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Interim Reliefs in Arbitral

July 18, 2019 Proceedings: Powerplay between
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EMPEROR’S NEW CLOTHES? ARBITRATION AND CONCILIATION (AMENDMENT) BILL, 2019 May 30, 2019

Preparing For a Driverless Future:

The Arbitration and Conciliation (Amendment) Bill, 2019 (“2019 Bill”) is largely the same as the
Re-Shaping the Transportation
Arbitration and Conciliation (Amendment) Bill, 2018.
Landscape & Conquering the Sky
The 2019 Bill seeks to establish an ‘Arbitration Council of India’ for the purpose of grading of arbitral May 30, 2019
institutions and accreditation of arbitrators.
Are we ready for Designer Babies?
The 2019 Bill proposes to amend the start date for the computation of the 12-month time-limit for
May 29, 2019
completion of arbitral proceedings to the date on which the statement of claim and defence are
complete.
The 2019 Bill exempts international commercial arbitrations from the 12-month time-limit.
Research Articles
The 2019 Bill further introduces provisions on confidentiality of arbitral proceedings and immunity for
arbitrators. The Tips and Traps to Avoid When
The 2019 Bill prescribes minimum qualifications for a person to be accredited/act as an arbitrator Investing in India
under the Eighth Schedule. December 31, 2018

The 2019 Bill statutorily overrules BCCI v. Kochi Cricket and clarifies that Arbitration and Conciliation Evolving HR Law: Giving GCs
(Amendment) Act, 2015 would apply only to such proceedings where the arbitration commenced post Sleepless Nights?
October 23, 2015. June 01, 2017

India confirms intent to sign BEPS

INTRODUCTION multilateral instrument curbing tax
The Arbitration and Conciliation (Amendment) Bill, 2019 (“2019 Bill”) was introduced in the Rajya avoidance
May 17, 2017
Sabha earlier this week.1 This follows the Arbitration and Conciliation (Amendment) Bill, 2018 (“2018
Bill”) which was passed by the Lok Sabha on 10 August 2018 and was pending before the Rajya
Sabha. However, the 2018 Bill lapsed as the 16th session of the Lok Sabha was dissolved. The same
2018 Bill, albeit a few minor changes, has now been introduced as the 2019 Bill.
Audio
The 2019 Bill continues to retain the shortcomings of the 2018 Bill and would significantly undo the Webinar: India Budget 2019 :
progress made towards the growth of arbitration in the country. We had provided our detailed analysis Implications for the International
of the 2018 Bill, which can be found here. Certain additional writings on the 2018 Bill can be accessed Business Community
here. July 09, 2019

Following are the salient features of the 2019 Bill, along with our critical analysis: Webinar: FinTech in India:
Understanding the Regulatory Side
· Arbitration Council of India
of the Next Big Wave
The 2019 Bill proposes the constitution of an Arbitration Council of India (“ACI”).2 The ACI would have April 24, 2019

functions such as grading arbitral institutions, recognizing professional institutes that provide
Webinar: Structuring AIFs in IFSC:
accreditation to arbitrators, issuing recommendations and guidelines for arbitral institutions, and taking
Issues and Considerations
steps for making India a center of domestic and international arbitrations. This is based on the
April 12, 2019
recommendations of the High-Level Committee Report issued on 30 July 2017 under the chairmanship
of Justice B.N. Srikrishna (“Committee Report”). However, the Bill departs from the recommendations
on the following aspects:
NDA Connect
a. Constitution of the ACI
Connect with us at events,
Committee Recommendation 2019 Bill conferences and seminars.

