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New Delhi International Arbitration Centre Act comes into force


By Ganesh Chandru
                                                            
INTRODUCTION
                
Over the past few years, the government has taken a pro-active approach to promote India as an arbitration hub.  In order to suggest improvements to the institutional arbitration regime in India, a High-Level Committee under the Chairmanship of Hon’ble Justice B. N. Srikrishna, former judge of the Supreme Court of India (“High-Level Committee”) was constituted. One of the recommendations of the High-Level Committee was to revamp the International Centre for Alternative Dispute Resolution (“ICADR”), which was set up in 1995 to promote alternative dispute resolution mechanism in India. Based on the above recommendation the New Delhi International Arbitration Centre Bill, 2018 (“the NDIAC Bill 2018”) was prepared and introduced in the lower house of the Indian parliament and was passed in January 2019. The NDIAC Bill 2018, which was pending in the upper house of the parliament, could not be taken up for consideration during the budget session of the parliament in February 2019. The NDIAC Bill 2018 would have lapsed in the normal course due to the ensuing general elections. In the given circumstances, and with a view to promoting institutional arbitration, the President of India promulgated the New Delhi International Arbitration Centre Ordinance, 2019 (“the NDIAC Ordinance”) on 2 March 2019. The NDIAC Ordinance was challenged by the ICADR before the Delhi High Court and a stay of the operation of the Ordinance was granted by the Delhi High Court on 7 March 2019. This stay was vacated by the Delhi High Court on 16 May 2019. Appeals have been filed before the Supreme Court of India against both these orders.
 
After the new government came into office, the Cabinet approved the New Delhi International Arbitration Centre Bill, 2019 (“the NDIAC Bill 2019”) to replace the NDIAC Ordinance. The NDIAC Bill 2019 was passed by the lower house of Parliament (Lok Sabha) on 10 July 2019 and by the upper house of parliament (Rajya Sabha) on 18 July 2019. The President gave his assent on 26 July 2019 and the New Delhi International Arbitration Centre Act, 2019 (“the Act”) was thus enacted.  The Act is deemed to have come into force on 2 March 2019, the date the NDIAC Ordinance was promulgated.
 
The Act provides for the establishment of the New Delhi International Arbitration Centre (“NDIAC”), an institution to better manage domestic and international arbitration in the country. The NDIAC is to be declared as an institution of national importance. Further, the Act envisages NDIAC to take over the infrastructure and other facilities of the ICADR.
 
A.     Establishment of the NDIAC
 
Section 3 of the Act provides for the establishment of NDIAC as a body corporate having perpetual succession, a common seal with power to acquire, hold or dispose of property and power to enter into contract and to sue and be sued in its own name.  
 
B.      Composition of the NDIAC
 
Section 5 of the Act provides that the NDIAC shall consist of:
 
  • one Chairperson (who has been a judge of the Supreme Court or of a High Court or an eminent person, having special knowledge and experience in the conduct and administration of arbitration)
  • two eminent persons (having substantial knowledge and experience in institutional arbitration, both domestic and international) as full-time or part time members
  • one representative of a recognised body of commerce and industry as part-time member
  • Secretary to the Department of Legal Affairs, Ministry of Law and Justice or his representative not below the rank of Joint Secretary
  • Financial Adviser to be nominated by Ministry of Finance, and
  • the Chief Executive Officer of the NDIAC as Member ex-officio.
 
The Chairperson and Members shall hold office for a term of three years and shall be eligible for reappointment (section 6 of the Act).
 
C.     Chief Executive Officer and Secretariat
 
Section 21 of the Act provides for the appointment of a Chief Executive Officer, who shall be responsible for the day-to-day administration of the NDIAC. The Act (section 23) also provides for the establishment of a Secretariat consisting of a Registrar (who shall supervise the activities of the NDIAC), Counsel (dealing with matters relating to domestic and international arbitration) and other officers and employees.
 
D.    Transfer of undertakings from ICADR to the Central Government and to the NDIAC
 
Sections 7 to 13 of the Act provide for the transfer of undertakings of ICADR (including all rights, titles and interests of the ICADR) and vesting them in the Central Government on and from the specified date (to be notified by the Central Government). As per section 10 of the Act, the Central Government as soon as may be after the vesting of undertakings, direct that the undertakings and the right, title and interest of ICADR in relation to such undertakings which had vested in the Central Government shall vest in the NDIAC. The NDIAC shall be deemed to have become the owner of such undertakings.
 
The Central Government may also appoint a Custodian of the undertakings who shall manage the undertaking as per the instructions of the Central Government (section 11).
 
E.      Objects and Functions of the NDIAC
 
The objects of the NDIAC have been defined under section 14 of the Act as follows:
 
  • to bring targeted reforms to develop itself as a flagship institution for conducting international and domestic arbitration;
  • to promote research and study, providing teaching and training, organising conferences and seminars on arbitration, conciliation, mediation and other alternative dispute resolution mechanisms;
  • to provide facilities and administrative assistance for conciliation, mediation and arbitral proceedings;
  • to maintain panels of accredited arbitrators, conciliators and mediators both at national and international level or specialists such as surveyors and investigators;
  • to collaborate with other national and international institutions and organisations for ensuring credibility of the NDIAC as a specialised institution in arbitration and conciliation;
  • to set up facilities in India and abroad to promote the activities of the NDIAC;
  • to lay down parameters for different modes of alternative dispute resolution mechanisms being adopted by the NDIAC; and
  • such other objectives as it may deem fit with the approval of the Central Government.
 
As per section 15 of the Act, the NDIAC shall strive:
 
  • to facilitate the conduct of international and domestic arbitration and conciliation in the most professional manner;
  • to provide cost effective and timely services for the conduct of the arbitration and conciliation at national and international levels;
  • to promote studies in the field of alternative dispute resolution and related matters and to promote reforms;
  • to undertake teaching and to provide for diffusion of knowledge of law and procedures on alternative dispute resolution and related matters and to award certificates and other academic or professional distinction;
  • to impart training in alternative dispute resolution and related matters to those who are handling arbitration, conciliation and mediation;
  • to cooperate with other societies, institutions and organisations, national or international for promoting alternative dispute resolution; and
  • to perform such other functions as may be entrusted to it by the Central Government for promoting alternative dispute resolution.
 
F.      Chamber of Arbitration and Arbitration Academy
 
The NDIAC shall establish a Chamber of Arbitration which shall empanel arbitrators and also scrutinise the applications for admission to the panel of arbitrators. Section 28 of the Act provides that the Chamber of Arbitration shall consist of experienced arbitration practitioners of repute (at national and international level) and persons having wide experience in the area of alternative dispute resolution and conciliation.
 
Further, section 29 of the Act provides that the NDIAC may establish an Arbitration Academy to train arbitrators, particularly in the area of international commercial arbitration; to conduct research in the area of alternative dispute resolution and allied areas.
 
CONCLUSION
 
The initiative to promote institutional arbitration through the NDIAC is an excellent one.  There is, however, a likelihood of a perception that the NDIAC may not be a neutral institution, considering the active role that the Central Government will play in its establishment and operations. This aspect, in my view, needs to be addressed as a priority so that parties (especially foreign parties) understand that whilst the Government is involved in the establishment of the institution, it will have a ‘hands-off’ approach when it comes to the appointment of arbitrators and administration of cases.  If this can be achieved, NDIAC certainly has the potential to be the flagship arbitral institution in India and an institution of international repute in the years to come. 
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