The Draft Arbitration and Conciliation (Amendment) Bill, 2024

In October 2024 the Department of Legal Affairs released a draft Arbitration and Conciliation (Amendment) Bill for public consultation. It follows the report of an expert committee chaired by Dr. T.K. Viswanathan and pursues three stated objects: to promote institutional arbitration, to reduce court intervention, and to ensure timely conclusion of proceedings. The first thing to say about it, and the thing most commentary omits, is that it is not law. It has not been introduced in Parliament, and the governing statute remains the Act of 1996 as amended in 2015, 2019 and 2021.

The principal proposals, and the status that governs how they should be described

1. Why a Fourth Round Was Proposed

Three gaps had become obvious. Practice had invented institutions the statute did not recognise, principally the emergency arbitrator, which the Supreme Court had to accommodate by construction in Amazon.com NV Investment Holdings LLC v. Future Retail Ltd., (2022) 1 SCC 209. The institutional framework created in 2019 had not become operative, because the Arbitration Council of India was not constituted. And challenges under Section 34 continued to take years in courts already burdened, which defeated the time limits introduced in 2015.

2. The Principal Proposals

1. Emergency arbitration, a proposed Section 9A. Express recognition of an emergency arbitrator appointed under institutional rules before the tribunal is constituted, and of the enforceability of his order. It would replace the construction adopted in Amazon, and its application to an arbitration seated outside India is one of the questions raised in consultation.
2. An appellate arbitral tribunal, a proposed Section 34A. A challenge to an award could be taken to a second arbitral tribunal instead of a court. This is the most contested proposal: it would create a parallel route to setting aside, with the court route surviving for ad hoc references and for parties who do not opt in, which risks two bodies of jurisprudence on the same grounds.
3. The seat. The statutory language would move from place of arbitration to seat of arbitration, adopting the distinction the courts have worked out since Bharat Aluminium and BGS SGS SOMA.
4. Audio-visual proceedings. Express recognition of hearings conducted by electronic means, which practice adopted during the pandemic and which the Act nowhere mentions.
5. The grounds of challenge. The grounds in Section 34 would be reorganised, partial setting aside made explicit, and, in one version of the draft, patent illegality extended to international commercial arbitration, which would reverse a deliberate choice made in 2015.
6. Consequential changes. Removal of the conciliation provisions following the Mediation Act, 2023, with a settlement reached during an arbitration enforced under that Act, and further functions conferred on the Arbitration Council of India.

3. The Criticisms Made in Consultation

• The appellate arbitral tribunal. A second arbitral layer may add cost and delay rather than reduce it, since the losing party will use it and may then still go to court; and the grounds being the same, it is unclear what a second tribunal adds that a court does not.
• Powers for a body that does not exist. Several proposals confer functions on the Arbitration Council of India, which has not been constituted since Part IA was enacted in 2019 and brought into force in 2023.
• Patent illegality in international commercial arbitration. Extending it would widen the review of awards involving foreign parties, which is the opposite of the direction taken in 2015 and of the reason the ground was confined to domestic awards.
• Emergency arbitration abroad. If Section 9A does not cover an emergency arbitrator seated outside India, the position after the amendment would be no clearer than it is now.

4. What It Does Not Address

Three matters that practitioners raise are absent from the draft or are dealt with only indirectly. There is no framework for third-party funding, which the Law Commission recommended in 2015. There is no provision for joinder or consolidation, so multi-party disputes continue to depend on the agreement and on institutional rules. And the enforcement of awards against government entities, which is where much of the delay in Indian arbitration actually occurs, is left to the general law and to the guidelines issued by the Department of Expenditure in June 2024.

5. Related Topics and Provisions