0.1 Why in News

0.1.1 The Arbitration Council of India (ACI), provided for under the 2019 amendments to the Arbitration and Conciliation Act, 1996, has not yet been constituted.
0.1.2 In October 2024, the Union government released the draft Arbitration and Conciliation (Amendment) Bill, 2024 for public consultation.

0.2 Arbitration Council of India: Proposed Mandate

0.2.1 Establish ACI as the central regulatory and promotional authority for institutional arbitration in India.
0.2.2 Grant ACI the power to accredit individual arbitrators and grade arbitral institutions based on prescribed criteria.
0.2.3 Authorise ACI to recognise professional arbitration bodies involved in training and accreditation.
0.2.4 Maintain a centralised electronic repository of arbitral awards made in India.
0.2.5 Empower ACI to advise the government on policy matters relating to arbitration law and practice.
0.2.6 Chairperson of ACI to be appointed by the Union government in consultation with the Chief Justice of India.
0.2.7 Composition of ACI to include ex officio members from the executive.

0.3 Concerns Regarding Institutional Independence

0.3.1 Majority of ACI members to be appointed or nominated by the Union government, leading to executive dominance.
0.3.2 Raises concerns about impartial regulation, since the government is the largest party involved in arbitration disputes.
0.3.3 A regulator controlled by the executive grading arbitral institutions and accrediting arbitrators may affect perceived neutrality of arbitration in India.
0.3.4 Such a regulatory model is uncommon in arbitration-friendly jurisdictions, where independence of arbitral institutions is emphasised.

0.4 Issues with the Accreditation and Regulatory Framework

0.4.1 ACI empowered to accredit any number of arbitral institutions, which may lead to dilution of quality standards.
0.4.2 Heavy regulatory and supervisory functions may create administrative overload for the Council.
0.4.3 Exclusion of foreign lawyers and arbitrators from accreditation may reduce India’s appeal as an international arbitration seat.

0.5 Draft Arbitration and Conciliation (Amendment) Bill, 2024

0.5.1 The draft Bill redefines an “arbitral institution” as any organisation that conducts arbitration proceedings under its own procedural rules or rules agreed by parties.
0.5.2 Under the 2019 framework, only institutions formally designated by the Supreme Court or a High Court could act as arbitral institutions.
0.5.3 The draft Bill removes this requirement of court designation, allowing parties to directly choose arbitral institutions without court approval.
0.5.4 The draft Bill transfers several functions from courts to arbitral institutions to reduce court involvement in arbitration.
0.5.5 These functions include extending the time limit for arbitral awards, reducing arbitrators’ fees in case of delay, and substituting arbitrators when required.

0.6 Changes Relating to Judicial Intervention

0.6.1 Courts currently have wide powers to grant interim measures before and during arbitration proceedings.
0.6.2 The draft Bill proposes to limit court-granted interim relief mainly to the period before arbitration begins or after the award is made.
0.6.3 Amendment to Section 9(2) changes the starting point of the 90-day period for commencing arbitration to the date of filing the interim relief application.
0.6.4 This aims to prevent parties from delaying arbitration by prolonging pre-arbitral court proceedings.
0.6.5 Introduction of Section 9-A allows parties to seek urgent interim relief from an emergency arbitrator before the tribunal is formally constituted.

0.7 Way Forward

0.7.1 The Justice B.N. Srikrishna Committee noted that Indian parties prefer ad hoc arbitration due to greater procedural control.
0.7.2 Lack of trust in independence and efficiency of domestic arbitral institutions remains a key challenge.
0.7.3 Building credible, neutral, and professionally managed institutions is essential for India to emerge as a global arbitration hub.