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Written By: Shajeeda Tajdeen

The Central Cabinet headed by Honourable Prime Minister on Wednesday (07/03/2018) gave its consent by approving the Arbitration and Conciliation (Amendment) Bill, 2018, which will now proc on its way to the Parliament.

The proposed amendment aims at improving and developing institutional arbitration. With this view the bill aims to set up an independent body which shall have the authority to lay down standards for conducting arbitration and conciliation proceedings, it also focuses on making the process much more party friendly, along with making it more cost-effective or reasonable in terms of money and time.

The Arbitration and Conciliation Act, 1996 was latest amended by the Arbitration and Conciliation (Amendment) Act, 2015, with the help of the new provision included by the amendment, the process of arbitration and conciliation were both made user-friendly, cost-effective and were also disposed of easily and with speed.  But, with the change in time and society and also with a view to match the needs of the fast-growing surrounding, there were some more changes that were required in the Act, so as to make Act survive in today’s world. after considering the and keeping in the view the need for change a High-Level Committee (HLC) was formulated by the Central Government under the Chairmanship of a retired Supreme Court Judge, Justice B H Srikrishna.

The mandate of the HLC was as follows:

  • To study the functioning and performance of the present structure of arbitral institutions in the country with a view to examining its effectiveness.
  • To promote the institutionalized arbitration mechanisms and to devise and frame a proper plan for doing so.
  • To develop an arbitration eco-system which would suit the commercial dispute resolution and also submit a report on suggested reforms in the law.

Hereinafter, the HLC had submitted its report on 30th July 2017, along with its recommendations which are as follows:

  • To accelerate speedy appointment of arbitrators via designated arbitral institutions with the help and assistance of Supreme Court and High Court. The Committee stated that if this is done then the parties could directly approach the designated arbitral institutions in cases of International Commercial Arbitration, and they will not have to wander around.
  • The said amendment also talks about constituting an independent body called as Arbitration Council of India (ACI). The task entrusted to ACI shall be of providing accreditations and grade to arbitral institutions throughout the country. The grades and credits would be subject certain norms and regulations laid by the council. The ACI shall also be responsible for promoting and encouraging the ADR (Alternate Dispute Resolution) process. Being an independent body the ACI shall be free from political influences and can evolve and develop its own set of policies and guidelines for its governance. The council is also required to maintain an electronic depository of all arbitral awards.
  • The ACI shall enjoy the status and advantages of a body corporate. It would be headed by a Judge of the Apex Court or by a Chief Justice or Judge of any High Court or any eminent person. The qualifications of the other members are subject to the situation and educational background of an individual. The Government is also eligible to nominate its members in the Council, but the selection would be made at the discretion of the ACI.
  • The Committee also mentioned that it is essential to amend sub-section (1) of section 29A, by removing International Arbitration from the bounds of timeline and to provide a time limit of 12 months for passing an arbitral award, the period of 12 months shall be calculated from the date of completion of the pleadings by the parties.
  • In order to maintain the confidentiality of the proceedings, a new section 42A should be inserted. The provisions of this section would apply to the entire proceedings except for the arbitral award.
  • Protection from litigation is also sought for the Arbitrators by inserting a new section namely 42B. The shield of this section is to make available only when the award and proceedings were conducted in good faith.
  • Lastly, the bill also seeks to insert a new section 87, to state that unless otherwise agreed by the parties, the Amendment Act, 2015, shall not be applicable in the following cases:
  • Arbitral proceedings, which started before the commencement of the Amendment Act, 2015
  • To all the Court proceedings arising out of or in relation to such arbitral proceedings, irrespective of the fact that whether or not such proceedings started before or after the commencement of the Amendment Act, 2015.
  • The Amendment Act, 2015 shall only be applicable on proceedings which have commenced on after the commencement of the Arbitration Act, 2015 and to all the Court proceedings which are in relation to such proceedings subject that they have commenced subsequently.

The final call on the bill shall be taken after it is placed before the Parliament and then this would determine the destiny of this bill, that whether or not it can enjoy the status of the Act. But, it essential to mold the laws to suit the change and need of the society or else it laws would become stale in nature. So to keep the bond between the statues and society strong it is necessary that the statues are framed by keeping in view the requirements of the society and need of the hour in mind.


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