Six years after law amended, Centre yet to constitute Arbitration Council of India

As many as six years after the law was amended, the Union Government is yet to constitute the Arbitration Council of India to regulate and promote institutional arbitration in the country.

Senior officials in the Union Law Ministry said it took years for corporates and public sector undertakings to shun ad-hoc arbitration and go far institutional arbitration to settle commercial disputes.

The proposed council is mandated to regulate institutional arbitration. “But when institutional arbitration has not taken shape in India, who would the Arbitration Council regulate? Now it has taken shape, and within this year, the proposed council will be set up,” an official said.

However, a former Union Law Secretary had a contrary view.

“The provision for an institutional mechanism by the Arbitration Council of India was made by amending the Arbitration Act way back in 2019. It has been more than six years now and the proposed council has not yet been constituted. It is adversely affecting making India as a hub of international arbitration,” former Union Law Secretary P.K. Malhotra told PTI.

If an institutional mechanism is available, it will promote institutional arbitration. If the council is in existence, it will promote institutional arbitration, he said.

Mr. Malhotra noted that the prevalence of ad-hoc arbitration in the country is creating more problems, and that is why even some of the government departments are going out of the arbitration system and preferring mediation as another tool to settle disputes.

Hub of international arbitration

Union Law Minister Arjun Ram Meghwal has, on multiple occasions, lamented that while arbitration was part of Indian culture, the concept got “disturbed” somewhere and other countries became hub of international arbitration. He hoped that India will soon emerge as a new hub of international arbitration.

In February last year, an expert committee headed by former Law Secretary T.K. Vishwanathan submitted its report on reforms in the arbitration sector to the Law Ministry.

The panel, which included representatives from the Law Ministry and domain experts, recommended an amendment to the arbitration law to confer courts with the power to set aside or vary arbitration award.

Industry representatives, however, dubbed the proposed changes as a setback to arbitration reforms in the country.

In October last year, the Law Ministry floated a draft Bill to tweak the arbitration law. But so far, the amendments seem to have taken a back seat.