This article is written by Siddharth Chapalgoankar, pursuing a Certificate Course in Arbitration: Strategy, Procedure and Drafting from Lawsikho.com. Here he discusses “New Delhi International Arbitration Centre: All You Need To Know”.

Introduction and Background

The New Delhi International Arbitration Centre Act, 2019 was passed by the Parliament. Before going into the details about the Act and the mandate of the Centre, it is pertinent to have a background about what circumstances and developments led to the passing of this Act.

With the advent of Liberalisation, Privatisation and Globalisation regime in India in the 1990s and beyond, the volume of economic activities grew manifold and so the number of disputes arising out of it. This resulted in an increasing burden on the Courts of law. Thus, Arbitration and Conciliation Act, 1996 was enacted. As the Act was in force, there arose the need to promote institutional arbitration because of Ad-hoc arbitrations being highly time-consuming as well as exorbitant and also the Courts apparently taking over the arbitration proceedings, thus the Arbitration and Conciliation (Amendment) Act, 2015 was enacted.

At the same time increasing Foreign Direct Investment in various sectors, indicators like Ease of doing business in general and enforcement of contracts (the indicator where India has lot of scopes to improve upon) in particular a special mechanism had to be set up in place to promote institutional domestic as well as international arbitration and also to make India a preferred destination by the foreign parties for arbitration.

Thus a committee was formed in 2016 headed by former Supreme Court Judge B.N. Shrikrishna. The Committee was mandated with the task of identification of the roadblocks to the development of institutional domestic as well as international arbitration, analysing the specific issues that affect the Indian arbitration landscape, and preparing guidelines for making India a “Robust centre for international and domestic arbitration”.

Report of the Committee

The Report of the Committee which was given in 2017 is divided into three parts. Part I contains the Committee’s findings on institutional arbitrations in India and its recommendations. Part II contains a study of working and performance of the International Centre for Alternative Dispute Resolution and the Committee’s recommendations for its reform. Part III deals with the role of arbitrations in BIT disputes involving the Union of India and the committee’s recommendations for the same.

It is the Part II of the report which forms the genesis of the New Delhi International Arbitration Centre and therefore it is necessary to have a look at Part II of the Report.

ICADR

The Part II of the Report deals with the working, performance and functioning of the International Centre for Alternative Dispute Resolution and recommends the reforms for the same.

ICADR was set up in 1995 under the aegis of Ministry of Law and Justice,  Government of India, with the objective of promoting alternative dispute resolution methods and providing facilities for the same.

The Report examines the role of ICADR and describes in detail, the shortcomings of the institution.

1.  the ICADR has failed to keep pace with the dynamic nature of arbitration in spite of having eminent lawyers and judges on its Governing Council, the body has been unable to actively embrace the developments in arbitration ecosystem and create a reputation for excellence. The organisation has completely failed to market itself to the parties at the stage of the contract formation which is essential for an arbitral institution. ICADR has very few cases and even Government/PSU do not prefer it to be a destination for arbitration.
2. The size of the present Government Council is too large and there is a need for a fresh face to handle the working of the organisation
3. The ICADR  rules are outdated failing to catch the global development of arbitration law. Other worldwide competing institutions have revised their rules and have included provisions regarding rejoinder, consolidation of arbitral proceedings, emergency arbitrators. But the ICADR rules have failed to do so although there was a revision of rules in 2016. ICADR has conducted national and international conferences pertaining to institutional arbitration, yet it has failed to update its rules with the industry standards.
4. ICADR has sufficient infrastructure to support arbitration hearings including arbitration rooms, waiting for lounges for arbitrators, library facilities and video conferencing facilities, yet these appear to be put to limited use. The design of arbitration rooms is not suitable for the proceedings to be conducted. If the ICADR can be promoted as a venue for arbitration hearings, it might result in increased visibility for the institution.

On the backdrop of this Committee went on to recommend that either the ICADR be developed into flagship arbitral institution by rectifying the shortcomings or the Centre be fully replaced by a statutory body for institutional arbitration. And thus it gave away to New Delhi International Arbitration Centre.

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New Delhi International Arbitration Centre

New Delhi International Arbitration Centre Act, 2019 replaces the New Delhi International Arbitration Centre Ordinance, 2019 which was promulgated in March 2019.

