ARBITRATION AND CONCILIATION (AMENDMENT) ACT, 2019
Context: The Government has recently amended the Arbitration and Conciliation Act, 1996 by the Arbitration and Conciliation (Amendment) Act 2019.
Previously, The Arbitration and Conciliation Act, 1996, was amended by the Arbitration and Conciliation (Amendment) Act, 2015 in order to make arbitration process user friendly, cost effective and ensure speedy disposal and neutrality of arbitrators. The recent amendment in the 2015 Act has been done in order to give a boost to institutional, arbitration vis-a-vis ad hoc arbitration and to remove some practical difficulties in applicability of the Arbitration and Conciliation (Amendment) Act, 2015. WHAT HAS THE RECENT AMENDMENT PROPOSED?
The Amendment Act inter-alia seeks to insert a new Part 1A to the Act of 1996 for the establishment and incorporation of an independent body namely, the Arbitration Council of India (ACI) for the purpose of grading of arbitral institutions and accreditation of arbitrators, etc. As per section 43C of the Act, the following composition has been proposed for the Arbitration Council of India (ACI):
- Headed by a Chairperson, who has been a Judge of the Supreme Court or a Chief Justice or Judge of a High Court or an eminent person, having special knowledge and experience in the conduct or administration of arbitration, to be appointed by the Central Government in consultation with the Chief Justice of India.
- Two Full-time Members from amongst eminent arbitration practitioners and academicians.
- In addition, one representative of a recognized body of commerce and industry shall be nominated on rotational basis as a Part-time Member.
- The Secretary, Department of Legal Affairs, Ministry of Law & Justice; Secretary, Department of Expenditure, Ministry of Finance and Chief Executive Officer, ACI will be ex-officio Members.
Section 43M of the Act provides for the Secretariat to the Council consisting of such number of officers and employees as may be prescribed by the Central Government.
In this regard, the Department of Legal Affairs has prepared the following draft Rules:
- The Arbitration Council of India (the Salary, Allowances and other Terms and Conditions of Chairperson and Members) Rules, 2020.
- The Arbitration Council of India (the Travelling and other Allowances payable to Part-time Member) Rules, 2020.
- The Arbitration Council of India (the Qualifications, Appointment and other Terms and Conditions of the service of the Chief Executive Officer) Rules 2020.
- The Arbitration Council of India (the Number of Officers and Employees of the Secretariat of the Council and the qualifications, appointment and other terms and conditions of the officers and employees of the Council) Rules 2020.
WHAT IS ARBITRATION? According to World Intellectual Property Organization (WIPO), Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court.
The principal characteristics of Arbitration are:
- Arbitration is consensual: Arbitration can only take place if both parties have agreed to it. In the case of future disputes arising under a contract, the parties insert an arbitration clause in the relevant contract. In contrast to mediation, a party cannot unilaterally withdraw from arbitration.
- The parties choose the arbitrator(s): Under the WIPO Arbitration Rules, the parties can select a sole arbitrator together. If they choose to have a three-member arbitral tribunal, each party appoints one of the arbitrators; those two persons then agree on the presiding arbitrator.
- Alternatively, the Center can suggest potential arbitrators with relevant expertise or directly appoint members of the arbitral tribunal.
- The Center maintains an extensive roster of arbitrators ranging from seasoned dispute-resolution generalists to highly specialized practitioners and experts covering the entire legal and technical spectrum of intellectual property.
- Arbitration is neutral: In addition to their selection of neutrals of appropriate nationality, parties are able to choose such important elements as the applicable law, language and venue of the arbitration. This allows them to ensure that no party enjoys a home court advantage.
- Arbitration is a confidential procedure: The WIPO Rules specifically protect the confidentiality of the existence of the arbitration, any disclosures made during that procedure, and the award.
- In certain circumstances, the WIPO Rules allow a party to restrict access to trade secrets or other confidential information that is submitted to the arbitral tribunal or to a confidentiality advisor to the tribunal.
- The decision of the arbitral tribunal is final and easy to enforce: Under the WIPO Rules, the parties agree to carry out the decision of the arbitral tribunal without delay. International awards are enforced by national courts under the New York Convention, which permits them to be set aside only in very limited circumstances. More than 140 States are party to this Convention.
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