The Draft Arbitration and Conciliation (Amendment) bill, 2024: Whether the draft bill affects India’s status as a pro-arbitration ?

7th January, 2025 - 10:45 am Categories: Arbitration 0 Comments

Introduction

Recently, The Department of Legal Affair Released The Arbitration and Conciliation (Amendment) bill, 2024 and invited comments on drafts amendment  for more reforms in Arbitration and conciliation Act, 1996.

The aim and purpose is to provide a boost to Institutional Arbitration, reduce judicial intervention and ensure timely conclusion of Arbitration proceeding. The department also said  that the purpose of this bill is to promote the vision of ease of doing business in India and include provisions which are given through the Judicial interpretation regarding changes in Indian Arbitration and Conciliation Act, 1996. Overall aim to draft amendments to the bill is to modernise in terms of technology, time, seat, institutionalised.

This blog analysed major amendments proposed by the department of legal affairs and further described key areas  which draft amendments not covered in the draft bill. And the author also gives their suggestions regarding the draft amendments bill.

Through The Draft Arbitration and Conciliation (Amendment) Bill, 2024, The department of legal affairs changed the name of legislation, now it will be Arbitration Act, 1996. They mentioned behind the change of name is that reflecting priorities about Arbitration and removing provisions of the conciliation of the arbitration and conciliation Act, 1996.

Definition of the term ‘court’:

In the Draft Amendments bill,  The mean of court in section 2A would in domestic case that the court means the court having pecuniary and territorial jurisdiction over the seat of Arbitration, in case of parties not decided the seat thereafter the court of jurisdiction on the subject matter of a suit. In case of international commercial arbitration, where parties decided seat then the court means the High court have territorial jurisdiction over the seat and in all other cases, the High court have of jurisdiction on the subject matter.

Interim measures and emergency Arbitration:

In order to get the Interim measures according to sec 9, the draft bill suggests that the court should be divested of the power to grant interim reliefs during pendency of the arbitration.

The draft amendments introduces Sec 2(1)(ea) of the act which will provide a formal definition of the emergency Arbitrator. Sec 9-A define the emergency Arbitrator, which say that an arbitration institution may appoint before the constitution of the arbitration tribunal for the purpose of grant of interim measures referred to in section 9.^[1]

Time:

For the provisions of Time, the draft bill suggest that in section 8  must be disposed within 60 days from the date of filing. And for disposal of sec 16 application must be decided as a preliminary issue within 30 days of filing. Lastly for commencer of Arbitration must be start within 90 days from the date of passing of the order in that application in section 9.(1)

Fee:

For the Fee, The draft bill suggests for deletion of the fourth schedule where fee structure was mentioned, further the arbitration council will decide about the fee of the arbitration tribunal.

Seat V. Venue:

In  the matter of Seat v. Venue, the draft bill suggests two ways, the first one is to replace the ‘ the place of Arbitration’ with either seat or venue as appropriate and second place where the contract decided to execute or where couse of action was raised.^[2]

Modernization of Arbitration:

This draft bill also  shows interest in the  benefits for the commercial parties regarding their comfortability and accessibility for the  presence during hearings. The draft bill introduces provisions for the arbitration will be conducted through audio-video electronic means. Now virtual proceedings such as video conferencing, electronic filing of documents, and remote evidence recording will be included in the definition of the arbitration.

Appeal against sec 37 application:

The draft bill 2024 will introduce new provisions for the appeal of appointment of Arbitrator under sec 11, now also can be challenged under sec 37. However this provision did not allow parties to challenge an order rejecting under  Section 11 petition prior to the draft amendments bill.^[3]

Appellate Arbitral Tribunal

The Appellate Arbitral tribunal will be the most crucial element of the draft bill, the department of legal affairs already mentioned vision behind the new draft bill is ease of doing business and minimise the court intervention with the reduced judicial burden. Under 34 of the act, the appellate Arbitral tribunal will be established. However, certain inconsistencies will happen due to possibilities of creating parallel regimes.

Suggestions for india as a  the preferred Arbitration

This Draft bill gave a major change for commercial arbitration in india but the draft bill did not clarify the procedure of constitution of the appellate Arbitral tribunal and there will be increased chance of judicial intervention which repeating the same problem again. The recent judicial pronouncements on patent illegality and curative jurisdiction is not applied in case  of international arbitration cases. In case of international arbitration, the Arbitral award If which is against the provisions of the contract or provides an implausible interpretation to the terms of the contract still passes the muster provided under the grounds of challenge and cannot be set aside by the courts.^[4] In indian according to provision of Arbitration and Conciliation Act, 1996, there is not time limit for disposal of enforcement petition due to which even after having a favourable award and the parties made to run from pillar to post to enforce the same which throws them off and discourages the parties which impact a lot at international level. In this Arbitration draft bill will not mention international arbitration and their foreign awards provisions.

Conclusion

The  Draft Arbitration and Conciliation (Amendment) bill, 2024 might be able to help India’s status as a pro Arbitration country. The main concern for the draft bill is that the provision of international commercial arbitration is not same as the domestic Arbitration which negatively affects India in case of international arbitration. And the successful implementation of all reforms will be crucial for the preferred Arbitration country in the global arena. And reintroduction of the patent illegality test and  ambiguity in appellate processes, rigid timelines could undermine the effectiveness of the draft amendments bill, 2024.

Author: Vikash Kumar, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.

^[1] Abhisaar Bairagi, Milind Sharma and Ausaf Ayyub, Future of Arbitration in India: Decoding the Draft Arbitration and Conciliation (Amendment) Bill, 2024,  SCC online, https://www.scconline.com/blog/post/2024/12/10/future-of-arbitration-in-india-decoding-the-draft-arbitration-and-conciliation-amendment-bill-2024/, Dec 19, 2024.

^[2] Yogendra Aldak, Pranav Mundra and Rashi Srivastava, Arbitration and Conciliation (Amendment) Bill, 2024 — Small Leaps to Align the Law with Practicality, SCC Online,  https://www.scconline.com/blog/post/2024/11/30/key-changes-lks-attorneys-experts-corner-arbitration-and-conciliation-amendment-bill-2024/, Dec 19, 2024.

^[3] Ibid.

^[4] Ibid.