The Role Of The 2024 Draft Bill In Shaping Institutional Arbitration In India

India has been steadily progressing towards becoming a global arbitration hub, with continuous legal reforms aimed at enhancing efficiency and transparency. The Draft Arbitration and Conciliation (Amendment) Bill, 2024 (“2024 Arbitration Bill”) marks a significant step in this journey, proposing several key changes to align India’s arbitration framework with global best practices and at the same time, to strengthen Institutional Arbitration in the country, which will boost the foreign investemnts. This article explores the key provisions of the 2024 Arbitration Bill and its potential impact on the existing framework of Institutional Arbitration in India.

Redefining Institutional Arbitration

The 2024 Arbitration Bill marks a fundamental shift in the definition of Institutional Arbitration, moving away from a court-centric model to one that recognizes arbitral institutions as independent entities. Earlier, institutional arbitration was narrowly defined as institutions designated by the Supreme Court or High Courts under the Act. The proposed new definition broadens this scope by recognizing any organization or body that can conduct arbitration under its own rules or as agreed by the parties. The proposed shift acknowledges the need for autonomy of arbitral institutions, reducing direct judicial control over their designation and reinforcing their role as the primary facilitators of arbitration.

Administrative Assistance to mean support from Arbitral Institutions

The 2024 Arbitration Bill seeks to explicitly recognize Arbitral Institutions and administrative secretaries as part of administrative assistance in arbitration. While the earlier provision allowed parties or tribunals to seek assistance from any suitable institution or person, the proposed clause categorically specifies that “institution” is to include an Arbitral Institution. The proposed change aims to encourage reliance on structured arbitration centres rather than ad-hoc arrangements, thereby promoting more professional case management, procedural efficiency, and consistency in arbitration practice.

Appointment of Emergency Arbitrators by Arbitral Institutions

The provision proposed in the 2024 Arbitration Bill introduces the concept of “emergency arbitrators” and seeks to grant Arbitral Institutions the authority to appoint such arbitrators before the constitution of the full arbitral tribunal to enable parties to obtain interim relief immediately without having to wait for the full tribunal to be formed. Such orders passed by Emergency Arbitrators are proposed to be enforced in the same manner as an order of an arbitral tribunal under Section 17(2) of the Arbitration & Conciliation Act, 1996, which may be confirmed, modified, or vacated in whole or in part by an order or arbitral award passed by the arbitral tribunal so constituted.

Regulating Fees of the Arbitrators

While earlier, the Central Government had the power to amend the Fourth Schedule, which prescribes the model fee structure for arbitrators, the 2024 Arbitration Bill modifies Section 11A stipulating that arbitral fees will be governed either by party agreement or by the rules of an Arbitral Institution under whose aegis the arbitration is being conducted. This change signals a move towards greater control sought to be given to Arbitral Institutions.

Arbitral Institutions to Reduce Judicial Interventions

The 2024 Arbitration Bill seeks to confer on Arbitral Institutions the powers previously vested in the courts under Section 29A of the Arbitration & Conciliation Act, 1996. This includes the power to extend the mandate of the Arbitral Tribunal, reduce arbitrators’ fees for delays, and substitute arbitrators when necessary. These powers as proposed would enhance the efficiency of arbitration and reduce the judicial burden.

It also introduces a significant development, particularly with regard to the establishment of an Appellate Arbitral Tribunal to hear applications for setting aside of arbitral awards and it seeks to empower Arbitral Institutions to establish such Appellate Arbitral Tribunals under Section 34A of the Arbitration & Conciliation Act, 1996. This could reduce the burden on courts and ensure efficient and expeditious resolution of disputes.

Arbitration Council of India (ACI) to recognize Arbitral Institutions

The 2024 Arbitration Bill retains the Arbitration Council of India’s duty to promote and strengthen Institutional Arbitration as outlined in Section 43D of the Arbitration & Conciliation Act, 1996. The proposed amendments seek to strengthen the Council’s mandate by broadening its duties and functions, including enhancing its role in accrediting Arbitral Institutions. Further Section 43K read with Section 43Q(2)(s) and Section 43Q(2)(t) which have been proposed to be inserted, would enable the Council to recognize Arbitral Institutions in the manner and based on the criteria as may be specified by the Council.

Conclusion

The 2024 Arbitration Bill, with its focus on advancing Institutional Arbitration, aims to streamline procedures and alleviate judicial bottlenecks. If effectively implemented, it holds the potential to position India as a leading hub for arbitration. However, its success will hinge on robust implementation and collaboration among all stakeholders.

(This article is authored by Nilava Bandyopadhyay, Senior Partner, and co-authored by Moonmoon Nanda, Partner Designate at S&A Law Offices.)