Expert committee on Arbitration reforms

Expert Committee on Arbitration reforms An expert committee on reforms in the Arbitration and Conciliation Act, 1996, recently submitted its final report to the government.

About the Committee on Arbitration Reforms:

• The committee led by former law secretary Dr T.K. Viswanathan was constituted in 2023 by the Ministry of Law and Justice.
• This was to examine the working of the arbitration law and to recommend reforms to it.
• It was asked to suggest changes to enhance the arbitration process through by reduction in court intervention, cost-effectiveness, and ensure timely resolution.
  • Arbitration is a process under which the parties concerned, instead of approaching the courts, opt for private dispute resolution through arbitrators.
  • The Arbitration and Conciliation Act, 1996 was enacted to consolidate domestic arbitration, international commercial arbitration, and enforcement of foreign arbitral awards.
• It included Additional Solicitor General, members from Department of Economic Affairs, Niti Aayog, public industries, and legal counsels.
• A consultation paper sought recommendations on a framework of an efficient, effective, and economical model arbitration system based on the requirements of users.

Key Recommendations of the Report:

Separate Division:

• Resolution of corporate disputes can be fast-tracked by creating a separate Arbitration Division in every High Court with regular proceedings and decisions taken expeditiously.

Model Procedure:

• The committee recommended a model procedure based on prevalent best practices, which can be used by the arbitral tribunals as a guide.
• A separate Model law for domestic disputes, based on UNCITRAL (United Nations Commission on International Trade Law) can be referred.
• The enforcing Court should dispose of the petition in nine months and adjournments in proceedings must be granted only for exceptional reasons or in case of stay on enforcement.
• While courts oversee the legitimacy and integrity of the arbitral process, its role must be limited to overall supervision, and reviewed in the post-award stage.

Cost and fee structure:

• It also proposed a framework for the cost of arbitration and the fees charged by arbitrators.
• The arbitrators’ fees were fixed under the Fourth Schedule in 2015 but should be revised.
• The Committee suggested the government provide different fee structures for small and medium-value claims and revise the rates periodically without amendments.
• The committee proposed the deletion of the Fourth schedule dealing with fee schedule.

Process of appointing arbitrators:

• No upper age limit had been prescribed for accepting an appointment as arbitrator.
• There is an urgent need to institutionalize the process of appointment of arbitrators and minimize court intervention at the first stage.
• Any decision to challenge an arbitral award must be based on an honest assessment of the prospects of success, as weighed against the estimated cost of litigation.
• A bona-fide administrative suggestion shall not challenge an arbitral award and must be given finality.
• The legal personnel involved in the arbitral process must identify the grounds of challenge, and assess the prospect of success under the supervision of a senior law officer.

Methods for Review:

• Periodic reviews must be conducted on the outcome of challenges to arbitral awards.
• A standing committee of officers may be appointed to immediately examine an award after it is delivered, to decide on acceptance, settlement, or against challenging it.
• Fortnightly reviews of all arbitral awards must be undertaken to ensure that the timeline for challenging an award does not expire.
• It did not prescribe limits on the number of arbitrations an arbitrator can take, leading to delays in award.

Ref: Source