Institutional Arbitration in India: Brief Overview

The growth of arbitration as a dispute resolution mechanism has been exponential in the recent times. It is one of the most preferred choice of dispute resolution, especially when parties are in a long and continuing relationship such as in infrastructure contracts, supply contracts, shareholder agreements, investment contracts etc. However, the growth of institutional arbitration has been far from equal in the Indian regime. Ad-hoc arbitrations are still the preferable mode of arbitration, despite its shortcomings such as delayed proceedings, unprofessional arbitrators, poor quality of awards etc. On the other hand, institutional arbitration, which enables parties to submit their disputes to an institution has various advantages such as pre-established rules, efficient administration, qualified arbitrators and established format.

Taking note of the lack of good institutions to administer arbitration in India and looking at the institutionalized framework at the global level, the legislature brought some important amendments to the Arbitration and Conciliation Act, 1996 in the year 2015 and 2019.

The aim was to improve the institutionalization of administration of arbitrations and to improve the existing infrastructure for such institutionalization so as to make India a center for international arbitration. The global institutions like Singapore International Arbitration Centre ("SIAC"), London Court of International Arbitration Centre ("LCIA"), Hong Kong International Arbitration Centre ("HKIAC") and International Chamber of Commerce ("ICC") are some of the most successful institutions which have paved the way for India to develop its institutional arbitration and become an arbitration friendly nation and further impose confidence in the foreign investors.

Enactment of the New Delhi International Arbitration Centre Act, 2019

The promulgation of the New Delhi International Arbitration Centre Act, 2019 ("NDIAC Act") sought to provide a further impetus towards the aforementioned intention. The Act was notified on September 26, 2019 with the objective of providing for the establishment of an institution namely, The New Delhi International Arbitration Centre ("The NDIAC"), for the purpose of creating an independent autonomous regime for institutionalized arbitration.

It further sought for better management of arbitration so as to make it a hub for institutional arbitration and to declare the NDIAC as an institution of national importance. The aim of enacting this legislation was to incorporate a robust institution for domestic and international arbitration which inspires confidence and credibility among the litigants of the commercial disputes, to expedite the settlement of disputes and basically to overcome the shortcomings of the International Centre for Alternative Dispute Resolution set up in 1995.1

The NDIAC consists of seven-member body headed by a former judge of Supreme Court or High Court or any other eminent person. The NDIAC was created to provide cost effective and timely services for the conduct of arbitration and conciliation at national and international level, facilitate conduct of international and domestic arbitration and conciliation and impart training in alternative dispute resolution and related matters in the field of arbitration, conciliation and mediation.2

Its purpose is to bring reforms in the field of arbitration and conciliation and to develop it as a flagship institution for both domestic and international arbitration. It will facilitate and provide administrative assistance for conduct of arbitration and conciliation proceedings in a professional and a time-bound manner and in the most cost-effective way. It will also set up an arbitration chamber to empanel professional arbitrators at national and international level and set up an Arbitration Academy to train arbitrators in India, so as to empower them to compete on par with reputed arbitral institutions in the world.3

Subsequently, the name of the institution has been changed to The India International Arbitration Centre ("The IIAC") by way of the New Delhi International Arbitration Centre (Amendment) Act, 2022 (No. 23 of 2022).4

The IIAC comprises of a chairperson, who is designated by the Central Government in conjunction with the Chief Justice of India and is a retired Supreme Court or High Court judge. There would be two full-time members possessed with substantial knowledge and experience in the regime of arbitration. These members will be appointed by the Central Government. A part-time member to be appointed as Secretary and Financial Advisor. A Chief Executive Officer is also to be appointed to keep a check on the Centre's administrative activities. A Registrar would also to be appointed to supervise the activities of the Centre.5