1. A retired judge of the Supreme Court of 1. A person, who has been, a Judge of the
India or a High Court who has substantial Supreme Court or, Chief Justice of a High NDA Hotline
experience dealing with arbitration matters or Court or, a Judge of a High Court or an
 has acted as an arbitrator, nominated by the eminent person, having special knowledge Click here to view Hotline archives.
Chief Justice of India; and experience in the conduct or
administration of arbitration, to be appointed
2. An eminent counsel having substantial
knowledge and experience in institutional
by the Central Government in consultation Video
with the Chief Justice of India–Chairperson;
arbitration, both international and domestic,
nominated by the Central Government; 2. An eminent arbitration practitioner having Webinar: India Budget 2019 :
substantial knowledge and experience in Implications for the International
3. An overseas arbitration practitioner having Business Community
institutional arbitration, both domestic and
substantial knowledge and experience in
international, to be nominated by the Central
international arbitration nominated by the Seminar: Navigating HR-Legal
Government–Member;
Attorney General for India; Issues in Investigating Employee
3. An eminent academician having Fraud, POSH & Ethics Complaints
4. A nominee from the Ministry of Law and
experience in research and teaching in the
Justice; Masterclass on Key Fund Terms
field of arbitration and alternative dispute
and Legal Considerations
5. A representative of commerce and industry resolution laws, to be appointed by the
who will be chosen on a rotation basis by the Central Government in consultation with the
Ministry of Commerce and Industry. Chairperson–Member;

4. Secretary to the Government of India in

the Department of Legal Affairs, Ministry of
Law and Justice or his representative not
below the rank of Joint Secretary–Member,
ex officio;

5. Secretary to the Government of India in

the Department of Expenditure, Ministry of
Finance or his representative not below the
rank of Joint Secretary– Member, ex officio;

6. One representative of a recognised body

of commerce and industry, chosen on
rotational basis by the Central Government–
Part-time Member;

7. Chief Executive Officer-Member-Secretary,

ex officio.

b. Functions & Power of ACI

Committee Recommendation 2019 Bill

Review grading of arbitration institutions Review grading of arbitral institutions and

arbitrators

Should not regulate institutional arbitration or Power given to frame regulations for
arbitral institutes discharge of its broadly framed functions
and duties.

The 2019 Bill departs from the recommendations of the Committee Report and provides the ACI with
broad powers to frame regulations. As the Government is the largest litigator in India, the proposals of
the 2019 Bill risk the independence of arbitration in India.

· Appointment of Arbitrator:

The Committee Report recommended amendments to Section 11 of the A&C Act to ensure speedy
appointment of arbitrators.3 In light of this recommendation, the 2019 Bill proposes to amend the A&C
Act by providing the Supreme Court and the High Court with the power to designate arbitral institutions
which have been accredited by the ACI. The Supreme Court and the High Court can designate the
appointment of arbitrators to such arbitral institutions.4 This amendment in line with practices followed
in other arbitration-friendly jurisdictions such as Singapore5 and Hong Kong6, wherein appointment of
arbitrators is designated to the Singapore International Arbitration Centre (SIAC) and the Hong Kong
International Arbitration Centre (HKIAC) respectively.

· Timelines

a. Time-limit for Completion of Arbitral Proceedings

The 2015 Amendment had introduced a time-limit of 12 months (extendable to 18 months with the
consent of parties) for the completion of arbitration proceedings from the date the arbitral tribunal
enters upon reference. The 2019 Bill seeks to change the start date of this time limit to the date on
which statement of claim and defense are completed.7 The 2019 Bill further proposes that the filing of
the statement of claim and defense should be done within a period of 6 months from the appointment of
arbitrator(s).8

The introduction of an additional six-month period for completion of pleadings is because in the
Committee report it is noted that arbitrators felt that 12-month timeline should take effect post
completion of pleadings. The Committee Report does not discuss the reason why arbitrators have
given this suggestion. However, it can be understood that due to due process concerns, arbitrators are
constrained from taking strong procedurals decisions in relation to completion of pleadings. Time taken
by the parties in completing pleadings therefore takes up most part of the 12-month time-frame, leaving
a very short period for completion of rest of the process.

However, the resolution of this concern by providing a six-month time frame for completion of statement
of claim and defence will result in the creation of more issues. For instance, it is very common in
arbitration proceedings for parties to bifurcate the issues. Certain issues such as jurisdictional or liability
related issues could be heard first. Mandating a fixed timeline for filing of statement of claim and
defense would deprive parties of such flexibility and would effectively require them to file their complete
pleadings at the very outset of the arbitration proceedings. Further, it is difficult to ascertain at what
stage filing the statement claim and defense be considered as completed. For instance, there may be
circumstances where parties wish to amend their statement of claim or defense, or where a counter-
claim is filed.

