Analysis of The New Delhi International Arbitration Centre Bill, 2018

Amit Meharia, Paramita Banerjee | February 2018

The New Delhi International Arbitration Centre (for short “NDIAC”) is all set to replace its erstwhile predecessor International Centre for Alternate Dispute Resolution (for short “ICADR”). The NDIAC Bill was introduced in the Lok Sabha by Mr. PP Choudhary, Minister of State for Law and Justice and Corporate Affairs, on 05th January, 2018 with a view to bring about targeted reforms in developing NDIAC as a flagship institution for domestic and international arbitration, thereby, enabling better management of arbitration in India.

BACKGROUND

Pursuant to the vision of making India a hub for international arbitration, a High- Level Committee headed by Mr. B.N. Srikrishna, former judge of the Supreme Court of India, was constituted to identify the obstacles that were affecting the development of institutional arbitration and preventing India from becoming a pioneer of international and domestic arbitration. The Report of the Committee brought to light the requirement for a complete revamp of the ICADR in order to rebrand it as a centre of national importance to highlight its character as a flagship arbitral institution.

HIGHLIGHTS OF THE NDIAC BILL

Objects:

Clause 14 of the NDIAC Bill states its objects as:

To bring about targeted reforms to develop it as a flagship institution for conducting international and domestic arbitration.
To promote research, training and conduct conferences and seminars in arbitration, conciliation, mediation and other alternative dispute resolution matters.
To provide facilities and administrative assistance for conciliation, mediation and arbitral proceedings.
To maintain panels of accredited arbitrators, conciliators and mediators both at national and international level or specialists such as surveyors and investigators.
To collaborate with other national and international institutions for ensuring credibility of NDIAC as a specialized institution.
To lay down parameters for different modes of alternative dispute resolution mechanisms being adopted by the Centre.

establishment:

Clause 3 of the NDIAC Bill provides that NDIAC is to be a body corporate, having perpetual succession, a common seal, power to acquire, hold or dispose property, power to enter into contract and the power to sue and be sued in its own name. Its establishment is however contingent upon notification by the Central government. Clause 4 provides for establishment of its head office at New Delhi and branches at other places in India and abroad.

cOnstitutiOn:

Composition:

Appointment of Members: Clause 5 seeks to provide for the composition of NDIAC:

One chairperson who shall have been a judge of the Supreme Court or High Court or an eminent individual having special knowledge and experience in the conduct or administration of arbitration.
Two eminent individuals having substantial knowledge and experience in institutional arbitration, both domestic and international as full time or parttime member.
One representative of a recognized body of commerce and industry, chosen on a rotational basis by the Central Government as a part-time Member.
One Member each from the Ministry of Law and Justice who is not below the rank of Joint Secretary, Financial Advisor nominated by the Ministry of Finance and Chief Executive Officer, who shall be responsible for the day-to-day affair as Members ex office.

The Chairperson and Members shall hold office for a period of three years from the date upon which they enter office and shall be eligible for reappointment provided they have 70 years and 67 years respectively.

Appointment of Chief Executive Officer: Clause 21 of the Bill seeks to provide for appointment of a Chief Executive Officer to the Centre, who shall be responsible for the day to day administration of the NDIAC and he shall liaison with the Secretariat to exercise such powers and functions as may be specified by the regulations or delegation by NDIAC.
Appointment of Secretariat: Clause 23 of the Bill seeks to provide for a Secretariat to the NDIAC consisting of a Registrar to supervise the activities of NDIAC, a Counsel dealing with matters relating to domestic and international arbitration and such number of other officers and employees.

Removal, Resignation and Vacancies of Members:

Clause 17 of the Bill provides that the Chairperson or any member may resign by a notice in writing addressed to the Central Government. Clause 18 of the Bill provides for removal of members on the grounds of them being an undischarged insolvent, engaged in any paid employment during their tenure at NDIAC, having acquired financial interest affecting their function as a Member, abuse of position and physical or mental incapability. Sub-Clause (2) of Clause 18 of the Bill empowers the Supreme Court to prescribe procedure for removal of a Member on a reference being made by the Central Government.

FunctiOns:

To fulfill the objectives as laid down in Clause 14, the NDAIC seeks to facilitate in conducting international and domestic arbitration and conciliation in a professional manner, promote studies in the field and in the system of dispute settlement, provide training and impart teaching in the alternate dispute resolution (for short “ADR”) mechanism and award professional distinctions and cooperate to other societies, institutions and organizations of national and international level for promoting ADR.

The Bill envisages formation of committees in Clause 19 of NDIAC who shall meet from time to time and observe such rules and procedure as may be considered necessary to administer the functions of NDIAC.

