Penn Undergraduate Law Journal
  • Home
  • About
    • Mission
    • Masthead
    • Faculty Advisory Board
    • Partner Journals
    • Sponsors
  • Submissions
  • Full Issues
  • The Roundtable
    • Pre-Law Corner
  • Events
  • Contact
    • Contact
    • Apply
    • FAQs
  • Home
  • About
    • Mission
    • Masthead
    • Faculty Advisory Board
    • Partner Journals
    • Sponsors
  • Submissions
  • Full Issues
  • The Roundtable
    • Pre-Law Corner
  • Events
  • Contact
    • Contact
    • Apply
    • FAQs

The Roundtable


Welcome to the Roundtable, a forum for incisive commentary and analysis
on cases and developments in law and the legal system.


State Interference in Commercial Arbitration in India?

10/18/2019

0 Comments

 
Picture
By Suprateek Neogi
Suprateek Neogi is a fourth-year student at the Rajiv Gandhi National University of Law, Punjab studying Law and specializing in Business Laws.

​India’s arbitration regime has been criticized by the international community as being non-friendly towards arbitration. Despite good intentions, Indian courts often behave in an interventionist manner while dealing with arbitration disputes.[1] For instance, legal provisions for setting aside[2] and refusal of enforcement of arbitral awards[3] for “public policy” considerations had been inserted into the Arbitration and Conciliation Act, 1996 (“the Act”) to minimise court interference. These provisions have led to certain decisions by Indian Courts which set questionable precedents for the validity of arbitral awards.[4]
The Indian legislature has been trying to change that with amendments to the Act. The 2015 Amendment aimed at making India a hub for international commercial arbitration. The recent 2019 Amendment[5] has aimed at promoting institutionalized arbitration. Although the Amendment is a welcome step towards promoting institutionalized arbitration, this can inadvertently lead to State interference in the form of the Arbitration Council of India (“ACI”).
The 2019 Amendment to the Act came after deliberations by the High-Level Committee set-up by the Union Government on December 29, 2016. The Committee, headed by Justice BN Srikrishna, a retired judge of the Supreme Court of India, gave its final report on July 30, 2017, which was the basis for the 2019 Amendment.

India has over 35 arbitral institutions, including domestic and international institutions.[6] Despite that, India has shown a preference of ad-hoc arbitration over institutional arbitration despite the obvious advantages of an institutionalised process.[7] This is broadly due to certain misconceptions regarding institutional arbitration which exist in India and the lack of statutory backing.[8] For instance, contrary to the fact, institutional arbitration is considered to be expensive compared to ad hoc arbitration.

The Amendment mainly attempts to tackle the following: 
  1. Grading arbitral institutions and promoting institutional arbitration by setting up the ACI,[9]
  2. Relax time limit for international commercial arbitration by adding a statutory provision,[10] and
  3. Maintain confidentiality of arbitral proceedings by adding a statutory provision.[11]

In order to show governmental and statutory support for institutional arbitration, the central government, through this Amendment, has set up the ACI as an autonomous body, along with promoting institutional arbitration, grading and recognizing arbitral institutions in India, making recommendations to the central government on commercial arbitration, and more.[12] 

The ACI does not intend to be a regulatory authority, but merely an authority for grading arbitral institutions. This is to maintain the separation of the State and judicial system from arbitration.[13] But this may backfire because as mentioned before, the Indian arbitration regime has numerous examples of how positive steps have led to increased State intervention despite intentions to the contrary.

But despite the positive steps taken by the Indian Parliament to promote institutional arbitration, one can’t help but wonder about the practical repercussions of the reforms. The repercussions will mostly be felt in the form of “red-tapism” and a decrease in party autonomy. The ACI is a governmental body and, by virtue of that, has certain fallacies which could act as a hurdle for the very purpose of the ACI. State interference can lead to excess red-tapism and regulation, unwarranted State control, delays and other discrepancies. The infamous red-tapism of Indian governmental bodies is a known deterrent for international commerce.[14] This can be detrimental for arbitral institutions whose business in India will rely upon the grading provided by the ACI.

