The article is written by Harmanpreet Kaur from Amity University, Kolkata. The article will provide an analysis of the New Delhi International Arbitration Centre Act, 2019.
Arbitration in India gained importance at the end of the 20th century and it has been flourishing and prospering since then. Arbitration has become the preferred dispute resolution mechanism in India for commercial matters and has been driven at all stages by lawyers, legal practitioners, and even legal students and interns with the support of the courts. The enactment of the Arbitration and Conciliation Act, 1996 that was aimed to regulate domestic arbitration in India brought much cheer and alignment to the procedural laws and legislation of the country. It is adopted by the International Court of Arbitration‘s UNCITRAL Model Law.
The landscape of the arbitration practice in India blossomed after the amendments to the Arbitration and Conciliation Act in 2015 and 2019 which sought to change the practical order of arbitration. The arbitration regime in India has evolved and changed throughout time.
The New Delhi International Arbitration Centre Act, 2019 is a welcoming step to strengthen Indian arbitration in terms of domestic and international regimes. This article will provide an analysis of the Act and all-important provisions regarding the Act.
The backdrop of the Act
A High-Level Committee was formed in 1995 under the chairmanship of Justice B.N.Srikrishna to take all considerate decisions regarding the arbitration regime in India. One of the most significant suggestions that were recommended by the Committee in 2019 was to revamp and introduce the international centre for arbitration dispute resolution in India for facilitating the settlement of disputes by the processes of arbitration, conciliation, and meditation by promoting arbitration in both the domestic and international spheres. The Committee in consultation with the Ministry of Law and Justice introduced the Bill for the establishment of an autonomous and independent international arbitration institution at New Delhi in the Lok Sabha on July 03, 2019. The Bill was passed by the Lok Sabha on July 10, 2019, and was finally passed by the Rajya Sabha on July 18, 2019. It received the assent of the President on July 26, 2019, finally gaining recognition in the eyes of the law.
Role of the Central Government in setting up the centre
The Central Government has been mandated with establishing an international arbitration institution to establish a body known as the centre under Section 3 for resolving disputes through arbitration, and its main function would be to exercise the powers and functions granted by the Act while adhering to the rules and regulations of the Act by following the principles of natural justice.
The centre would be referred to as the corporate body with the features of perpetual and permanent administration and a powerful common seal. The centre would be incorporated and established as an institution of national importance and would have the power to establish branches at all other places in India but only by the approval of the Central Government.
Composition of the centre
The centre would comprise of the following members for the proper and efficient administration of the institution.
- The Central Government, in conjunction with the Chief Justice of India, will designate the chairperson. A person can only be nominated as the chairperson if they have served as a judge in one of India’s high courts or the Supreme Court, or are an eminent person. They must have extensive expertise and experience in conducting arbitration procedures, as well as a thorough understanding of the country’s laws and regulations. The chairperson will be appointed to the institution for a three-year term.
- The Central Government should appoint two full-time members, who would be professing substantial knowledge and experience in the regime of arbitration and should be well versed with the legislation of the country.
- One part-time member should be appointed as a secretary and as a financial advisor in the institution.
- Two members should be appointed by the Central Government on a rotational basis from the body of commerce and industry.
- The chief executive officer should be chosen to keep a check on the centre’s administrative activities and for maintaining a liaison with the secretary and the centre.
- The secretariat to the centre must be appointed who would be consisting of:
- A registrar who would be responsible for supervising the activities of the centre.
- A council that would be dealing with the matters of domestic and international arbitration.
- Any other member or members who would be appointed as the secretariat deems fit.
Objectives of the centre
The main objectives of the International arbitration centre at New Delhi are:
- Implementation of the deliberate reforms and establishing itself as a leading institution for international and domestic arbitration.
- Promotion of the legal research and study and organization of the conferences and seminars in the fields of arbitration, conciliation and mediation, and other alternative dispute settlement mechanisms.
- Facilitating conciliation, mediation, and arbitration procedures with facilities and administrative assistance.
- Management of the national and international panels of the arbitrators, conciliators and mediators as well as professionals.
- Coordination and cooperation with the national and international institutions for ensuring the credibility of the centre as a specialized arbitration and conciliation entity.
- Establishing adequate facilities in India and other foreign nation-states to promote the centre’s activities.
- Establishing and developing parameters for the centre’s various modes of alternative dispute resolution methods and techniques.
- Adopting other methods as the centre deems fit but only with the approval of the Central Government.
Functions of the centre
The New Delhi International Arbitration Centre Act has prescribed functions of the centre under Section 14. The functions are:
- Facilitating the conduct for international and domestic arbitration with professionalism and transparency.
- The services offered for the conduct of the arbitration and conciliation proceedings to be cost-effective, timely and efficient.
- There must be efforts to encourage improvements in the system of dispute resolution.
- Encouraging and promoting research and studies in alternative dispute resolution and its associated issues or matters.
- Promotion of education and dissemination of knowledge of legislation and the process related to arbitration dispute resolution.
- Granting of diplomas and certifications and other academic and professional qualifications.
