The Draft Arbitration and Conciliation (Amendment) Bill, 2024: A Step in the Right Direction?

By Nihit Nagpal and Muneeb Rashid Malik

The Government of India has invited comments from the public on the Draft Arbitration and Conciliation (Amendment) Bill, 2024, in its continuous effort to modernize the arbitration framework and foster India’s reputation as a jurisdiction which is arbitration-friendly. The draft amendments aim to streamline arbitration proceedings, reduce dependency on courts, enhance institutional arbitration, and introduce digital and emergency mechanisms.

Purpose of the Amendment

India’s arbitration laws have evolved over the years, with significant changes to the Arbitration and Conciliation Act, 1996, to address practical challenges and improve arbitration efficiency. The Draft Arbitration and Conciliation (Amendment) Bill, 2024, is part of this ongoing evolution, targeting increased efficiency, promoting institutional arbitration, strengthening digital integration and streamlining the process of resolution of disputes. The Draft Arbitration and Conciliation (Amendment) Bill, 2024, has set time limits for various processes under the Arbitration and Conciliation Act, 1996, thereby, expediting the resolution of the disputes. The focus has also shifted towards recognizing arbitral institutions for providing structured processes and robust oversight. Conducting arbitration proceedings through electronic means, including video conferencing and electronic submissions as well as allowing emergency arbitration and introducing new guidelines to simplify arbitration processes are important steps which will surely help in the blooming of the arbitration landscape in the country.

Important Amendments in the Draft Bill

1. Updated Definitions: – The term “arbitration” has been expanded to include digital means, allowing proceedings through video conferencing and electronic records. “Court” jurisdiction is clarified based on the seat of arbitration: the court means the court having pecuniary and territorial jurisdiction over the seat of arbitration for domestic arbitration and the High Court for international commercial arbitrations. “Arbitral institution” now includes bodies administering arbitration as per their rules or as agreed upon by parties, and “emergency arbitrator” is formally recognized for interim orders prior to the arbitral tribunal’s constitution.
2. Revised Terminology: – The term “seat” replaces “place” to specify the legal location governing arbitration, aligning with international standards. Section 6 (Administrative Assistance) clarifies that parties or the tribunal may engage administrative support, from arbitral institutions or secretaries.
3. Increased Role of Arbitral Institutions: – Courts will now be relying more on arbitral institutions, with the Supreme Court and High Courts designating recognized institutions to handle arbitrator appointments. Disclosures are required for pending arbitrations between parties, adding transparency to the process and avoiding potential conflicts.
4. Emergency Arbitrators: – Emergency arbitrators can now be appointed by arbitral institutions for granting of interim relief before the arbitral tribunal’s formation, enforceable like the tribunal orders. This provision is important as it allows immediate relief for parties in urgent matters, reducing dependency on courts for interim orders and reflecting global trends in arbitration.
5. Appellate Arbitral Tribunal: – Parties may opt for an appellate arbitral tribunal to challenge arbitral awards, which is expected to reduce the burden on courts and offer a specialized review mechanism.
6. Interim Measures:- Before the arbitral proceedings commence, a party may file an application for any kind of interim measure under Section 9 and the arbitral proceedings shall start within 90 days from the date of filing of such an application.
7. Digital Arbitration and Model Rules: – The Arbitration Council of India is authorized to create model rules and guidelines for proceedings through audio-video means. Electronic filing of pleadings, recording evidence, and issuing decisions electronically aim to reduce logistical barriers and enhance accessibility.

