The 2019 amendments to the Arbitration and Conciliation Act, 1996, aimed to enhance the efficiency, transparency, and credibility of arbitration in India. These changes focused on addressing concerns about delays, bias, accountability of arbitrators, and judicial intervention in arbitration proceedings. The amendments were part of India's ongoing efforts to make the country a global hub for arbitration by ensuring a reliable and transparent arbitration process that complies with international best practices.
One of the most notable changes was in Section 12(5), which introduced an absolute bar on the appointment of arbitrators who have conflict of interest with the parties. This was done to ensure that arbitrators remain independent and impartial, addressing concerns about bias in arbitration proceedings. The amendment made the disclosure of conflicts of interest mandatory, and it applies even to arbitrators appointed by the parties themselves.
Example: If a company is involved in a dispute with its supplier, an arbitrator who has a business relationship with either party (or has acted as counsel for one of the parties) cannot be appointed as an arbitrator in the same dispute.
Section 43J was added to the Act to establish the qualifications and experience required for an individual to be appointed as an arbitrator. This provision aims to ensure that arbitrators possess the necessary expertise and training to handle arbitration cases efficiently and competently.
This amendment ensures that the quality of arbitrators improves, and inexperienced or underqualified arbitrators are excluded, thereby enhancing the credibility of the arbitration process.
The 2019 amendments introduced the option for expedited procedures under which arbitrations can be completed in a shorter time frame. In cases where the dispute value is low or the arbitration is simple, parties can opt for a fast-tracked arbitration procedure. This is aimed at ensuring that less complex disputes are resolved quickly, without unnecessary delays.
The 2019 amendments aimed to reduce judicial interference in arbitration proceedings. Section 87 was introduced to limit the applicability of court interventions in certain types of disputes, particularly those involving foreign awards. It provided that foreign arbitral awards that had already been enforced under the New York Convention could not be interfered with, thereby ensuring a smoother and more efficient enforcement process.
The 2019 amendments included a provision to make the Arbitration Council of India (ACI) more active in setting standards for arbitration institutions and accrediting them. The ACI’s role was reinforced, ensuring that arbitration centers in India met high standards and maintained global credibility. The ACI is expected to ensure that arbitration in India adheres to the highest standards of quality, with oversight of the arbitration process.
The amendments provided clearer guidance on challenging arbitration awards. Courts were given further discretion to set aside arbitral awards on the grounds of corruption, fraud, or violation of public policy, but with clear guidelines to prevent misuse of such challenges. The amendments aimed to reduce the number of cases where arbitration awards were unnecessarily delayed by being repeatedly challenged in courts.
The 2019 amendments also sought to strengthen the enforcement mechanism for foreign arbitral awards. The scope for non-recognition of foreign awards under Section 48 was narrowed, ensuring that foreign arbitral awards are treated with greater respect and finality in India. This change was crucial for promoting India as a jurisdiction friendly to international arbitration.
The amendments reaffirmed the principle of party autonomy, meaning that the parties in a dispute have the freedom to choose their arbitrators and arbitration rules. This provision strengthens the role of institutional arbitration, allowing parties to select the rules and procedures that best suit their needs.
The amendments clarified the timelines for the passing and enforcement of awards, which were made mandatory for both domestic and international arbitration. The aim was to ensure that arbitration awards are delivered on time and are enforceable without unnecessary delay. The 12-month time limit from the commencement of arbitration proceedings, as established by the 2015 amendments, was maintained, and time extensions were also clarified.
Imagine a global technology firm in the US has a contract dispute with an Indian supplier over an alleged breach of contract. The contract includes an arbitration clause that mandates institutional arbitration under Indian law.
With the 2019 amendments:
The 2019 amendments aim to make the arbitration process more transparent, accountable, and efficient, ensuring India’s place as a preferred destination for both domestic and international arbitration.
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