INDIA INTRODUCES KEY AMENDMENTS TO ARBITRATION AND CONCILIATION ACT 1996

After the Arbitration and Conciliation Bill, 2019 (the "Bill") was passed by both houses of the Indian Parliament, the President of India on 9 August 2019 gave his assent.  The new Arbitration and Conciliation (Amendment) Act, 2019 (the "2019 Act") will amend the Indian Arbitration and Conciliation Act, 1996 (the "1996 Act"), implementing the recommendations of the High Level Committee Report issued in 2017 under the chairmanship of Justice BN Srikrishna. The changes proposed in the Bill were previously discussed here.

Key changes introduced by the 2019 Act

The Arbitration Council of India: The most significant change introduced by the 2019 Act is the establishment of an independent body, the Arbitration Council of India (the "Council"). The Chairperson of the Council will be either a judge of the Supreme Court, or a judge or chief justice of the High Court or an eminent person with expert knowledge and experience of arbitration. Other members of the Council will inter alia, include eminent arbitration practitioners with knowledge of institutional arbitration, eminent academicians and the Secretary to the Government of India in the Department of Legal Affairs. The Council is tasked with promotion and encouragement of arbitration, mediation, conciliation and other alternative dispute resolution mechanisms. The Council will also be responsible for maintaining uniform professional standards in respect of matters related to arbitration. With the stated goal of improving the quality of institutional arbitration in country, the Council will also be responsible for grading arbitral institutions on the basis of criteria such as quality and calibre of arbitrators and performance and compliance with time limits for completion of arbitral proceedings. The 2019 Act also prescribes qualification requirements for accreditation of arbitrators in India.  Further, the Council will review the grading of arbitrators and hold training and courses in collaboration with law firms.

Confidentiality: The 2019 Act places the onus of confidentiality of arbitral proceedings on the arbitrator, the arbitral institution and the parties. The 2019 Act however provides that confidentiality obligations will not apply where disclosure of an arbitral award is necessary for implementation and enforcement of award.

Protection for arbitrators: The 2019 Act seeks to offer additional comfort and protection to arbitrators and provides that no suit or legal proceedings can be brought against an arbitrator for anything which is done in good faith.

Time limits for pleadings and awards: The 1996 Act (as amended in 2015) required arbitral tribunals to make their awards within a period of 12 months for all arbitration proceedings. The 2019 Act removes this restriction for international commercial arbitrations and provides that the tribunals "must endeavour" to complete international arbitration matters within 12 months. For domestic arbitrations, the 2019 Act imposes new time limits in relation to statements of claim and defence and provides that both should be completed within six months from the date the arbitrator receives the notice of appointment.

Appointment of arbitrators: Under the 1996 Act, the procedure for appointment of arbitrators in case of disagreement between parties often led to delays in the arbitral process. The 2019 Act empowers the Supreme Court and the High Courts to designate arbitral institutions (accredited by the Council) for the appointment of arbitrators. This is intended to result in speedy appointment of arbitrators. In case no accredited institutions are available in the relevant jurisdiction, the High Court will maintain a panel of arbitrators to perform the functions of the arbitral institutions.

Restrictions on setting aside an award: Previously under the Section 34(2)(a) of the 1996 Act, an award made in India could be set aside on limited grounds (such as incapacity of parties, invalidity of arbitration agreement, lack of proper notice of arbitration, where tribunal acts outside the scope of its jurisdictions etc.) on the basis of the proof furnished by parties. The 2019 Act restricts the scope of interference by the Indian courts by stating that in an application to set aside an award, the courts can only rely on the materials furnished before the relevant arbitral tribunal.

The 2019 Act is an important change in the arbitration landscape in India and practitioners should keep an eye on related developments.

For more information, please contact Nicholas Peacock, Partner or Rebecca Warder, Professional Support Lawyer, or your usual Herbert Smith Freehills contact.