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A step towards strengthening institutional arbitration in India - New Delhi International Arbitration Centre Act, 2019

by Akshita Alok

With a view to promote institutional arbitration and to make India a destination for conducting international arbitration, a new bill was introduced and has been passed by both the Houses of the Indian Parliament and assented by the President of India – The New Delhi International Arbitration Centre Act, 2019.
The Act replaces the New Delhi International Arbitration Centre Ordinance, 2019 (“the Ordinance”) which was promulgated on 2nd March 2019.

The objective of the Act is to promote institutional arbitration in India and it is based on the recommendations of the High-Level Committee headed by Mr. Justice B.N. Srikrishna, former Judge, Supreme Court of India. The recommendations of the Committee, inter alia, suggested that the International Centre for Alternative Dispute Resolution at New Delhi (ICADR), established in the year 1995 to promote alternative dispute resolution mechanism, had not been able to achieve its objectives and should be taken over by the proposed New Delhi International Arbitration Centre (“the Centre”). It has also been proposed to declare the Centre an institution of national importance.

A shift in policy towards promoting ease of business in India, increasing pendency of cases in courts, lack of options for institutional arbitration in India and issues being faced by parties in ad-hoc arbitrations are a few of the reasons that led to this Act.

Key features of the Centre, as enshrined in the Act, are discussed below –
  1. Members and Chairperson – The Centre shall be headed by a Chairperson appointed by the Central Government in consultation with the Chief Justice of India and such person should have been a judge of the Supreme Court or a High Court or an eminent person with special knowledge and expertise in arbitration, law or management. The 7-member body would consist of two eminent person having knowledge and expertise in international and domestic institutional arbitration appointed by the Central Government; one representative from a recognised body of commerce and industry chosen by the Central Government; Secretary, Department of Legal Affairs, Ministry of Law and Justice; a Financial Advisor nominated by the Department of Expenditure, Ministry of Finance and a Chief Financial Officer.
  2. Transfer of Undertakings of ICADR – The Act provides that, from a date specified by the Central Government by a notification, the right, title and interest of the ICADR in relation any undertaking which form part of or are relatable to ICADR, shall stand transferred to and vest in the Central Government, which shall in turn, direct by notification that the undertakings shall vest in the Centre.
  3. Objects of the Centre – The Centre will be established with the object of (i) bringing targeted reforms to develop itself as the flagship institution for conducting international and domestic arbitration; (ii) promoting research, study, training, teachings, seminars and conferences etc. in ADR; (iii) providing facilities for arbitration, mediation and conciliation proceedings; (iv) maintaining a panel of accredited arbitrators, conciliators and mediators; (v) ensuring credibility of the Centre through collaborations with other organisations; (vi) setting up facilities in India and abroad to promote the activities of the Centre; (vii) lay down parameters for conducting ADR mechanisms of the Centre and so on.
  4. Functions of the Centre – The Centre shall facilitate conducting of arbitral proceedings; provide cost effective and timely services for conduct of arbitral proceedings; promote studies and reforms in ADR and settlement of disputes; undertake teachings and provide certification therefor on procedures of ADR; impart training to those handling arbitration, conciliation and mediation; cooperate with other organisations and societies for promoting ADR and promote ADR as per Central Government’s instructions.
  5. Conduct of Functions – The Centre shall constitute committees for discharging its functions and meet at least four times a year which meetings shall be presided by the Chairperson. The decisions at the meetings shall be taken by majority. A Chief Executive Officer shall be appointed at the Centre who shall be responsible for day to day administration of the Centre. The Centre shall also have a Secretariat consisting of a Registrar, Counsel and other officers and employees.
  6. Funds - The Centre shall maintain a fund that shall be applied towards salaries and allowances of Members and expenses of the Centre.
  7. Chamber of Arbitration – A key feature of the Act is the establishment of a Chamber of Arbitration through which the Centre shall empanel arbitrators at the national and international level and maintain a permanent panel of arbitrators.
  8. Arbitration Academy – The Centre may also establish an Arbitration Academy to train the arbitrators to bring them at par with international arbitration institutions; to conduct research in the area of ADR and to give suggestions for achieving the objects of the Centre under the Bill.
The provisions of the Act are largely based on the recommendations of the Report of the High-Level Committee set up to review the Institutionalisation of Arbitration Mechanism in India under the chairmanship of Justice B.N. Srikrishna (retired), released in June 2017.

While there is no denying the urgent need for a premier flagship arbitration institution in India, it is also true that the International Centre for Alternative Dispute Resolution at New Delhi (ICADR) was set up with similar noble intentions and objectives which are also the driving force behind the current New Delhi International Arbitration Centre Act, 2019. The onus lies on the Central Government to ensure that the objectives of the Act are brought to its intended fruition by establishing a Centre that makes India a desirable destination for international and domestic institutional arbitration.

[The author is Senior Associate in Corporate practice, Lakshmikumaran & Sridharan, Bangalore]