| As one of the world’s fastest-growing economies, India is a party to many international commercial arbitrations and the government is making efforts to establish the country as an arbitration hub.
The recent amendments to the Arbitration and Conciliation Act, 1996, in 2015 (the 2015 Act), represent one such initiative. The definition of the term “court” for the purpose of international commercial arbitration has now been narrowed to include a High Court of competent jurisdiction only, which is aimed at reducing the involvement of lower courts in international commercial arbitrations and fast-tracking disputes by enabling the parties to approach High Courts directly for resolving their disputes.
There are amendments made in the Act in consonance with the UNCITRAL Model Law, which make the provisions for interim measures by the Court, assistance by the Court in taking evidence and provisions relating to appealable orders applicable to domestic arbitrations, valid to international commercial arbitrations also, if not agreed otherwise by the parties. Although the applicability of these provisions may sound contrary to the purport and intent of the 2015 Act, they are still made available as the foreign parties realise and acknowledge the importance of interim reliefs and accordingly prefer to approach Indian courts.
The 2015 Act has further incorporated two schedules, the Fifth Schedule and the Seventh Schedule, which provide guidance in determining the independence and impartiality of arbitrators in India. The Fifth Schedule comprises 34 grounds that have been derived from the IBA guidelines on Conflict of Interest in International Arbitration. The Seventh Schedule includes 19 grounds for consideration of the eligibility for appointment of an arbitrator.
The amended Act also directs every arbitration to be completed within 12 months from the date the arbitral tribunal enters upon the reference, which can be further extended by a maximum of six months with the consent of the parties. However, after the expiry of the 18 month period, parties seeking a further extension would have to apply to the Indian courts, which may grant an extension only if it finds that there is sufficient cause. Provisions have also been added in the 2015 Act mandating the arbitral tribunal to hold oral arguments on a day-to-day basis, and not grant any adjournments unless sufficient cause can be made out. Fast-track procedures have also been adopted by which parties can agree to refer the matter to a sole arbitrator and the same shall be adjudicated on the basis of written pleadings and without any oral hearing.
Judicial intervention has been reduced by restricting the scope of pre-arbitration review by courts to a prima facie review of the existence of an arbitration agreement and to the appointment of arbitrators by the court only. The Act has limited the ambit of the term “public policy” and an international commercial arbitration can only be set aside, if (i) the award is vitiated by fraud or corruption; (ii) it is in contravention with the fundamental policy of Indian law, which again has a limited scope with respect to international commercial arbitration; and (iii) it is in conflict with the basic notions of morality and justice. Additionally, the ground of “patent illegality” does not apply to international commercial arbitration.
Most importantly, the mere filing of a petition for challenging an award will not render the award inexecutable and put an automatic stay in the execution of the award.
India has further taken a major step by establishing a new arbitral centre in Mumbai. The Mumbai Centre for International Arbitration (MCIA), which was launched in October 2016, provides for an expedited timeline and is India’s very first institution for arbitration. MCIA will provide world-class infrastructure, 24×7 functionality and live transcription services recording during proceedings, putting India on a par with arbitration centres such as Singapore and London.
To sum it up, the questions that were being raised as to why one should submit to arbitration in India, which could, in view of the delays, become a long and expensive affair, have now been looked into and acted upon by the Indian government. With the above highlighted amendments, there is intent to curtail delays and expedite the arbitration proceedings.
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