Consistent with its push towards ease of doing business in India, the government has proposed further amendments by way of the Arbitration and Conciliation (Amendment) Bill, 2018 (Arbitration Bill) and introduced the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Ordinance, 2018 (Ordinance).
The Arbitration Bill proposes the creation of an Arbitration Council of India, an independent body whose functions will include grading arbitral institutions; accrediting arbitrators by laying down norms; and taking all such steps as may be necessary to promote and encourage arbitration, conciliation, mediation and other ADR mechanisms. An electronic depository of all awards is also proposed to be maintained by the council. The Arbitration Bill also proposes to insert a stipulation that arbitral proceedings are confidential except for the award. Further, the Arbitration Bill proposes to protect an arbitrator from suit or other legal proceedings for any action or omission done in good faith in the course of the arbitration proceedings. The timeline of 12 months to make an award shall not apply to international arbitrations and is proposed to be amended so as to commence from the date of completion of pleadings. In order to resolve the conflict of when the amendments in 2015 took effect, a transition provision is also being proposed. The Arbitration Bill was approved by the cabinet on 7 March 2018 but is yet to be introduced in parliament.
On a regional level, the New Delhi International Arbitration Centre Bill, 2018 was introduced in the Lok Sabha in January 2018 to establish an autonomous and independent institution to conduct and regulate arbitration, mediation and conciliation proceedings in India. The bill seeks to establish the New Delhi International Arbitration Centre, which will provide training and promote research in arbitration, provide facilities for the conduct of ADR proceedings and maintain a panel of accredited professionals to conduct ADR proceedings. The Bill also proposes to establish a Chamber of Arbitration, which will maintain a permanent panel of arbitrators, and an Arbitration Institute, which will provide training to arbitrators and conduct research in the area of ADR.
By the Ordinance the specified value has been reduced to three million rupees and state governments, in consultation with High Courts, may establish Commercial Courts at district levels in Mumbai, Kolkata, Chennai, Delhi and Himachal Pradesh (ie, High Courts exercising ordinary original jurisdiction). Where High Courts do not exercise ordinary original civil jurisdiction, the state government, in consultation with the High Court, may set up Commercial Appellate Courts at the district level.
A person aggrieved by the decision of a Commercial Court at the district level may appeal the decision to such Commercial Appellate Court within 60 days from the date of the judgment or order.
The Ordinance also provides for pre-institution mediation and settlement in commercial suits of the specified value that do not contemplate any urgent interim relief. In such cases, a suit cannot be instituted unless the remedy of pre-institution mediation has been exhausted.
The Ordinance also empowers the central government to authorise the authorities under the Legal Services Authorisation Act, 1987 for the purposes of such mediation and prescribe the manner and procedure of such mediation. This process of pre-institutional mediation must be completed within three months from the date of the application made by the plaintiff. This time-frame may be extended by a period of two months with the consent of parties. This period of mediation will not be calculated for the purposes of calculating the period of limitation.
Any settlement arrived at must be in writing and signed by the parties and the mediator, and shall have the same status as a consent award under section 30 of the Act.
The central government is yet to notify rules as to the manner and procedure of such pre-institutional mediation.
The government is also considering amendments to the Specific Relief Act, 1963. Presently, granting specific performance is discretionary, but the amendment proposes to make it compulsory. The amendments also seek to introduce the concept of ‘substituted performance’, whereby the affected party may opt to get the contract performed by a third party or its own agent at the cost of the defaulting party. The Bill proposes a special category for infrastructure projects in the field of energy, water, transport, communications and social or commercial infrastructure. In cases concerning such infrastructure projects, no injunctions may be granted if such an injunction would delay or hamper such project. Further, special courts are proposed to be set up to hear disputes pertaining to infrastructure projects. These amendments were approved by the lower house on 15 March 2018 and await approval of the upper house.
While such amendments are welcome, courts are already over-burdened and absent a systemic overhaul and reform, these amendments, like their predecessors, may end up being just palliatives.
Indian courts have adopted a pro-arbitration approach in recent times. Since the coming into force of the 2015 Amendment, there had been a great deal of uncertainty in relation to the applicability of the amended provisions insofar as proceedings arising out of ongoing arbitrations were concerned. This controversy has been settled by the Supreme Court in Board of Control for Cricket in India v Kochi Cricket Pvt Ltd & Ors Civil Appeal Nos. 2879-2880 OF 2018. It has been held that an award shall be enforceable notwithstanding any pending challenge in the appropriate forum until and unless a stay has been sought for and granted. Therefore section 36 of the Act, as amended, will apply to pending challenges under section 34 as well. Similarly, the Supreme Court in Sundaram Finance Ltd v Abdul Samad & Anr Civil Appeal No. 1650 of 2018 lent legitimacy to arbitral awards by holding that an application for execution of an award may be filed in the court within whose jurisdiction the assets are located without having to obtain a transfer decree from the court that would otherwise have supervisory jurisdiction over arbitral proceedings.
The Supreme Court of India also delivered a landmark judgment in KS Puttaswamy & Anr v Union of India (2015) 8 SCC 735, by which it held that the right to privacy is a fundamental right emanating from article 21 of the Constitution of India but is subject to certain reasonable restrictions. This is a welcome step towards achieving data protection in a world increasingly dominated by intellectual property.
Back to top