Mira Mahadevan on Institutionalising Arbitration in India

The New Delhi International Arbitration Centre Bill, 2018 (the “NDIAC Bill”) was introduced in the Lok Sabha earlier this year. The object of the bill is to encourage the establishment of the New Delhi International Arbitration Centre (“NDIAC”) to allow for an autonomous and an independent institution that promotes a more efficient arbitration mechanism in India.

Highlights of the NDIAC Bill

The objective of establishing the NDIAC was to further the process of institutionalisation of arbitration in India. This effort aims to ensure that the system is more efficient and not a time consuming process. Earlier, under the guidance of Mr. Justice B. N Srikrishna, a high level committee looked into the obstacles that hampered the institutionalization of arbitration in India and suggested reforms to the working of International Centre for Alternative Dispute Resolution (“ICADR”). The committee in its report had recommended that the ICADR would come up with specific objectives to ensure that it becomes an institution of national importance. However, the ICADR failed to rebuild itself to meet with the major developments in the field of arbitration. In light of this background, the NDIAC Bill was proposed to construct an institution that would highlight the importance of a nationalised institution in the country. The undertakings of the ICADR would be handed over to the new NDIAC, without interfering with the existing system of the ICADR. In addition, the NDIAC would also be recognized as a “body corporate” as defined under the Companies Act, 2013 having perpetual succession and a common seal with power. It would also be able to hold and dispose property as well have the capability to enter into a contract and be allowed to sue or be sued.

Composition of the NDIAC

Since the NDIAC aims to be the central hub of arbitration in India, the criteria for appointment is of a higher standard. The composition of the NDIAC is covered under Clause 5 of the NIDIAC Bill. It is to comprise of a chairperson who has served as a Judge of the Supreme Court or a High Court or an eminent person, having special knowledge and experience in the conduct or administration of arbitration, appointed by the Central Government in consultation with the Chief Justice of India. In addition, there would be (a) two eminent persons as members having substantial knowledge and experience in institutional arbitration, in domestic as well as international, appointed as full-time or part-time members; (b)one representative of a recognized body of commerce and industry as part-time member and(c) one member each from the Ministry of Law and Justice and Ministry of Finance and the Chief Executive officer of the Centre as members ex officio.

Adoption of a Pro-Arbitration Approach

The main aim of the NDIAC Bill is to ensure a more pro-arbitration environment in the country. This is clearly envisaged under Clause 14 of the NDIAC Bill. The NDIAC bill iterates that the NDIAC would look at the acquisition as well as the undertakings of the ICADR. It will be declared as an institution of national importance and would deal with matters that surround similar situations as the ICADR. In addition, the NDIAC would aim to bring within its ambit targeted reforms to develop itself to conduct domestic and international arbitration. The NDIAC would promote research and organize conferences and seminars on the different modes of dispute settlement and also collaborate with national and international institutions. It would also set up facilities that would promote dispute settlement as a whole.

Establishment of Chamber of Arbitration and Arbitration Academy

The NDIAC Bill also recommends the establishment of the Chamber of Arbitration under Clause 28 which would be required to scrutinize the applications of arbitrators for the place in the panel of the NDIAC. The chamber would consist of experienced practitioners who would lay down criteria for the shortlisting of a pool of qualified arbitrators in the field of international commercial arbitration and arbitration other than that as well. The NDIAC also proposes the establishment of the Arbitration Academy under Clause 29 that would focus on training arbitrators particularly in the field of international commercial arbitration to compete on par with existing institutions. The academy would look at conducting research as well as putting forward suggestion that would forward the objectives of the Act.

Analysis of the NDIAC Bill

Most foreign investors would prefer to deal with an international centre that would oversee arbitration in India. Most pro-arbitration countries like London, Singapore and Hong Kong have international arbitral institutions. The NDIAC set up in India mirrors the model of the Singapore International Arbitration Centre (“SIAC”). The SIAC has a higher rate of disposal of cases. NDIAC also shares certain similarities with SIAC. For instance, the appointment of arbitrators would rest with the NDIAC as opposed to the courts similar to the SIAC model to reduce judicial intervention when there is a dispute regarding appointment of arbitrators.

While the bill seems as an ambitious step to further the aim of institutionalising arbitration in the country, it is also imperative to realize that the model is very similar to the existing ICADR setup. Hence it would all come down to assessing the credibility of the system once it would be implemented and tested on procedural counts.

There is a growing urge to ensure a suitable climate for arbitration in the country. At present there are around 35 arbitral institutions in the country. This include the International Centre for arbitration in Mumbai, Delhi Arbitration Centre, as well as the Nani Palkivala Centre in Chennai. There seems no clarity with respect to the hierarchy of the existing institutions with the advent of the NDIAC. In addition, the Justice Sri Krishna Committee had highlighted the demand of the populace to prefer ad hoc arbitrations over institutional arbitration. Literature on this question iterates that ad hoc arbitrations are preferred simply because of the lack of credibility of arbitral institutions in the country along with the fear of exorbitant fees that could be charged by an institution. In this light, the NDIAC can be seen to bring about faith in the process of institutional arbitration by dealing with most of the problems that existing institutions had. To this end, the latest Arbitration and Conciliation (Amendment) Bill, 2018 also proposes the need for the establishment of the Arbitration Council of India that will grade the arbitral institutions in the country.

  1. Justice Srikrishna Committee Report to Review the Institutionalization of Arbitration in India
  2. New Delhi Arbitration Centre Bill, 2018
  3. New Delhi International Arbitration Centre: Building India into a Global Arbitration Hub

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