INTERNATIONAL JOURNAL OF MULTIDISCIPLINARY EDUCATIONAL RESEARCH

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VOLUME 8, ISSUE 9(5), SEPTEMBER 2019

THE ARBITRATION AND CONCILIATION (AMENDMENT) ACT, 2019: A

CRITICAL ANALYSIS

Dr. Vikrant Sopan Yadav

Assistant Professor
Government Law College
Mumbai

Abstract
The Arbitration and Conciliation (Amendment) Bill, 2019 has been adopted based on the
report of Justice B. N. Sriksrishna Committee. With passage of the Bill in both the
houses of the parliament (i.e. in Rajya Sabha on July 18, 2019 and in Lok Sabha on Aug
01, 2019), it has made some key changes in current law of Arbitration i.e. the Arbitration
and Conciliation Act of 1996.This research paper is attempt to critically analyse the
Arbitration and Conciliation (Amendment) Act, 2019.
.
Keywords: Arbitration, Amendment, Court, Tribunal

Introduction:
In the words of Law Minister Ravi Shankar Prasad, “India should not accept imperialism
in the field of arbitration. The best would be when Indian arbitrators are sought globally.
We want India to become a hub of international arbitration.” With this aim, The
Arbitration and Conciliation (Amendment) Act, 2019 has been passed recently by the
Indian legislators.
The Act has proposed some key changes to the existing Arbitration law in India. Some of
these changes are a welcome step; however, it also has few issues which are critically
analysed hereunder.

Key Amendments
Appointment of Arbitrators (Sec. 11)
Parties have to approach the Supreme Court or the High Court for appointment of
Arbitrators or to resolve their dispute. Under the Act, the Supreme Court and High
Courts may now designate arbitral institutions (graded by ACI under Section 43-I),
which parties can approach for the appointment of arbitrators.iThis is a welcome move as
ACI will share this burden of the courts and even facilitate speedy appointment of
arbitrators. This will help in reducing some burden on already overburdened Courts in
India.
For international commercial arbitration, appointments will be made by the institution
designated by the Supreme Court. For domestic arbitration, appointments will be made
by the institution designated by the concerned High Court.ii
The much debated question of whether a power u/s 6A is judicial or not, has now been
set aside as the 2019 Amendment Act expressly permits the delegation to an institution
designated by the Court concerned. In case there are no arbitral institutions available, the
Chief Justice of the concerned High Court may maintain a panel of arbitrators to perform
the functions of the arbitral institutions.iii

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Arbitration Council of India (ACI)

The 2019 Act, already passed by the Rajya Sabha, along with few other key amendments
to the Arbitration and Conciliation Act of 1996, aims to establish an independent body
namely, Arbitration Council of India (ACI) for promotion of arbitration, mediation,
conciliation and other alternative dispute redressal mechanisms. Indicating the need for
establishment of ACI, Law Minister Ravi Shankar Prasad said replying to a debate on the
Act that, “India is qualified to have a centre of international arbitration as it has enough
qualified lawyers, and has skill and training facilities."iv
As per Section 43B of the Act, the Arbitration Council of India will have perpetual
succession and a common seal, with power, subject to the provisions of the Act, to
acquire, hold and dispose of property, both movable and immovable, and to enter into
contract. It can sue or be sued.v
Some of the key functions of ACI includes;
(i) Making policies for the establishment, operation and maintenance of uniform
professional standards for all alternate dispute redressal matters,vi
(ii) Framing policies for grading arbitral institutions and accrediting arbitrators,vii
(iii) Holding training, workshops and courses in the area of arbitration in collaboration
of law firms, law universities and arbitral institutes;viii
(iv) Promoting institutional arbitration by strengthening arbitral institutions;ix and
(v) Maintaining a depository of arbitral awards (judgments) made in India.x

Interim Relief
Present Section 17 of the A&C Act, provides that, ‘party may seek interim measures
during the arbitral proceedings or at any time after the making of the arbitral award but
before it is enforced...’ However, since arbitral tribunals become functus officio after the
making of the final award,xi the 2019 Act has deleted the words “or at any time after
making the arbitral award but before it is enforced...” As a result, the henceforth
Arbitration tribunal tribunal will not have any jurisdiction u/s 17 and the parties need to
approach either Court (u/s 9 of the 1996 Act) or the emergency arbitral tribunal (subject
to agreement between the parties).
This is in accordance with the general prescription that, the arbitral tribunal is by and
large functus-officio after the passing of the award except for certain limited functions
such as those mentioned in Section 33 of the 1996 Act.xii

Application of Amendment Act of 2015

The 2019 Act proposes the removal of Section 26 of the Amendment Act of 2015 and
clarify that the Amendment Act of 2015 is applicable only to arbitral proceedings which
commenced on or after 23 October 2015 and to such court proceedings which emanate
from such arbitral proceedings. This proposed amendment is in response to the decision
by honourable SC in Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltdxiii
wherein it was held that, held that Section 26 would apply to arbitrations and court
proceedings commencing post October 23, 2015.

