While the government’s proposed reforms seek to promote institutional arbitration, they still contain provisions that would delay dispute resolution by allowing courts to intervene, experts said.

When the Arbitration Act was amended for the second time in 2019, it was strengthened to give rating powers of arbitration institutions to the Arbitration Council of India (ACI), a body of experts and policy makers that would frame procedural rules for arbitration.

Now, under the new proposed amendments, the Indian Arbitration Council would only have powers to “recognise” arbitration institutions. Furthermore, the amended law seeks to empower courts to appoint arbitral institutions in matters brought before them.

“It’s good that the gradation has been eliminated. However, appointment by the courts upon recognition of ACI dilutes the authority of ACI, causes duplication of work and invites unnecessary judicial intervention, all of which violates the principles of ADR (alternative dispute resolution),” it said P. Madhava Rao, registrar of Amika Arbitration and Mediation Council, on the institution’s recommendations to the government.

“As a result, this clause should be removed from the amendments, and the designation section of the original law should be removed entirely,” he added.

To be sure, although the ACI was created in the 2019 amendment to the Arbitration Act, it has not yet been established.

The Amika Arbitration and Mediation Council also suggested that the government give powers to arbitrators to gather evidence.

Under current law, arbitrators can only use evidence gathered by the courts to resolve the dispute.

“This is another major threat to the speed with which justice is administered. When the Arbitration Court depends on the courts to take evidence, it will undoubtedly be delayed and the purpose of ADR is defeated. Therefore, the arbitration courts “they should be empowered to take evidence rather than write to the courts, which would increase the burden on the courts,” the set of recommendations said.

Previous amendments

However, this is not the first time that stakeholders have fought to reduce judicial intervention. Over the years, each time the Arbitration Law, passed in 1996, was amended in 2015, 2019 and 2021, calls have been made to reduce the involvement of the courts.

This was aimed at reducing the burden on the courts, which are overwhelmed with cases, and empowering the arbitration method as a dispute resolution mechanism to be completely independent.

Experts have also called on the government to give arbitral tribunals powers to enforce awards. Currently, litigants have to go to civil courts to enforce those awards.

When arbitral awards are as binding as a court’s decree, there is no problem in allowing arbitrators to enforce their awards themselves, Rao said.

Rao highlighted that arbitration is a mechanism in which parties mutually decide to resolve an issue, while one party drags another to court, without their consent. Therefore, appeals against the enforcement of awards, Rao concluded, are less likely in arbitrations, as the parties would like to resolve the dispute willingly, and enforcement through the courts would only lead to further delays.

Mint earlier reported on August 15 that the Union Ministry of Law and Justice was conducting an investigation into the possible implementation of global best practices for the enforcement of arbitral awards.

While professionals have called for a shorter judicial intervention, the current amendments, which were open for consultation until November 3, contain some provisions towards the same goal.

The draft amendment proposes an appeal arbitration court for disputes that are resolved by arbitration institutions. This means that if the disputing parties have chosen to resolve disputes through arbitration by engaging the services of a specialized institution and wish to appeal the arbitrator’s decision, they may appeal to another appellate arbitration court, rather than to a court of law.

But this amendment may also be more costly for litigants.

“The option of the parties to agree to resort to appellate arbitral tribunals to decide a first challenge to an award in the bill is intended to reduce a level of judicial intervention in the arbitration process,” said Shaneen Parikh, partner (head of international arbitration) by Cyril. Amarchand Mangaldas.

“While it will relieve the courts of some pressure from challenges under section 34, further appeals will still be available under Section 37 of the Act and up to the Supreme Court. With the possibility of greater judicial scrutiny over a court decision, This may not ultimately “have the desired effect of truly reducing judicial intervention and, in any case, will likely be more costly for the parties.”

Shiv Sapra, partner at Kochhar & Co., opined that the new appellate court would be similar to the high courts, which currently hear arbitration appeals.

“It will be interesting to observe the criteria that would be laid down for the appointment of members of the said tribunals as the appeal is currently before the Hon’ble Courts under Sections 34 and 37. It is expected that the members to be appointed will be in a similar position , the fact that the parties still have the option to go to court as before is an added advantage as it gives the party the freedom to choose between the two,” Sapra said.

Sections 34 and 37 of the Arbitration Act allow parties to appeal arbitration awards in court.

Some experts also pointed to digital and online means to resolve disputes.

Alay Razvi, managing partner at Accord Juris, said digital dispute resolution is a critical area that needs policy development. “The other critical area to consider would be to have a better framework supporting the digital dispute resolution process. Further amendments would be required from time to time, subject to new challenges ahead, to make the provisions airtight and litigation friendly” . said.