Party autonomy is a very important and integral aspect of commercial arbitration. A lot of parties opt for arbitration largely due to party autonomy. Having a governmental body to grade arbitral institutions limits party autonomy to a certain extent. This is because the choice of the courts in determining arbitral institutions will be restricted by the decision of the ACI. This will also act as a hurdle for ungraded arbitral institutions which might be reputed abroad. The administrative hurdles posed by the ACI can act as a hurdle for such ungraded arbitral institutions in establishing their business in India.

The 2019 Amendment, despite its fallacies, is a much-needed respite for institutional arbitration in India. Accreditation of institutions by a statutory body has its cons, but it remains an important step forward for international commercial arbitration in India. The BN Srikrishna Committee Report showed a good understanding of the Indian arbitration landscape, which is why the recommendations were accepted without substantive modifications by the Parliament. The Report and the Amendment are reflective of the government’s policy of making India a global arbitration hub for commerce.

The opinions and views expressed in this publication are the opinions of the designated authors and do not reflect the opinions or views of the Penn Undergraduate Law Journal, our staff, or our clients.

References:

[1] Ghani, Moin. “Court Assistance, Interim Measures, and Public Policy: India’s Perspective on International Commercial Arbitration”, The Arbitration Brief 2, No. 1: 16-29 (2012). Available at http://digitalcommons.wcl.american.edu/cgi/viewcontent.cgi?article=1026&context=ab; Nair, Promod. “Ringfencing Arbitration from Judicial Interference: Proposed Changes to the Arbitration and Conciliation Act”, The Practical Lawyer (2010). Last accessed date October 11, 2019.
[2] Section 34, Arbitration and Conciliation (Amendment) Act, 2019.
[3] Section 48, Arbitration and Conciliation (Amendment) Act, 2019.
[4] Working Paper on Institutional Arbitration Reforms in India, HLC, Indian Council of Arbitration (2017): 8. Last accessed date October 11, 2019. http://www.icaindia.co.in/HLC-Working-Paper-on-Institutional-Arbitration-Reforms.pdf.
[5] Arbitration and Conciliation (Amendment) Act, 2019.
[6] Srikrishna, B.N. et al. “High-Level Committee to Review The Institutionalization of Arbitration Mechanism in India”, Department of Legal Affairs (2017). Last accessed date October 2, 2019. http://legalaffairs.gov.in/sites/default/files/Report-HLC.pdf.
[7] “Corporate Attitudes & Practices towards Arbitration in India”. PricewaterhouseCoopers (2013). Last accessed date October 2, 2019. https://www.pwc.in/assets/pdfs/publications/2013/corporate-attributes-and-practices-towardsarbitration-in-india.pdf.
[8] Srikrishna, B.N. et al. “High-Level Committee to Review The Institutionalization of Arbitration Mechanism in India”, Department of Legal Affairs (2017): 18. Last accessed date October 2, 2019. http://legalaffairs.gov.in/sites/default/files/Report-HLC.pdf.
[9] Section 10, Arbitration and Conciliation (Amendment) Act, 2019; Section 43D(2), Arbitration and Conciliation Act, 1996.
[10] Section 6, Arbitration and Conciliation (Amendment) Act, 2019; Section 29A, Arbitration and Conciliation Act, 1996.
[11] Section 9, Arbitration and Conciliation (Amendment) Act, 2019; Section 42A, Arbitration and Conciliation Act, 1996.
[12] Supra note 5.
[13] Srikrishna, B.N. et al. “High-Level Committee to Review The Institutionalization of Arbitration Mechanism in India”, Department of Legal Affairs (2017): 50. Last accessed date October 2, 2019. http://legalaffairs.gov.in/sites/default/files/Report-HLC.pdf.
[14] “Red-tapism of Indian bureaucracy poses hurdle to red carpet for foreign companies: US”. The Economic Times (2015). Last accessed date October 2, 2019. https://economictimes.indiatimes.com/news/economy/policy/red-tapism-of-indian-bureaucracy-poses-hurdle-to-red-carpet-for-foreign-companies-us/articleshow/48639468.cms.
0 Comments

Your comment will be posted after it is approved.


Leave a Reply.


