Under the 2018 amendment bill to the Arbitration and Conciliation Act, 1996, the government has put forward the proposal of setting up a new statutory regulatory body called the Arbitration Council of India.
This council will be made responsible for the promotion as well as encouragement of the arbitration and other alternative dispute resolution mechanisms in the country.
The Arbitration and Conciliation (Amendment) Bill, 2018 has made the council responsible for the ranking and grading of the arbitral institutes as well as the accreditation of the arbitration professionals. In this article, we will discuss the ways in which an Arbitration institution can secure a high ranking or grading form the Arbitration Council of India (ACI).
Grading of the Arbitral Institutes
One of the functions of the ACI is the framing of policies that will govern the arbitral institutions. The council is made responsible, not just for grading new arbitral institutes, but also reviewing those institutes that it has graded.
It is also the responsibility of the council to keep updating its policies and regulation in order to keep abreast with the current practices being followed in arbitration around the world. Section 43F of the 2018 amendment bill gives a criterion upon which the grading of an arbitral institute is to be done. They are:
The decision of choosing an arbitration seat involves weighing of various elements. Infrastructure is one such element that is looked into before deciding where the arbitration proceedings should be initiated.
Countries that are prominent hubs of arbitration, be it London, Hong Kong or America, have one thing in common; they all have a well-developed infrastructure for arbitration. Many countries in Asia, such as Malaysia, have been proactively developing their infrastructure as well.
The Arbitration Council of India has made infrastructure as on of the basis on which it will grade the arbitral institutes in the country. It is pertinent that the institutes adhere to the infrastructural requirements that will be put forward by the ACI in its regulations. Better infrastructure will positively impact the ranking of an arbitral institute with the ACI.
The Ability of the Arbitrators
It has been readily accepted by the arbitration community that arbitration is only as good as the arbitrator. This succinct statement is enough to establish the importance that an arbitrator has in an arbitration proceeding. They also bring domain expertise to a particular disputed matter.
What makes a good arbitrator is again a debatable question. Impartiality is the most important quality of an arbitrator. His ability to decide, independently and impartially, on an issue as well as his inclination towards working hard are the pertinent skills of arbitrators.
The ACI has included the ability as well as the caliber of the arbitrators as a criterion while ranking the arbitral institutes. It has also specified the qualification, experience, and norms for the accreditation of these arbitrators in the Eighth Schedule of the 2018 amendment bill.
The Eighth schedule includes qualifications and experience of arbitrators as well as general norms applicable to the arbitrator.
Who can be an Arbitrator under the Eighth Schedule:
- An advocate under the Advocates Act, 1961 with 10 years of experience.
- A CA under the Chartered Accountant Act, 1949 with 10 years of experience.
- An officer of the Indian Legal Service.
- An officer with a law degree with 10 years of experience in legal matters in Government, Autonomous Body, PSU or private (managerial position) sector.
- An officer with an engineering degree with 10 years of experience in legal matters in Government, Autonomous Body, PSU or private (managerial position) sector or self-employed.
- An officer with senior level experience in administration in state or central government.
- An officer having senior management experience in PSUs or in Government company or a private company of reputation.
- Any other person having degree qualification with 10 years of experience in his respective field.
General Norms for an Arbitrator under the Eighth Schedule
- The Arbitrator must be a person of general reputation of fairness and integrity.
- The Arbitrator must be impartial and neutral. He should avoid getting into transactions that will put a question on his impartiality.
- The Arbitrator should avoid any dispute or conflict that is connected with the matter which is to be arbitrated by him.
- The Arbitrator should not be convicted of an offense which puts a question on his moral turpitude or an offense which is economic in nature.
- The Arbitrator must have a good knowledge of the Constitution of India as well as the principles of natural justice.
- The Arbitrator must be well conversant with the laws of domestic as well as international arbitration.
- The Arbitrator must be able to fully understand the commercial disputes and contractual obligations between the parties and must be able to apply the principles of law in a given situation.
It has been made quite clear by this bill as regard to who can be an arbitrator and what are his duties. In order to achieve a higher ranking and accreditation of their arbitrators as well as of the institute itself, it is important for the arbitral institutions to follow these guidelines to the core while appointing an arbitrator.
Timely Disposing of the Arbitration Proceeding
The main objective behind opting for alternative dispute resolution mechanism is the speedy resolution of the disputes between the parties.
Parties choose arbitration over traditional methods in hope that their disputes will be resolved in less time. In face of such expectations, it becomes important for the arbitral institutes to issue awards in less time. This has to be done without compromising with the quality of the award.
Before deciding the seat for an arbitration dispute, a party will obviously look at the time taken by an arbitral institute to issue an award in normal circumstances. If an arbitral institution takes longer than usual to issue an award, a party will not designate it to settle its disputes.
The ACI has also considered this fact and has included the performance and compliance of time limits for the disposal of domestic or international commercial arbitrations as a criterion for grading the arbitral institutions.
An arbitral institute that adheres to the time limits prescribed by the statutes and issues awards in arbitration disputes on time will have a higher ranking on the ACI rankings.
The ranking of institutes based on set criteria is a welcome step. It will make the arbitral institutes proactive in adopting the current practices as well as keep upgrading itself to meet the required standards.
This method has provided the institutes with an incentive-based model under which institutes of prominence will be rewarded for their forward-looking policies.