Key Changes suggested by proposed Arbitration & Conciliation (Amendment) Bill 2024 and its challenges
There are some long-awaited amendments suggested like the inclusion of the emergency arbitral process — an era ushered into India through Amazon.com NV Investment Holdings LLC v. Future Retail Ltd.2, judgement of 2021 and other more controversial developments like the suggestion of constitution of an appellate Arbitral Tribunal.
Introduction
India has seen a spate of changes to its arbitration regime in recent times, starting from 2015, then in 2019, 2021 and now the latest proposed round where the Draft Arbitration and Conciliation (Amendment) Bill, 2024 (Draft Bill) has been published which proposes changes to the Arbitration and Conciliation Act, 19961. There are some long-awaited amendments suggested like the inclusion of the emergency arbitral process — an era ushered into India through Amazon.com NV Investment Holdings LLC v. Future Retail Ltd.2, judgement of 2021 and other more controversial developments like the suggestion of constitution of an appellate Arbitral Tribunal. There are however a few other key matters that this Draft Bill could have captured such as, for example, joinder of parties, consolidation of arbitrations but which are absent. In this piece, let’s examine some key changes and provide necessary views.
Summary of Key Changes:
1. Emergency Arbitration: The Draft Bill introduces emergency arbitration, allowing arbitral institutions to appoint emergency arbitrators whose orders have enforceable effect similar to those under Section 17. This change is in line with most institutional rules and aims to provide quicker relief in urgent situations.
2. Jurisdiction Based on Arbitration Seat: A new Section 2-A defines courts with jurisdiction over arbitration matters by the seat of arbitration, replacing the term “place” with “seat” in relevant provisions. This aims to reduce disputes over jurisdiction and provide clarity.
3. Interim Reliefs: The Bill allows the Arbitral Tribunal to confirm, modify, or vacate interim reliefs granted by courts under Section 9. It also proposes removing courts’ jurisdiction to grant interim reliefs during arbitration, which may limit recourse when tribunal remedies are insufficient.
4. Mandatory Content in Arbitral Awards: Amendments require arbitral awards to include findings on parties’ capacity, validity of arbitration agreements, and arbitrability of the subject matter to reduce grounds for appeals.
5. Appellate Arbitral Tribunal: The Bill proposes an appellate Arbitral Tribunal to hear appeals on arbitral awards as an alternative to courts. This two-tiered appeal system may prolong dispute resolution and create parallel forums.
6. Partial Setting Aside of Awards: The Draft Bill allows awards to be partially set aside with remand to the tribunal for reconsideration on specific issues. It requires courts or appellate tribunals to first formulate grounds for challenge, adding procedural steps.
7. Enhanced Role and Recognition of Arbitral Institutions: The Bill expands the definition of arbitral institutions, empowering them alongside courts to extend award timelines and substitute arbitrators. This aims to reduce judicial burden and enhance institutional credibility.
Challenges Highlighted:
1. Enforcement Timing and Appealability: The enforcement timing and appealability of orders passed by emergency arbitrators remain unclear. This could lead to practical difficulties in execution and enforcement.
2. Exclusion of Ad Hoc Arbitrations: The provision for emergency arbitration is silent on its application in ad hoc arbitrations. This could be costly for parties opting for a cheaper arbitral process.
3. Jurisdiction Confusion: The alternative formulation of Section 20, which suggests the seat shall be the place where the contract/arbitration agreement is executed or where the cause of action has arisen, may cause confusion and litigation.
4. Limitation of Court’s Jurisdiction: The proposed removal of courts’ jurisdiction to grant interim reliefs during arbitration may limit recourse when tribunal remedies are insufficient.
5. Prolonged Dispute Resolution: The introduction of a two-tiered appeal system with an appellate Arbitral Tribunal may prolong dispute resolution and create parallel forums.
6. Procedural Complexity: The requirement for courts or appellate tribunals to first formulate grounds for challenge before adjudicating a challenge under Section 34 may add unnecessary procedural steps.
These proposed amendments aim to enhance the efficiency and effectiveness of arbitration in India, but they also present several challenges that need to be addressed to ensure smooth implementation and practical applicability.
Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.