    Categories

    All
    Aaron Tsui
    Akshita Tiwary
    Alana Bess
    Alana Mattei
    Albert Manfredi
    Alexander Saeedy
    Alexandra Aaron
    Alexandra Kanan
    Alexandra Kerrigan
    Alice Giannini
    Alicia Augustin
    Alicia Kysar
    Ally Kalishman
    Ally Margolis
    Alya Abbassian
    Amanda Damayanti
    Anika Prakash
    Anna Schwartz
    Arshiya Pant
    Ashley Kim
    Astha Pandey
    Audrey Pan
    Benjamin Ng'aru
    Brónach Rafferty
    Bryce Klehm
    Cary Holley
    Catherine Tang
    Christina Gunzenhauser
    Christine Mitchell
    Christopher Brown
    Clarissa Alvarez
    Cole Borlee
    Connor Gallagher
    Dan Spinelli
    Dan Zhang
    David Katz
    Davis Berlind
    Derek Willie
    Dhilan Lavu
    Edgar Palomino
    Edna Simbi
    Ella Jewell
    Ella Sohn
    Emma Davies
    Esther Lee
    Evelyn Bond
    Filzah Belal
    Frank Geng
    Gabrielle Cohen
    Gabriel Maliha
    Georgia Ray
    Graham Reynolds
    Habib Olapade
    Hailie Goldsmith
    Haley Son
    Hannah Steinberg
    Harshit Rai
    Hennessis Umacta
    Henry Lininger
    Hetal Doshi
    Ingrid Holmquist
    Iris Zhang
    Irtaza Ali
    Isabela Baghdady
    Ishita Chakrabarty
    Jack Burgess
    Jessica "Lulu" Lipman
    Joe Anderson
    Jonathan Lahdo
    Jonathan Stahl
    Joseph Squillaro
    Justin Yang
    Kaitlyn Rentala
    Kanishka Bhukya
    Katie Kaufman
    Kelly Liang
    Keshav Sharma
    Ketaki Gujar
    Khlood Awan
    Lauren Pak
    Lavi Ben Dor
    Libby Rozbruch
    Lindsey Li
    Luis Bravo
    Lyan Casamalhuapa
    Lyndsey Reeve
    Madeline Decker
    Maja Cvjetanovic
    Maliha Farrooz
    Marco DiLeonardo
    Margaret Lu
    Matthew Caulfield
    Michael Keshmiri
    Michael Merolla
    Mina Nur Basmaci
    Muskan Mumtaz
    Natalie Peelish
    Natasha Darlington
    Natasha Kang
    Nathan Liu
    Nayeon Kim
    Nicholas Parsons
    Nicholas Williams
    Nicole Greenstein
    Nicole Patel
    Nihal Sahu
    Omar Khoury
    Owen Voutsinas Klose
    Owen Voutsinas-Klose
    Paula Vekker
    Pheby Liu
    Pragat Patel
    Rachel Bina
    Rachel Gu
    Rachel Pomerantz
    Rebecca Heilweil
    Regina Salmons
    Sajan Srivastava
    Samantha Graines
    Sandeep Suresh
    Sanjay Dureseti
    Sarah Simon
    Saranya Das Sharma
    Saranya Sharma
    Sasha Bryski
    Saxon Bryant
    Sean Foley
    Sebastian Bates
    Serena Camici
    Shahana Banerjee
    Shannon Alvino
    Shiven Sharma
    Siddarth Sethi
    Sneha Parthasarathy
    Sneha Sharma
    Sophie Lovering
    Steven Jacobson
    Suaida Firoze
    Suprateek Neogi
    Takane Shoji
    Tanner Bowen
    Taryn MacKinney
    Thomas Cribbins
    Todd Costa
    Tyler Larkworthy
    Tyler Ringhofer
    Vatsal Patel
    Vikram Balasubramanian
    Vishwajeet Deshmukh
    Wajeeha Ahmad
    Yeonhwa Lee

    Archives

    April 2025
    March 2025
    February 2025
    January 2025
    December 2024
    November 2024
    September 2024
    May 2024
    April 2024
    January 2024
    December 2023
    November 2023
    May 2023
    March 2023
    January 2023
    December 2022
    November 2022
    September 2022
    June 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    May 2019
    April 2019
    March 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    December 2017
    November 2017
    October 2017
    August 2017
    July 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    April 2016
    March 2016
    February 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    November 2014
    October 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    December 2013
    November 2013
    October 2013
    September 2013

Powered by Create your own unique website with customizable templates.