- Appropriate steps to be taken to impart training in the alternative dispute resolution and to the ones who are equipped with the handling of cases related to arbitration, conciliation and mediation.
- Cooperation and coordination are to be maintained among various societies, organizations, national and international with the motive to promote the mechanism of the arbitration.
- The centre should abide by all the other functions ensured by the Central Government for the promotion of arbitration dispute resolution.
Resignation and removal of the members
Resignation of the members
A letter of resignation is to be submitted to the Central Government by the chairman or any other member of the centre who wants to resign from their offices and responsibilities at any time. Within three months of any member’s resignation, the Central Government should take the appropriate procedures to re-appoint the new member to their position.
Removal of the members
The Central Government can remove any member from their respective positions and offices by the process of impeachment if:
- The member has committed the offence of bankruptcy and has not been discharged.
- The member has profited from any other kinds of employment throughout his tenure of office.
- The member has committed any offence of criminal nature and involves moral turpitude.
- The member has acted arbitrarily and abused his positions that would be a harm to the public domain.
- The member has become physically and mentally unfit to perform the duties of the member.
Finance and audit
Section 24, Section 25, and Section 26 of the Act contain finance, accounting, and auditing provisions. The following are interpretations of the provisions:
- The Central Government has been granted the authority to pay an equivalent sum of money in every financial year that would be utilised by the centre to carry out the Act’s aims.
- All money supplied by the Central Government, fees collected and received during the proceedings, money received in the form of contributions, grants, and contributors and the amount obtained from investment income shall be attributed to the centre’s funding.
- The fund thus collected shall be deposited in any of the banks that should be used for the salaries, allowances and any other expenses of the members and other officials of the centre.
- The centre is responsible for keeping accurate accounting and other relevant records.
- These records should be audited by the comptroller and the Auditor General of India, which would subsequently be sent to the Central Government.
Establishment of the arbitration chamber and academy
Chamber of Arbitration
The centre has been given the responsibility under Section 28 of the Act for the establishment of a Chamber of Arbitration that would appoint arbitrators and also review the applications for admission to a panel of reputable arbitrators for the maintenance of the permanent panel of arbitrators. The chamber should consist of experienced arbitration practitioners at the national and international level having experience in the area of arbitration and conciliation. The registrar would be appointed as the member secretary of the chamber.
An Arbitration Academy shall be established under Section 29 of the Act by the centre to provide training to the arbitrators in the domain of international commercial arbitration and for conducting legal research in the area of arbitration dispute resolution. A permanent three-member committee shall be formed which would submit reports to the centre if any considerable amendment is to be needed in the Act.
Advantages of setting up of a centre
The advantages of setting up an international arbitration centre in New Delhi would be:
Flexibility in the process
The centre would set the goal of carrying out the process in a flexible manner, as it is governed by party autonomy, which means that the parties can select how their conflicts are addressed and resolved. The parameters of the case would likewise be flexible.
Decrease in the backlog of cases
The burden on the courts would be reduced since they would be able to refer matters to the official centre of arbitration if they needed to be resolved through arbitration, conciliation, or mediation. This would also provide the parties with speedy justice and prevent a backlog of cases.
After enacting the Arbitration and Conciliation Act at the national level, India has made attempts to promote arbitration as a mechanism for resolving disputes between parties. The establishment of the centre would help to advance arbitration on a global scale. As a result, legal certainty will be promoted at both the domestic and international levels of arbitration.
The New Delhi International Arbitration Centre Act promotes the spirit of collaboration and coordination between the arbitration centre and existing state courts, national and international organisations, and would assist them in establishing centres overseas, which would increase the growth of arbitration procedures.
Privacy of the parties
It would ensure privacy to the parties in dispute throughout the arbitration processes and the decision, as it is a non-public process.
Recommendations other than setting up of the centre
The setting up of the centre would provide development to the process of arbitration, but other measures must be kept in mind namely:
- The procedural rules of the institution should be arbitration-friendly and free of all obsolete procedures.
- The chamber of arbitration must also be nationally diversified, that is, it must include reputable arbitrators across jurisdictions and industries to assist international disputants to avail of dispute resolution services.
- The rules must provide a clear-cut cost calculation mechanism, which would entail a perception of the autonomy of arbitrators.
- The arbitration institution’s reputation is clearly at par with the reputation of the country in which the institution is incorporated. So, the Indian government must take steps to improve the judicially and constantly amend and upgrade the laws with relation to arbitration.
- The rules that are given precedence to the parties must include flexibility and efficiency, but the parties must also follow the laws that are explicitly established by the law.
The passage of the Act for the Establishment of an International Arbitration Centre by the parliament is a welcome development that will encourage both local and international arbitration at the same time. As per the regime of arbitration, conciliation, and mediation processes, the establishment of the centre would also broaden the ambit and scope of the legislation. Simultaneously, efforts should be made to build supportive internal structures for the institution to ensure its success. The establishment of a centre, together with other necessary changes and amendments to the Act, will assist India in becoming a hub for arbitration.
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