Effectively, the proposed amendment gives an 18-month timeline for completion of arbitration. It may be
prudent to increase the overall time frame to 18-months and arbitrators should be encouraged to not be
overly worried about due process challenges and to take decisions for conduct of arbitrations in an
efficient manner.

b. Exemption for International Commercial Arbitration

The A&C Act contains a 12-month (extendable to 18 month) timeline for completion of arbitration
proceedings for both international commercial arbitration and non-international commercial arbitration.
The 2018 Bill had suggested a blanket exemption from this statutory time-limit for international
commercial arbitration.

The 2019 Bill also proposes this exemption from the time-limits for international commercial arbitration.
However, the 2019 Bill has also proposed a non-binding a proviso to this exemption stating that the
award in an international commercial arbitration may be made as expeditiously as possible and an
endeavor may be made to dispose of the matter within 12 months from the date of completion of
pleadings. While this provision does not contain mandatory language, it may act as a guidance to
parties and arbitrators to ensure the arbitral award is rendered within a period of 12 months from the
date of completion of pleadings.

It is pertinent to note here that the timelines stipulated under the Amendment Act have worked well in
practice. An exemption may only be justified for institutional international commercial arbitration where
there is an inbuilt safeguard in form of the soft influence that institutions have over the arbitrator and
arbitration proceedings.9 Institutions typically have the power to extend timelines under their respective
rules and can effectively monitor time limits. In such situations, court interference may not be required.
Therefore, a more suitable exemption on applicability of the time-limit could have been one which is
determined based on whether the arbitration is institutional or ad-hoc in nature, rather than whether it is
an international commercial arbitration or a domestic arbitration.

· Confidentiality:

The 2019 Bill introduces a provision on confidentiality. 10However, the 2019 Bill fails to adequately
consider the recommendations of the Committee Report:

Committee Recommendation 2019 Bill

A new provision may be inserted providing for Notwithstanding anything contained in any
confidentiality of arbitral proceedings unless other law for the time being in force, the
disclosure is required by legal duty, to protect arbitrator, the arbitral institution and the
or enforce a legal right, or to enforce or parties to the arbitration agreement shall
challenge an award before a court or judicial maintain confidentiality of all arbitral
authority. proceedings except award where its
disclosure is necessary for the purpose of
implementation and enforcement of award.

The inadequacy of exceptions to the confidentiality obligation will give rise to multiple issues. For
instance, the following circumstances would require disclosure and would not strictly fall within the
scope of the exception proposed in the 2019 Bill:
 a. proceedings under Section 9, 11, 14, 27 and 34 of the A&C Act;
b. where one party wishes to initiate criminal proceedings along with the arbitration;
c. where a party files for an anti-arbitration injunction before the civil court;
d. where a party approaches a government regulator on facts which also gives rise to a contractual
dispute;
e. where information is proposed to be shared with third party experts (such as forensic, accounting,
delay or quantum experts); or
f. where information is required to be shared with a third-party funder to obtain funding for a claim.

· Arbitral Immunity

The 2019 Bill proposes immunity to arbitrators against suits or other legal proceedings for anything
which is done in good faith or intended to be done under the A&C Act or the rules thereunder.11 The
proposed amendment is in line with international practices in this regard. For instance, in Singapore,
arbitrators are not to be held liable for negligence in the capacity of an arbitrator, and mistake in law,
fact or procedure in the course of arbitral proceedings or in the making of an arbitral award.12

· Application for Setting Aside Arbitral Award

The 2019 Bill proposes to amend the language in Section 34 of the A&C Act, which provides recourse
to parties to set aside arbitral awards made in India. Section 34(2) of the A&C presently reads that an
arbitral award may be set aside by the Court only if the party making the application “furnishes proof
that” the party was under some incapacity, the arbitration agreement was not valid in law, etc.13 The
requirement to ‘furnish proof’ has created circumstances wherein the Courts have insisted that Section
34 proceedings be conducted in the manner of a regular civil suit.14 The Committee Report suggested
an amendment to this provision after considering the Supreme Court’s decision in Fiza Developers &
Inter-Trade P Ltd v. AMCI(I) Pvt. Ltd.15, wherein the Supreme Court indicated that proceedings under
Section 34 may not have the facets of a normal civil suit.

