Centre yet to constitute Arbitration Council

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

But 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 PK Malhotra. In case an institutional mechanism is available, it will promote institutional arbitration. If the council is in existence, it will promote institutional arbitration, he said.

Malhotra noted that the ad-hoc arbitration prevelant in the country is creating more problem 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.

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 a hub of international arbitration.

He hoped that India will soon emerge as the new hub of international arbitration. In February last, an expert committee headed by former Law Secretary TK Vishwanathan had submitted its report on reforms in the arbitration sector to the Law Ministry.

The panel, which also had representatives of the law ministry as well as domain experts, had recommended an amendment to the Arbitration law to confer on the court the power to set aside or vary the arbitration award.

Industry representatives had dubbed the proposed changes in the law as a setback for arbitration reforms in the country.

In October last year, the Law Ministry has floated a draft bill to tweak the arbitration law. But so far, the amendments seem to have taken a back seat, said officials, detailing the lethargy in forming the Arbitration Council.