Parliament sets 60-day target for arbitrator appointment applications

It amends the Arbitration and Conciliation Act, 1996, to streamline arbitration procedures, define the role of courts, and establish eligibility criteria for arbitrators, thereby affecting how commercial disputes are resolved in India.

Who it concerns: The Parliament of India (issuer), the Central Government, the Supreme Court, High Courts, Principal Civil Courts, arbitral tribunals, parties to arbitration agreements, and prospective arbitrators.

What the document says

• The Act is deemed to have come into force on 23rd October, 2015.
• Section 2 is amended to define 'Court' as the principal Civil Court of original jurisdiction for domestic arbitration and the High Court for international commercial arbitration.
• Section 7 is amended to include communication through electronic means as a valid method for arbitration agreements.
• Section 8 is amended to require judicial authorities to refer parties to arbitration unless they find prima facie no valid arbitration agreement exists, provided the application is made before the first statement on the substance of the dispute.
• Section 9 is amended to require arbitral proceedings to commence within 90 days of a court order for interim measures, unless extended by the court.
• Section 11 is amended to replace references to the 'Chief Justice' with the 'Supreme Court' or 'High Court' for the appointment of arbitrators and to limit the court's examination to the existence of the arbitration agreement.
• Section 11 is further amended to require the court to seek written disclosure from prospective arbitrators regarding independence and impartiality before appointment.
• A new Section 11A is inserted allowing the Central Government to amend the Fourth Schedule (fees) via notification, subject to parliamentary disapproval.
• Section 12 is amended to require prospective arbitrators to disclose in writing any circumstances likely to give rise to justifiable doubts as to their independence or impartiality, including their ability to complete the arbitration within 12 months.
• Section 12 is amended to make persons falling under categories specified in the Seventh Schedule ineligible to be appointed as arbitrators, unless waived by express written agreement after the dispute arises.
• Section 14 is amended to state that the mandate of an arbitrator shall terminate and they shall be substituted if specific conditions are met.
• Section 17 is substituted to allow parties to apply to the arbitral tribunal for interim measures of protection, including the preservation of goods and securing the amount in dispute.

Also in the document

• The Act specifies that for international commercial arbitration, the Supreme Court is the relevant authority for matters under Section 11, whereas for other arbitrations, the High Court within whose local limits the principal Civil Court is situated is the relevant authority.
• The Act mandates that applications for the appointment of arbitrators be disposed of as expeditiously as possible, with an endeavour to dispose of the matter within 60 days from the date of service of notice.
• The Act clarifies that the designation of a person or institution by the Supreme Court or High Court for appointing arbitrators is not regarded as a delegation of judicial power.
• The Act provides that the High Court may frame rules for the determination of fees of the arbitral tribunal, taking into consideration the rates specified in the Fourth Schedule, but this does not apply to international commercial arbitration or where parties have agreed to institutional rules.