The 2019 Bill proposes amend Section 34 by requiring the party to establish “proof on the basis of the
record of the arbitral tribunal” instead of ‘furnishing proof’. The proposed amendment is in line with the
Supreme Court’s decision in the case of M/s Emkay Global Financial Services Ltd. v. Girdhar Sondhi,16
wherein the Supreme Court held that an application for setting aside an arbitral award will not ordinarily
require anything beyond the record that is before the arbitrator.

The Supreme Court in the aforementioned case further held that “if there are matters not contained in
such record, and are relevant to the determination of issues arising under Section 34(2)(a), they may
be brought to the notice of the Court by way of affidavits filed by both parties. Cross-examination of
persons swearing to the affidavits should not be allowed unless absolutely necessary, as the truth will
emerge on a reading of the affidavits filed by both parties.”

This position of the Supreme Court should ideally continue to hold good even after the proposed
amendment by the 2019 Bill. The proposed amendment should not be interpreted as completely
precluding the reliance on any record by parties other than the record of the arbitral tribunal, as there
may be situations where parties may want to bring on record certain facts which came to light post the
arbitral proceedings. A few examples of such record could be:

a. Facts regarding incapacity of party to the agreement, being of unsound mind or minor etc.;
b. Misrepresentation of facts (or fraud played) by a party in arbitration not then known to other party;
or
c. Facts relating to impartiality / conflict of interest of the arbitrator, not then known to the innocent
party.

· Arbitrator Qualifications

The 2019 Bill prescribes that the qualifications, experiences and norms for accreditation of arbitrators is
specified in the Eighth Schedule.17 The Eighth Schedule, however, commences with the phrase “a
person shall not be qualified to be an arbitrator unless..”. Thus, although the proposed provision
pertains to accreditation of arbitrators, the Eighth Schedule appears to be specifying minimum
qualifications for a person to act as an arbitrator.

This proposed amendment is ambiguous, and may be interpreted imply that no foreign legal
professional could act as an arbitrator in India, as one of the requirements under the Eight Schedule is
for the person to be an advocate within the meaning of the Indian Advocates Act, 1961.18 This may
discourage foreign parties from seating their arbitrations in India as the parties may not be able to
appoint foreign legal professionals as arbitrators or otherwise would be stuck in litigation over the
ambiguity prevalent between the language of proposed Section 43J and the Eight Schedule.

· Applicability of 2015 Amendments

The 2019 Bill proposes to define the proceedings to which the amendments introduced by the
Amendment Act will apply. The 2019 Bill aims to delete Section 26 of the Amendment Act and clarify
that the Amendment Act is applicable only to arbitral proceedings which commenced on or after 23
October 2015 and to such court proceedings which emanate from such arbitral proceedings.19

In doing so, the 2019 Bill seeks to overturn a recent decision of the Supreme Court in Board of Control
for Cricket in India v. Kochi Cricket Pvt. Ltd20 which settled the issue after significant debate. In the
aforementioned case, the Supreme Court had held that Section 26 would apply to arbitrations and court
proceedings commencing post October 23, 2015. It also provided that amended Section 36 of the Act
would apply to all proceedings effectively removing the automatic stay on enforcement of awards
pursuant to filing of a set aside application which had plagued arbitration. An attempt to change the law
on applicability of the Amendment Act runs the risk of creating chaos as thousands of proceedings
across the country – several at a very advanced stage - and following the Supreme Court ruling, will be
set at naught. For instance, proceedings which have followed the Supreme Court ruling and are now at
the execution stage may get stalled. Such an amendment does not augur well with the objectives of
certainty and predictability and in fact furthers the impediment in the arbitration process which had been
identified.

