The Union law ministry has put forward a proposal to enhance the institutional arbitration process by introducing appellate arbitral tribunals. This would give disputants the option to appeal arbitral awards without having to go through traditional court proceedings.
However, this provision would only apply to arbitrations conducted under arbitration institutions, as per the draft amendment to the Arbitration and Conciliation Act released recently. The Act, originally passed in 1996, is the primary legislation governing arbitrations in India and has undergone several amendments over the years.
In India, arbitrations can be either ad-hoc or institutional. Ad-hoc arbitrations involve parties selecting arbitrators and determining procedural rules, while institutional arbitrations delegate these tasks to specialized institutions.
There has been a low caseload in institutional arbitration in the country, which has been a concern for many experts, especially as India aims to establish itself as a global arbitration hub. The government’s push to strengthen these institutions is evident in the proposed amendments, which aim to streamline the arbitration process and reduce the burden on Indian courts.
While some legal experts believe that the proposed amendments could help alleviate court congestion, others are cautious. They point out potential challenges such as increased complexity and costs for parties, especially with the introduction of appellate arbitral tribunals.
In addition to the appellate tribunal proposal, the amendments also include changes like omitting Conciliation from the Act, adding emergency arbitrations for interim relief, and empowering the Arbitration Council of India (ACI) with more authority. The ACI, established in 2019 to regulate arbitration mechanisms, is set to receive additional powers under the proposed amendments.
The proposed changes also grant more powers to the ACI, such as determining fees for arbitration in cases where parties or institutions have not decided on them. The amendments also allow for arbitrations to be conducted via video conferencing and for parties to use digital signatures in arbitration proceedings.
Furthermore, the amendments tighten the definition of courts for arbitration, specify territorial jurisdiction for appeals, and connect arbitration with the Mediation Act of 2023. If parties reach a consensus during arbitration, it would be recorded as a mediated settlement agreement enforceable under the provisions of the Mediation Act.
Public feedback on these proposed amendments is being sought by the law ministry, with a 15-day window for submissions.
