Arbitration in India: one more amendment in the Indian legislator's cap

Abstract

In September 2020, we published a newsletter on the changes made to the Indian Arbitration and Conciliation Act, 1996. One of these changes in effect disallowed foreign lawyers from acting as arbitrators in Indian-seated arbitration proceedings: acting as arbitrator would only be permitted to a person who is an advocate, accountant or company secretary «within the meaning» of Indian law. This seemingly innocuous provision effectively precluded lawyers not admitted to practise law in India from sitting as arbitrators in India, regardless of whether the substantive law applicable to the dispute was Indian or foreign law.

Receptive to widespread criticism, the President of India passed a further ordinance in November 2020, amending the Act once again. The 2020 Ordinance now provides that «[t]he qualifications, experience and norms for accreditation of arbitrators shall be such as may be specified by the regulations». On February 12, 2021, these changes were incorporated into the Arbitration and Conciliation (Amendment) Bill, 2021 passed by the Lok Sabha, the lower house of the Indian Parliament.

One of the reasons cited by the legislator to delete such qualifications was «to promote India as a hub of international commercial arbitration by attracting eminent arbitrators to the country». It thus appears that the Indian legislator has paid heed to voice of the international arbitration community and backtracked on its previous decision to limit the role of arbitrators in Indian seated arbitrations to only Indian qualified advocates.

It is now for the Arbitration Council of India (ACI), the newly created body set up by the 2019 Amendment, to frame these regulations. The ACI will be composed of members of the central government or persons nominated by the same. It remains to be seen whether the future rules will effectively open international arbitration in India to foreign practitioners – or whether they ultimately contain restrictions similar to those previously suggested. As of now, it is also open when these new regulations will come into force. Only time will tell.

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