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Time-limit for Completion of Arbitral Proceedings

The 2015 Amendment had introduced section 29A which had under sub-section 1
provided a time-limit of 12 months (extendable to 18 months with the consent of parties)
for the completion of arbitration proceedings from the date the arbitral tribunal enters
upon reference. The 2019 Act has replaced the sub-section with new provision which
seeks to change the start date of this time limit to the date of completion of pleadings.xiv
The 2019 Act has also provided a time limit of 6 months for fling of the statement of
claim and defence.xv
This is a welcome step most of the time parties take long time for filing of statements of
claim and defence. The aforementioned time limits will now ensure the speedy due
process in Arbitration.
However this provision is limited in its application only to the domestic arbitration and
doesn’t apply to international commercial arbitration. In a non binding proviso to section
29A (1), the Amendment Act has provided that, ‘in the matter of international
commercial arbitration may be made as expeditiously as possible and endeavour may be
made to dispose of the matter within a period of twelve months from the date of filing of
statement of claim and defence.’
The 2019 Act provides that, during the period an application for extension of time for
making of arbitral award is pending before the Court u/s 29A (5), the mandate of the
arbitrator shall continue till disposal of the application.xvi This amendment will help the
tribunal to continue the proceedings without waiting for Court's decision on extension of
time u/s 29A (5).
Misinterpretation of Sec 34(2)
in the case of Fiza Developers & Inter-trade Pvt. Ltd. v. AMCI (India) Pvt. Ltd. and
Anr.xvii The question before the Court was whether issues are required to framed in a
section 34 proceedings as they are required in a normal suit as per Order XIV Rule 1 of
the CPC. Answering the question in negative, it was held that the Section 34 proceedings
are summary proceedings and framing of issues was not an integral process of the
proceedings under Section 34. This was an indication that proceedings under Section 34
may not have the facets of a normal civil suit which was relied by the SC in the case of
M/s Emkay Global Financial Services.
the Supreme Court’s in the case of M/s Emkay Global Financial Services Ltd. v. Girdhar
Sondhi,xviii held that ‘an application for setting aside an arbitral award will not ordinarily
require anything beyond the record that is before the arbitrator,’ Going in tune with this
decision The 2019 Act proposes to amend Section 34 by requiring the party to establish
“proof on the basis of the record of the arbitral tribunal” instead of ‘furnishing proof’. xix
Earlier, use of term ‘furnishing proof’ u/s 34 (2) of current law was interpreted strictly by
the courts in India thereby resulting in conduct of proceedings under section in the
manner of civil suit. In its report, Justice Srikrishna Committee had expressed its
displeasure over practice that had evolved in some High Courts which allowed parties to
lead evidence in Section 34 proceedings just like in a suit. Such practice was developed
because of the language of Section 34(2)(a) which required parties to “furnish proof” as
to the existence of the grounds under Section 34. Hence itrecommended change in the
language of Section 34 (2) which has been positively responded with by the 2019
Amendment Act.

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Court in Emkay Global Financial Services also observed that, “if there are matters not
contained in such record, and are relevant to the determination of issues arising under
Section 34(2)(a), they may be brought to the notice of the Court by way of affidavits filed
by both parties. Cross-examination of persons swearing to the affidavits should not be
allowed unless absolutely necessary, as the truth will emerge on a reading of the
affidavits filed by both parties.”

General norms for arbitrators

The Eighth Schedule inserted by the Amendment Act of 2019, prescribes a general set of
norms for arbitrators, which includes;
 The arbitrator must be impartial and neutral and avoid entering into any financial
business or other relationship that is likely to affect impartiality or might reasonably
create an appearance of partiality or bias amongst the parties;
 The arbitrator must be conversant with the Constitution of India, principles of natural
justice, equity, common and customary laws, commercial laws, labour laws, law of
torts, making and enforcing the arbitral awards, domestic and international legal
system on arbitration and international best practices; and
 The arbitrator should be capable of suggesting, recommending or writing a reasoned
and enforceable arbitral award in any dispute which comes before him for
adjudication.

Confidentiality
Section 42A of the 2019 Act provides that, the arbitrator, the arbitral institution and the
parties to the arbitration agreement shall maintain confidentiality of all arbitral
proceedings except award, where its disclosure is necessary for implementation and
enforcement of award.
The 2019 Act proposes immunity to arbitrators against suits or other legal proceedings
for anything which is done in good faith or intended to be done under the A&C Act or
the rules thereunder.xx
Critique and suggestions:
 U/s 11 (3A) Court can designate only those arbitral institutes which are graded by
ACI. Since majority of the members of ACI are government representativesxxi, there
is a possibility of objections being raised on impartiality of ACI in grading the
arbitral institutions.
Foreign arbitral institutes and arbitral parties may refrain from entering in India for
arbitration as a result of governmental control on ACI (and recognition of arbitral
institutes)
 There is, till date, no clarity as to on what grounds the arbitral institution will or will
not be graded by the ACI.
 Instead of complete confidentiality,xxii Indian legislators may have accepted the ‘opt
out’ policy which allows publication of award except when parties have opted to
keep it confidential.
The confidentiality clause under the Amendment Act of 2019 has completely
neglected the recommendations of justice B. N. Srikrishna Committee. The
committee had recommended few exceptions to the rule of confidentiality. They

