Expert panel suggests Arbitration Division in High Courts

Resolution on corporate disputes can be fast-tracked by creating a separate Arbitration Division in every High Court with regular proceedings and decisions taken expeditiously, said the panel set up last June for suggesting changes in arbitration Law.

Unless there is a stay on enforcement, the enforcing Court should dispose of the petition in nine months and adjournments in proceedings must be granted sparingly only for exceptional reasons, said the panel headed by Dr TK Viswanathan, former secretary general, Lok Sabha and former secretary, Ministry of Law & Justice.

The 16-member expert panel was formed by the Centre to suggest reforms in the Arbitration and Conciliation Act, 1996. The committee has recommended a model procedure based on prevalent best practices. This model procedure can be used by the arbitral tribunals as a guide, it said.

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While the oversight by a court is essential to the legitimacy and integrity of the arbitral process, its role must be limited to overall supervision, and a second-look at the post-award stage.

Other suggestions

The arbitrators’ fees was fixed under the Fourth Schedule way back in 2015 and has not been revised ever since. The Committee has suggested the government to provide different fee structures for small and medium value claims and revise the rates periodically to meet the needs of changing times without the need to amend the Act.

There is an urgent need to institutionalise the process of appointment of arbitrators, and minimise court intervention at the very first stage. The courts should endeavour to dispose of applications for appointment of arbitrators without much delay.

Any decision to challenge an arbitral award must be based on an honest assessment about the prospects of success, as weighed against the estimated cost of litigation. A bona-fide administrative suggestions to not challenge an arbitral award must be given finality, said the report.

The legal personnel involved in the arbitral process must identify the grounds of challenge, and make a realistic and reasonable assessment of the prospect of success under the supervision of a senior law officer with periodic reviews of the outcome of challenges to arbitral awards.

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As an alternative, a standing committee of officers may be appointed to immediately examine an award after it is delivered, to decide whether to challenge it, or attempt to settle it. Fortnightly reviews of all arbitral awards must be undertaken to ensure that the timeline for challenging an award does not expire, it said.

Suggesting a separate law for domestic disputes as the UNCITRAL (United Nations Commission on International Trade Law) Model Law is based mainly on the experience of western countries where arbitrations are mostly conducted under the auspices of arbitral institutions.

The panel said a separate domestic law will be necessary to address India specific concerns and this can be finalised by the government after holding consultations with the Bar Council and Advocates’ Associations and trade associations.

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