Comparison of Existing Provisions and Proposed Amendments

Demo

Section	Existing Provision	Proposed Amendment
Long Title	Refers to both arbitration and conciliation.	Removes references to conciliation, focusing on arbitration.
Preamble	Mentions UNCITRAL Conciliation Rules.	Omits conciliation, aligns with UNCITRAL Model Law.
Section 1	Title includes “Conciliation.”	Retitled as Arbitration Act, 1996
Section 2 – Definitions	Defines “arbitration,” “court,” and “arbitral institution.”	Expands “arbitration” to include electronic means; redefines “court” based on seat; includes “emergency arbitrator.”
Section 8 – Referral to Arbitration	Courts refer cases to arbitration if a valid agreement exists.	Expedited processing of arbitration referrals, with courts required to resolve applications within 60 days from the date of filing.
Section 9 – Interim Relief	Allows interim measures by courts pre- and post-arbitration.	Limits court involvement post-tribunal formation; requires 90-day arbitration initiation post-application seeking interim relief.
Section 9A – Emergency Arbitrators	No Provision	Arbitral institutions may, provide for appointment of emergency arbitrator prior to the constitution of the arbitral tribunal, who has to conduct proceedings in the manner specified by the Council. An order of the emergency arbitrator may be confirmed, modified, or vacated, in wholly or partly, by the arbitral tribunal.
Section 11 – Appointment of Arbitrators	Appointment by parties, designated institutions or Supreme Court/High Courts.	Requires parties to disclose existing arbitrations; recognizes institutional autonomy in appointments.
Section 11A	Power of Central Government to amend Fourth Schedule.	Fees of arbitral tribunal – Unless otherwise agreed by the parties or where the arbitration is to be conducted under the aegis of an arbitral institution having rules for determining the fees payable to the arbitral tribunal, the fees of the arbitral tribunal shall be such as may be specified by the Council.
Section 19 – Conduct of Proceedings	Failing any agreement, the arbitral tribunal may, conduct the proceedings in the manner it considers appropriate.	Where arbitration is conducted other than under the aegis of an arbitral institution, the arbitral tribunal shall duly consider to carry on the arbitration proceedings as per the model rules of procedures or guidelines to be issued by the Arbitration Council from time to time.
Section 20	Place of arbitration	Option 1 has been given as – Seat of arbitration. Option 2 has been given as – Section 20 (1) “In case of domestic arbitration other than international commercial arbitration the seat of arbitration shall be the place where the contract/arbitration agreement is executed or where the cause of action has arisen. The arbitral tribunal may, unless otherwise agreed by the parties, meet at any venue it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property.”
Section 34 – Setting Aside Awards	Courts set aside arbitral awards based on limited grounds.	Adds appellate arbitral tribunal for reviewing awards before court involvement.
Section 43K –	Previously unregulated.	New council criteria for recognition of arbitral institutions.

The Draft Arbitration and Conciliation (Amendment) Bill, 2024 represents modernization of the Arbitration Act, intending to align India’s practices with regard to arbitration with global standards and encourage a more efficient dispute resolution mechanism in the country. The proposed amendment has the potential to promote India as an arbitration hub as it focusses on institutional arbitration and streamlining procedural aspects, paving the way for India to be a more attractive destination for international arbitration. The emphasis on emergency arbitration, appellate tribunals, and reduced court intervention will underpin the dispute resolution process and decrease the judicial backlog. The provisions for electronic means address important business needs and expand access to arbitration, which is extremely crucial for parties located across borders or even in remote areas. The provisions for mandatory disclosures will also reduce conflicts of interest, and reliance on the recognized institutions will ultimately, strengthen procedural integrity.

Gaps in the Bill

However, the Draft Arbitration and Conciliation (Amendment) Bill, 2024, also has the potential to swell the cost of arbitration to the parties as the parties would first pay for arbitration, then for appeal before the Appellate Tribunal, thereafter, would again have to pay, when the court steps in, under Sections 34/37 of the principal act. Another issue which comes to the fore is that the Arbitration Council of India has been bestowed with important functions under the Draft Bill but the same is yet to be constituted. It will also be interesting to see as to how the Arbitration Council would fix the fees of the arbitral tribunal as there is no mention of the same. The Draft Bill also has not mentioned anything about appellate tribunals for ad hoc arbitration which is a very popular mode for resolving disputes through arbitration in the country. The power of the appellate tribunals has also been constricted to the reasons enumerated under Section 34 of the principal act and only time will tell whether the same would work in an arbitration having a two-tiered arbitration clause.

Therefore, the upshot of the above discussion is that the Draft Arbitration and Conciliation (Amendment) Bill, 2024, is a forward-thinking step in the right direction which is towards a streamlined, transparent, and efficient arbitration eco-system in the country. By reducing procedural bottlenecks and adopting technology-driven processes, the proposed amendment reflect India’s commitment to fostering a pro-arbitration environment that meets international expectations. The changes, particularly around institutional and emergency arbitration, digital adaptations, and the creation of an appellate tribunal, reflect a modern and significant approach to resolving commercial disputes efficiently and with minimal court intervention. However, the Draft Bill has missed to provide satisfactory reasoning regarding the increased cost of arbitration to the parties, on account of the introduction of the appellate tribunal and the ways to address the same. The Arbitration Council of India needs to be constituted with immediate effect so that the functions bestowed to the Council can be exercised effectively, without any hindrances. Appellate tribunals for ad hoc arbitration also need to be allowed as ad hoc arbitration is still popular in the country and the appellate tribunals’ power in a two-tiered arbitration clause needs to be revisited so that there are no obstacles in the blooming of the arbitration landscape in the country. We hope that the gaps in the Draft Amendment Bill are plugged before the Bill is introduced in the Parliament.