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were, requirement of disclosure / publication under legal duty, to enforce legal right
and to enforce or challenge an award. The only exception recognised under the Act is
that where it is required for implementation and enforcement of award.
 The Eighth Schedule stipulates nine categories of persons such as an Indian
Advocate, cost accountant or company secretary or a government officer in certain
cases etc.) and only those are qualified to be an arbitrator. This clearly has closed the
doors for foreign advocates, CA’s and CS. This may act as an impediment in making
India a global international arbitration hub which, as mentioned hereinabove, is
stipulated as a goal behind this Amendment Act by honourable law minister of India.
The question of who can be an Arbitrator? Shall be left open to be answered by the
parties respecting the doctrine of Party Autonomy. The schedule is also in
contradiction with the generally accepted practice of ‘anyone who is expert in
subject matter of dispute can be an arbitrator.’
 The Act proposes deletion of Section 11 (6A) as well as Section 11 (7) but retains
provision of Section 11 (6B). Deletion of Section 11 (6A) will result in giving
excessive power of interpretation (of agreement) to arbitral institution without
confining to ‘examining only the existence of an agreement’ between the parties
while appointing the arbitrator.xxiii This is against the intention of legislators and
customary notions of arbitration. Deletion of section 11 (7) will result in challenging
the decision on appointment of arbitrator(s) by way of proceedings thereby resulting
in delay in arbitration. This means, the application for interim relief after award will
lie u/s 9 to the civil court and not to the arbitral tribunal.
 Even after amendment to Sec. 34 (2), the Courts can still examine additional facts in
the light of arbitral tribunal’s record and give their findings. Hence, an ‘express bar
to treat the matter u/s 34 (2) as Civil matter,’ might have given a better clarity and
restraint against judicial misinterpretation.

Conclusion:

As observed hereinabove, the 2019 Amendment Act is definitely a step in right direction
towards making India as an arbitration hub. Setting up of ACI, timelines for completion
of Arbitration, limited scrutiny of awards, confidentiality can be termed as pros of the
Act. Having said this the amendment too is not immune from defects and ambiguities. A
detailed set of rules governing the working of the ACI, ensuring its independence and
impartiality alongwith other suggestions provided in this paper may provide perfect step
towards making India an Arbitration hub.

References
i
Sec 11 (3A) the Arbitration and Conciliation (Amendment) Act, 2019
ii
Sec 11 (3A)(ii) the Arbitration and Conciliation (Amendment) Act, 2019
iii
Supra note 7
iv
Lok Sabha nod to bill to amend arbitration law, PTI, Available at,
http://www.ptinews.com/news/10751772_Lok-Sabha-nod-to-Act-to-amend-arbitration-
law.html, accessed on 30th August 2019

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v
Sec 43 B (2), the Arbitration and Conciliation (Amendment) Act, 2019
vi
Sec 43 D (1), the Arbitration and Conciliation (Amendment) Act, 2019
vii
Sec 43D (2) (a), the Arbitration and Conciliation (Amendment) Act, 2019
viii
Sec 43D (2) (d), the Arbitration and Conciliation (Amendment) Act, 2019
ix
Sec 43D (2) (h), the Arbitration and Conciliation (Amendment) Act, 2019
x
Sec 43D (2) (j), the Arbitration and Conciliation (Amendment) Act, 2019
xi
Page 62-63, Justice B.N. Srikrishna Committee Report
xii
Dr. George Amit, NPAC's Arbitration Review: The 2019 Arbitration Amendment Act
and the changes it ushers in - A Primer, August 12 2019, available at,
https://barandbench.com/npac-arbitration-review-2019-arbitration-amendment-act/
xiii
CIVIL APPEAL Nos.2879-2880 OF 2018
xiv
Section 29A (1), the Arbitration and Conciliation (Amendment) Act, 2019
xv
Section 23 (4), the Arbitration and Conciliation (Amendment) Act, 2019
xvi
Proviso to Section 29A (4), the Arbitration and Conciliation (Amendment) Act, 2019
xvii
(2009) 17 SCC 796
xviii
Civil Appeal No. 8367 of 2018
xix
Sec 34 (2) the Arbitration and Conciliation (Amendment) Act, 2019
xx
Section 42B, the Arbitration and Conciliation (Amendment) Act, 2019. Similar
provisions is provided under Section 25, International Arbitration Act (Chapter 143a)
(Singapore); Section 20, Arbitration Act (Chapter 10) (Singapore).
xxi
See sec 43C, the Arbitration and Conciliation (Amendment) Act, 2019
xxii
See sec. 42A, the Arbitration and Conciliation (Amendment) Act, 2019
xxiii
The validity of arbitration agreement shall be left open for checking by the arbitration
tribunal in accordance with the ‘Competence Competence (Kompetenz-Kompetenz)’
principal (see Sec. 16, the Arbitration and Conciliation Act, 1996)

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