– Amrutha Santhosh Kumar
Ever since its inception, the Arbitration Act in India has been repeatedly subjected to scrutiny by both the legislative and judicial fraternity alike. The Arbitration Act was formally enacted in the year 1940 during the British regime, and it applied to the whole of India at that point of time (including present-day parts of Pakistan). It is to be noted that other versions of the Arbitration Act existed in India prior to the 1940 Act. However, the older versions were limited in application and dealt only with arbitration case disputes in the Presidency Towns. Post- Independence it was later modified and given effect vide an ordinance. Although the Act was initially credited for bringing uniformity in Arbitration law in India, it was later on severely criticised for its provisions. From one High Court to another, the rules for filing for awards changed. Similarly, the lack of provisions for an Arbitrator to resign during the process of Arbitration made it extremely difficult for the parties. Malafide Arbitrators misused this loophole and took advantage of it to prolong the process orbitration whereby the parties ended up incurring lump some amount of loses as a result. As per Section 20 of the Act, a party could commence the process of Arbitration by filing an application for appointment of an Arbitrator. The 1940 Act remained silent regarding the aspect of Foreign Awards. Since India was a signatory under the New York Convention and Geneva Convention (1927), the Foreign Awards (Recognition and Enforcement) Act, 1961 was applied for the enforcement of the foreign awards until the enactment of the 1996 Act. (Kumar)
This Act was later on replaced by the Arbitration and Conciliation Act of 1996 taking into consideration the recommendations of the Law Commission. It came into force on 22nd August 1996. It was enacted in compliance with the United Nations International Commission on International Trade Law (UNICTRAL) model law and rules. The main ideal of the new act was to limit the judicial intervention and provide for a speedy solution to disputes between the parties involved. The Act intended to cover primarily Domestic as well as International Commercial Arbitration and conciliation. The Act of 1996 amended and consolidated laws pertaining to International Commercial Arbitration and Foreign Arbitral Awards. According to Section 9 of the Act, Interim orders could be passed either before commencement of arbitral proceedings or during the process of arbitral proceedings. However as per the 1940 Act, the court did not have the discretion to give interim orders before the beginning of the Arbitration process. As per this Act, a new term “Arbitral Institution” was introduced. An Arbitral institution is designated by the High Court or a Supreme Court under the Act. The High Court and the Supreme Court shall have the power to designate , Arbitral institutions, as and when needed from time to time. For cases where no graded arbitral institution is available, then the Chief Justice of the particular concerned High Court could maintain a required panel of arbitrators for discharging the duties and functions of the arbitral institution and could review the panel of arbitrators when required. For cases falling under the domain of International Commercial Arbitration, the appointment of the Arbitrator was made, on an application of the party, by the Arbitral institution designated by the Supreme Court. Where as for cases other that of International commercial arbitration, the appointment is made by the High Court. (Associates, 2016)
The Ministry of Law and Justice after taking into suggestions of eminent jurists, legal experts and lawyers of the country concerning the functioning of the Act of 1996, further amended the Act in the year 2015. The 2015 Amendment brought about significant changes to the Arbitration Act of 1996 especially concerning expeditious proceedings, independence and impartiality of arbitrators, international commercial arbitration, delays in presenting awards and powers of the arbitral tribunals. However, with the unprecedented increase in commercial disputes set off by industrialisation, liberalisation and globalisation, the recognition of Arbitration as a method of alternate dispute resolution went up globally, but Indian law governing Arbitration was seen to still largely outdated and behind global arbitration practices comparatively. Hence the main aim of the amended Act was to make the then prevailing Arbitration law in line with the other International Arbitration laws. The prime focus was on achieving the objective of making India a well recognised Arbitration center internationally. Section 17 of the Act was amended to give the Arbitral tribunal all the powers of the Court under Section 9. This was effective in limiting unwanted interference by the courts in the arbitration proceedings of the tribunals. Section 29A was inserted whereby the award had to be given within a time span of 12 months after the Arbitral tribunal was instituted. Amendment to Section 34 also limited the interference by the Courts. (Nitesh)
Although the 2015 Act addressed a large number of issues, some ideals were left unrecognised. For example, in India most of the Arbitrations were ad hoc and there was lack of ideals pertaining to institutional arbitration culture in the country. A High-level Committee under the guidance of Justice B.N. Srikrishna, retired Judge, Supreme Court of India, was constituted to look into and review the Institutionalization of Arbitration mechanisms in India and to deal and address the issue of lacunas leading to inordinate delay with Arbitration-related court actions. This paved the way for the 2019 Amendment. A significant feature of the new Act was the introduction and institution of the Arbitration Council of India (ACI). As per the Amendment Act of 2019, the main tasks of ACI are to encourage and promote ADR in the country, help in boosting the institutional Arbitration in the country and grade the Arbitral institutions and Arbitrators in the country. The 2019 Act also resolved the issue of filing of second appeals under the Commercial Courts by amending Section 37(1) of the Act. (Debroy)
The most controversial element of the 2019 Amendment Act was the insertion of 8th Schedule, which provided various norms for experiences, qualifications and endorsement of Arbitrators. It stipulated that a person can be appointed as an Arbitrator only if he/she qualifies to be an Advocate as per the Advocates Act of 1961 ( having ten years of practice experience as an advocate ). The confusion was whether this applied to foreign arbitrators as well. However this was resolved when Hon’ble Law Minister clarified that 8th schedule was not applicable to International Commercial Arbitration. The 2019 Amendment Act by giving more clarity to the 2015 Act has taken a more progressive step in realising and fulling the ideals of Arbitration Act in India. As a step towards a swift resolution, Section 29 A was amended to modify the timelines for carrying out the process of Arbitration. Similarly, it was made compulsory that the appointment of an Arbitrator had to be made within 30 days from the date of acceptance of the request, by the Arbitral institutions. (Partners, 2019)
With the governmental impetus and clear preference for Arbitration in resolving commercial disputes, introduction of several changes in the law by virtue of amendments, India is exorcising the ghosts of its past. The Amendments over time has put in place several measures to establish that India is truly, an arbitration-friendly jurisdiction. Ultimate ability of India to attract parties as a viable Arbitration destination and the success of the new provisions largely will depend on the practical implementation of the Act along with the co-operation of parties and courts in its process. The interplay of the tribunals and courts in this regime is crucial. The present amendments attempt to strengthen this relationship. The use of artificial intelligence in Arbitrator selection, increased prevalence of Arbitration across the business, document collation mechanisms, new Arbitral institutions streamlining the Arbitration process and use of block-chain in the process of Arbitration is likely to get more sophisticated and efficient over time. The evolution of the Arbitration Act via amendments is promising for the future of the Arbitration realm in India.
Modo Resolutio 