Other PrOvisiOns:

Chamber of Arbitration and Arbitration Academy The Bill proposes to set up a Chamber of Arbitration, which would empanel professional arbitrators of national and international repute in order to maintain a permanent panel of arbitration.
Arbitration Academy An arbitration academy is also proposed to be set up by NDIAC to train arbitrators in India, particularly in the field of international commercial arbitration, so as to empower them to compete with reputed arbitral institutions.
Immunity of NDIAC & Arbitrators Clause 33 provides immunity to NDIAC, the Chairperson, Members, Arbitrators and its employees against any legal proceedings for acts done in good faith under the ambit of the Act.

ANALYSIS

Inception of ADR methods, arbitration in India:

India’s commitment towards commercialization and a progressive economic development on a global scale can be seen in the recent strides made in materializing arbitration as an ADR method to attract global investors and ensure smooth dispute resolution process. India’s first step in furthering arbitration can be attributed to the Arbitration and Conciliation (Amendment) Act, 2015 which was passed to overhaul the erstwhile Arbitration and Conciliation Act of 1996. Thereafter, the NDIAC Bill can be seen as an attempt to widen this intension and further solidify the basis of institutional arbitration in India. The seeds to the requirement of institutional arbitration can be found in the 222nd Law Commission of India Report which declared: “The promotion of institutional arbitration will go a long way in improving the quality of ADR services and making them really cheaper.”1 Further, in its 246th Report, the Commission suggested: “The Government may also consider formation of a specialized body, like an Arbitral Commission of India, which has representation from all the stakeholders of arbitration and which could be entrusted with the task of, inter alia, encouraging the spread of institutional arbitration in the country.”2 The NDIAC Bill is thus, a result of these recommendations and India’s desire to attract and improve foreign investor relations.
Flexibility in form of branches of the NDIAC:

Clause 4(2) of the NDIAC Bill envisages branches to be set up in India as well as abroad which can be seen as a progressive step acknowledging the difficulty in certain cases where the seat of arbitration is in one place while the actual arbitration goes on in another place. It gives the investors an option to pursue the procedure in a place of their choice.
Independence and autonomy:

Preamble to the NDIAC Bill envisages the NDIAC to be an “independent and autonomous regime for institutionalized arbitration”; however, its member composition as per Clause 5 shows the predominant involvement of the Central Government in selection of the members. This substantial involvement of the government does not go hand in hand in bearing the truth of NDIAC being an independent and autonomous institution. This might lead to an increased politicization of the appointment and reappointment procedure and thereby, a decrease in faith in the system.
Procedure of reappointment:

The provision for re-appointment of the members as per Clause 6(1) is also not devoid of the standard criticisms levelled against the procedure. Re-appointment can be critiqued to give rise to motive in the members of NDIAC to adhere in a particular way. The self-interest of the member in being re-appointed may favour certain acts that might foster an anti-investment bias. Although, Clause 18 provides for removal of members and sub-clause(e) specifically provides for removal on the ground of abuse of position so as to “render his continuance in office prejudicial to the public interest”, however, the procedure of removal in addition to the stigma attached to such an act will hamper India’s move towards global investment in India
Arbitration centers previously in existence:

The Bill seeks to make NDIAC an arbitration center of national importance. This in turn raises the question about the function and credibility of other arbitration centers which were already in existence like the Delhi High Court International Centre which was started in 2009, the arbitration centre started by the Punjab & Haryana High Court in 2014 with its own set of rules, Indian Council of Arbitration established in 1965 which is also one of the oldest arbitral tribunals, the Nani Palkhivala Arbitration Centre in Chennai which has its own similar set of rules, governing body, etc. The NDIAC Bill is silent on the existence and functional modalities of these Arbitration Centres – whether these will continue to function or be replaced by branches of the NDIAC?
Treatment provided to other ADR methods:

Although the Bill talks about other ADR methods like conciliation, however, a perusal of the same reveals that only an arbitration framework has been laid down and the other ADR methods have only been mentioned without any legal mechanism or framework.

CONCLUSION

The NDIAC Bill aims to foster investor confidence and use arbitration technique to provide speedy resolution of dispute, however, the framework to achieve the same is not without loopholes. In the event of the B.N. Srikrishna Committee Report being kept away from the purview of public domain and therefore, our disability to scrutinize the failures of ICADR or analyze how the NDIAC tries to remedy the same, it can only be said that the success of the NDIAC Bill is contingent upon its implementation. Nonetheless, it attempts to provide a well-defined procedure for conducting institutional arbitration, a step much required in the face of the current global business scenario.

About Author

Amit Meharia

Amit Mohaan Meharia is a Law Graduate from King’s College (London) and holds a Post Graduate Diploma in Law from School of Law (Store Street). He is a Solicitor and is on the Roles of the Law Society of England and Wales. He is the Managing Partner of MCO Legals. He has been the primary think-tank in designing the idea of ‘Paperless’ office where all the workings happen in cloud and transparency is guaranteed to all clients. He has more than 20 years’ experience in Corporate Law, Commercial Arbitration and Transactional Work.

Paramita Banerjee

Paramita Banerjee, Trainee Associate, MCO Legals LLP