The Act seeks to provide for the establishment of NDIAC to conduct an arbitration, mediation and conciliation proceedings. It declares NDIAC as an institution of national importance. The Act seeks to transfer IDAC to Central Government and upon notification by the Central Government, all the rights, title and the interest in the ICADR will be transferred to the NDIAC.

Composition

The Act provides for the composition of members of NDIAC. There will be seven members including (i) a Chairperson (ii) not more than two persons having substantial knowledge and experience in institutional arbitration; (iii) three ex-officio members, including a nominee from the Ministry of Finance and a Chief Executive Officer (responsible for the day-to-day administration of the NDIAC); and (iv) a representative from a recognised body of commerce and industry, appointed as a part-time member, on a rotational basis.

Term

Membership 3 years. Eligible for reappointment? Yes. Retirement age = Chairperson 70 years, members 67 years.

Objectives of NDIAC

The key objectives of the NDIAC include (i) promoting research, providing training and organising conferences and seminars in alternative dispute resolution matters; (ii) providing facilities and administrative assistance for the conduct of arbitration, mediation and conciliation proceedings; (iii) maintaining a panel of accredited professionals to conduct arbitration, mediation and conciliation proceedings.  

Functions of NDIAC

Key functions of the NDIAC will include: (i) facilitating conduct of arbitration and conciliation in a professional, timely and cost-effective manner; and (ii) promoting studies in the field of alternative dispute resolution.

Finance and Audit

NDIAC will receive funds from Central Government, will receive grants and fees from the arbitration proceedings. The accounts of NDIAC will be subject to audit by CAG

Institutional Support

A panel of arbitrators will be maintained by NDIAC after establishing the Chamber of Arbitration.  The NDIAC may also set up an arbitration academy to train and develop the arbitration law.

Importance of the Move

1. India on the world map – Settlement of commercial disputes is a key factor and this move will help India to come on a global map. Law Minister Ravi Shankar Prasad told during debate on the Bill that India has qualified lawyers and we shouldn’t accept the imperialism in arbitration. India has a lot of scopes to develop the arbitration law. The NDIAC will help to make the arbitration of excellent quality. It will also have a responsibility to hold training, workshops, courses, frame policies, guidelines and update norms to ensure a satisfactory level of arbitrations, arbitral institutions and the arbitrators.
2. To reduce the burden on courts- institutional arbitration is one of the key solutions to reduce the burden on the Court. Today for any matter like the appointment of arbitrators, interim measures parties prefer going to the Courts. The NDIAC aims to reduce the burden of already overburdened courts
3. To provide an exhaustive list to choose an arbitrator– Arbitration is a combination of skill and law. Mere application of law may not suffice in resolving the dispute because the scope and expanse of economic activities are wide. Today it might be a construction dispute and tomorrow some dispute related to the partnership. Hence NDIAC aims to provide a list of arbitrators from the various field which parties can choose on their own.
4. To speed up the arbitration process–  Although arbitration is a speedy mechanism of alternate dispute resolution, the process itself takes time due to various reasons. Hence NDIAC will promote the speedy resolution of the dispute through arbitration. A fixed timeline will be set up before the parties to submit the statement of claims and defence and time-consuming tactics won’t be available at the dispense of parties

Conclusion

Thus the conception of the New Delhi Arbitration Centre is a right step in the right direction for promoting domestic as well as institutional arbitration. Only the concern that remains whether the new institution will really bring changes to arbitration regime in India or it will be similar to its predecessor organisation.

References

1. High-Level Committee to Review the Institutionalisation of Arbitration Mechanism in India.
2. ICADR v. Union of India Review Petition No. 196/2019 in WP (c) 2236/2019 in Delhi High Court
3.  https://www.ijariit.com/manuscripts/v4i5/V4I5-1198.pdf
4. ICADR v. Union of India Review Petition No. 196/2019 in WP (c) 2236/2019 in Delhi High Court
5. High-Level Committee to Review the Institutionalisation of Arbitration Mechanism in India.
6. ICADR v. Union of India Review Petition No. 196/2019 in WP (c) 2236/2019 in Delhi High Court
7. https://www.prsindia.org/billtrack/new-delhi-international-arbitration-centre-ordinance-2019
8. http://constructionclaims.weebly.com/blog/category/all

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