Amendments came into effect. This is a point on which there are conflicting High Court judgments and clarification on the subject will be welcome.

Developing institutional capacity for arbitration

The Council, which the press release says will be established by the Bill, will be an independent body chaired by a former judge of an Indian appellate court with government nominees as well as practitioners and academics. The Council will grade arbitral institutions and lay down guidelines for the accreditation of arbitrators. It will also develop policies and guidelines relating to arbitration, including those relating to professional standards.

In addition, it is suggested that where parties require assistance to appoint arbitrators, instead of approaching the Indian courts, they will be able to apply directly to appointing authorities designated by the Supreme Court or the relevant High Court. As we discussed here, some Indian courts have already shown a willingness to delegate the selection and appointment of arbitrators to domestic arbitration institutions like the Mumbai Centre for International Arbitration.  It appears that the Bill may make provision to seek to remove the court from such appointments altogether.

Developing an effective, stable ecosystem for arbitration is now being recognised as one of the key priorities in India. The Srikrishna report focused not only on promoting the development of arbitral institutions, but also on developing hearing venues, a specialist arbitration bar, training arbitrators and also training judges who hear arbitration-related applications. Both the Prime Minister and Chief Justice of India have acknowledged this as a top priority while the Attorney General noted that much more needed to be done to develop India as an arbitration hub. The press release suggests that the Bill (through the Council) will aim to achieve these goals.

An interesting approach to transparency 

The press release notes that a duty of confidentiality will be explicitly imposed on arbitrators and arbitral institutions (and presumably the parties) in relation to arbitral proceedings in India, save for the award itself. It also proposes that the Council will maintain an electronic repository of all arbitral awards.

The implication seems to be that these awards may also be published in some form, which would be a potentially very significant change to the arbitration environment in India.  If this is to be proposed, it remains to be seen whether the Bill will provide for the redaction of party names and sensitive or confidential information from awards, and whether the names of the arbitrators will be published. It is also not clear whether such a regime would be mandatory or whether parties will be able to opt out.

We will await the release of the Bill itself and will report further when this is available.

For more information, please contact Nicholas Peacock, Partner, Nihal Joseph, Associate, or your usual Herbert Smith Freehills contact.