The underlying themes of these reforms focus on fostering institutional arbitration within India and making India a hub for international commercial arbitration. While the panel has made several recommendations to align Indian arbitration law with best global practices, some key reforms stand out:
Replacing place with seat - The report suggests substitution of the word ‘place’ in the Arbitration Act with ‘seat.’ This clarifies that the jurisdiction and procedural rules applicable to arbitration are derived from the seat, whereas the place or venue relate to the location for conducting the arbitration proceedings.
Enforceability of unstamped or insufficiently stamped arbitration agreements – The report recommends adopting Supreme Court’s pro-arbitration ruling on unstamped or insufficiently stamped agreements, ensuring they are not rendered void or unenforceable. Instead, arbitral tribunals would address stamping issues, with the power to direct parties to pay requisite stamp duty, at an appropriate stage.
Appointment procedures for arbitrators – To ensure that mutual consent of parties is the hero of the appointment process, the report recommends amending Section 11 of the Arbitration Act to state that no party shall have the exclusive right to appoint a sole arbitrator or a presiding arbitrator. Further, it allows parties another opportunity after the dispute has arisen to either follow its appointment procedure allowing unilateral right to one party or to proceed with appointment through court.
Enforcement of India-seated emergency orders – The report suggests statutory recognition of emergency orders i.e., emergency arbitrators to pass orders within maximum 30 days of appointment and such orders shall be enforceable as a court order. The committee has adopted a balanced approach and not included emergency arbitrators in the definition of ‘arbitral tribunal’ to avoid appeals against their orders.
These reforms are the need of the hour and, if adopted, would go a long way in setting the stage for India as a global hub for international arbitration. However, certain other aspects could also have been considered. For instance:
The law regarding enforcement of foreign-seated emergency orders has not been revised. Unlike other developed arbitration jurisdictions like Singapore, such orders cannot be directly enforced in India except by applying to court under Section 9 of the Arbitration Act. This frustrates the purpose of obtaining immediate interim reliefs or orders and may add to the burden of Indian courts.
The report narrowly addresses the issue of third-party funding in arbitrations, emphasising its role in assisting arbitrators with disclosure duties. However, with the increasing traction for third-party funding globally and in India, there is an immediate need for detailed regulations which govern third-party funding arrangements in arbitration.
In conclusion, the expert committee’s report is a significant step forward in the right direction. What remains to be seen is if and how many of these suggested reforms get incorporated in the Arbitration Act and their impact on the ease of doing arbitration.
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