As per Section 14 of the Act, the objects of the Centre are (a) to bring targeted reforms to develop itself as a flagship institution for conducting international and domestic arbitration; (b) to promote research and study, providing teaching and training, and organising conferences and seminars in arbitration, conciliation, mediation and other alternative dispute resolution matters; (c) to provide facilities and administrative assistance for conciliation, mediation and arbitral proceedings; (d) to maintain panels of accredited arbitrators, conciliators and mediators both at national and international level or specialists such as surveyors and investigators; (e) to collaborate with other national and international institutions and organisations for ensuring credibility of the Centre as a specialised institution in arbitration and conciliation; (f) to set up facilities in India and abroad to promote the activities of the Centre; (g) to lay down parameters for different modes of alternative dispute resolution mechanisms being adopted by the Centre; and (h) such other objectives as it may deem fit with the approval of the Central Government.6

The Act provides for the establishment of chamber of arbitration under Section 28, who would appoint arbitrator and also review the application for admission to the panel of arbitrators. Section 29 of the Act deals with establishing an arbitration academy for providing training to the arbitrator(s).7 Further, one of the objectives of the Act is to also promote facilities and administrative assistance for mediation and conciliation.

IIAC (Conduct of Arbitration) Regulations, 2023

Recently, in exercise of the powers conferred by clause (f) of sub-section (2) of section 31 of the Act, the IIAC has notified the India International Arbitration Centre (Conduct of Arbitration Proceedings) Regulations, 2023 ("Regulations"). These Regulations have provided for the procedure and conduct of arbitral proceedings, appointment of arbitrators and passing of Award. Some of the key highlights of the Regulations are as under:

  • Regulation 4 provides for the procedure for request for arbitration by a party and necessary documents required in the process, followed by Regulation 5 which provides for response by the other party within fourteen days of request.
  • Regulation 6 provides that any notice or communication shall be in writing, and delivery of such written communications may be made personally or by registered post or by a courier service, or transmitted by any form of electronic means or delivered by any other means that provides a record of its transmission.
  • Regulation 7 provides for joinder of additional parties in the arbitration proceedings after constitution of the arbitral tribunal; whereas Regulation 8 provides for consolidation of arbitrations, subject to inter-alia agreement of the parties.
  • Regulation 11 talks about appointment and confirmation of arbitrators, where Regulation 12 deals with appointment of sole arbitrator and Regulation 13 talks about appointment of arbitral tribunal comprising of three arbitrators. Regulation 14 provides for multi-party appointment of arbitrator.
  • Regulation 17 provides for fast track procedure for resolving disputes. In such a case, the disputes have to be resolved within six months from the date of intimation by the Registrar to the parties, of the constitution of the arbitral tribunal.
  • Regulation 18 provides for appointment of emergency arbitrator within three days of the receipt of the application by the Registrar. It also provides for the time limit of fifteen days for completion of the entire arbitration proceedings from his date of appointment, which can be extended by the Registrar in exceptional circumstances.
  • Regulation 28 provides for place/seat of arbitration and allows the arbitral tribunal to hold proceedings either physically, virtually or in a hybrid manner.

Conclusion

A perusal of these Regulations unveil that they are in line with the intention of the government to boost the arbitration regime in India. They also aim to bring the IIAC at par with the globally popular arbitral institutions like SIAC, LCIA etc. by adopting the best practices followed therein and to resolve commercial disputes smoothly. It however, will be a matter of time for IIAC to provide the same level of effectiveness and efficiency as offered by the global institutions like SIAC, LCIA etc. and provide state of the art procedural framework for resolution of international disputes. Be that as it may, these steps will certainly augment the intention behind the 2015 and 2019 amendments to the Arbitration and Conciliation Act, 1996 to push model arbitration proceedings in India.

Footnotes

1 https://legalaffairs.gov.in/sites/default/files/The%20New%20Delhi%20International%20Arbitration%20Centre%20Act%2C%202019.pdf

2 https://legalaffairs.gov.in/new-delhi-international-arbitration-centre

3 Id.

4 https://legalaffairs.gov.in/sites/default/files/NDIAC_Amendment_Act_2022.pdf

5 https://legalaffairs.gov.in/sites/default/files/The%20New%20Delhi%20International%20Arbitration%20Centre%20Act%2C%202019.pdf

6 Section 14 of the New Delhi International Arbitration Centre Act, 2019

7 https://timesofindia.indiatimes.com/blogs/voices/road-to-institutionalised-arbitration-indian-approach/

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