· Other Amendments

The 2019 Bill has proposed to amend Section 17 of the A&C Act, which provides for interim measures
ordered by an arbitral tribunal. The A&C Act presently provides that a party may seek interim measures
during the arbitral proceedings or at any time after the making of the arbitral award but before it is
enforced in accordance with Section 36.21 However, since arbitral tribunals become functus officio after
the making of the final award,22 the 2019 Bill proposes to delete the language “or at any time after
making the arbitral award but before it is enforced in accordance with Section 36”.

Section 37 and 50 of the A&C Act provide for limited appeals from orders of arbitral tribunals and
courts.23 The Commercial Court Act, 2015 provides for a general right of appeal against the decisions
of Commercial Courts and Commercial Divisions of High Courts, which created an inconsistent and
wider a right of appeal to orders under the A&C Act. Therefore, the 2019 proposes the language
“Notwithstanding anything contained in any other law for the time being in force” to the aforementioned
Sections in order to restrict the right to appeal to what is already provided in Sections 37 and 50.

The 2019 Bill also proposes provisions to regulate removal of members in the ACI, vacancies in the
ACI, and resignation of members of the ACI.24

CONCLUSION

The 2019 Bill, much like the 2018 Bill, is fraught with multiple issues and glaring inconsistencies with
the Committee Report and judicial precedent. Further, the 2019 Bill proposes changes such as the
creation of a government regulator through the ACI, which has no precedent in any arbitration-friendly
jurisdiction.

While the aim of the 2019 Bill is to promote arbitration, and strengthen institutional arbitration in India,
the proposed changes to the A&C Act may force India to take two steps back as an arbitration-friendly
jurisdiction. The amendments under the 2019 Bill should be seriously reconsidered, as in its present
form, it is likely to give rise to several serious issues. Whilst some of these issues may be resolved over
time through judgments of the court, it would be wise to resolve these ambiguities at this stage to avoid
spending valuable judicial time and resources. Further, foreign parties may not be inclined to seat their
arbitrations in India, till such time that these issues are resolved.

– Dispute Resolution Team

You can direct your queries or comments to the authors

1 Rajya Sabha TV, available at: https://www.youtube.com/watch?v=hcQB_Z91Tr4.

2 Part IA, Arbitration and Conciliation (Amendment) Bill, 2019
3 Page 6, Report of the High Level Committee to Review the Institutionalisation of Arbitration Mechanism in India, 30 July
2017, available at: http://legalaffairs.gov.in/sites/default/files/Report-HLC.pdf (“High Level Committee Report”)
4 Paragraph 3, Arbitration and Conciliation (Amendment) Bill, 2019.
5 Sections 9A(2), 2(1) and 8(2), International Arbitration Act (Chapter 143a) (Singapore).
6 Section 13(2) and 24, Arbitration Ordinance, [1 June 2011] L.N. 38 of 2011 (Hong Kong).
7 Paragraph 6(a), Arbitration and Conciliation (Amendment) Bill, 2019.
8 Paragraph 5, Arbitration and Conciliation (Amendment) Bill, 2019.
9 Page 64, High Level Committee Report.
10 Section 42A, Arbitration and Conciliation (Amendment) Bill, 2019.
11 Section 42B, Arbitration and Conciliation (Amendment) Bill, 2019.
12 Section 25, International Arbitration Act (Chapter 143a) (Singapore); Section 20, Arbitration Act (Chapter 10)
(Singapore).
13 Section 34(2), Arbitration and Conciliation Act, 1996.
14 Page 65, High Level Committee Report.
15 (2009) 17 SCC 796.
16 Civil Appeal No. 8367 of 2018
17 Section 43J, Arbitration and Conciliation (Amendment) Bill, 2019.
18 Section 43J read with the Eighth Schedule of the Arbitration and Conciliation (Amendment) Bill, 2019.
19 Statement of Objects and Reasons, Arbitration and Conciliation (Amendment) Bill, 2019.
20 Civil Appeal Nos.2879-2880 OF 2018 (Arising out of SLP (C) Nos.19545-19546 of 2016).
21 Section 17, A&C Act.
22 Page 62-63, High-Level Committee Report.
23 Section 37, A&C Act.
24 Sections 43E – G, Arbitration and Conciliation (Amendment) Bill, 2019.

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