Partner, Dispute Resolution & Arbitration
The New Delhi International Arbitration Centre Ordinance has been recently promulgated by the President on the 2nd of March, 2019.
The Ordinance aims to provide for a robust regime of International and Domestic Institutional Arbitration in India, in the likes of the SIAC (Singapore International Arbitration Centre), the LCIA (The London of Court of International Arbitration) and several other International Institutional Arbitration bodies. This Ordinance seeks to address three key issues:-
To create an Independent and Autonomous body for Institutional Arbitration – the New Delhi International Arbitration Centre(NDIAC) –
The Central Government is to establish the NDIAC by notification as a body corporate. The body is to consist of 7 members and the Chairperson to be appointed by the Central Government in consultation with the Chief Justice of India.
To vest the entire undertaking of the ICADR (International Centre for Alternate Dispute Resolution) in the NDIAC –
This means that all the assets and properties of the ICADR will be transferred to the NDIAC. These will probably be used by NDIAC to make its branches and to make arbitration centres. It is still not clear what intends to be done with these assets.
To declare the NDIAC to be an institution of national importance –
This connotation basically denotes that the Central Government would be funding the institution and that it is thought to be a premier institution contributing to skill development in any particular field.
Apart from these, the Ordinance also provides that the NDIAC will establish two other bodies being as follows:-
Chamber of Arbitration
To maintain a permanent panel of arbitrators. The qualifications of the arbitrators are still under covers and would be as per regulations made by the NDIAC.
This Academy may also be established by the NDIAC to impart training to the arbitrators and conduct research activities.
The number of members in the NDIAC is much less as compared to the ICADR, which would probably result in the Commission being much more efficient and being much less bureaucratic.
One unique feature of the NDIAC is that it is being given the status of an Institution of National Importance. In the past, Institutes of National Importance have been meant to be only educational/academic institutions contributing considerably to higher education in the country. It is the first time that an institution like NDIAC is being given this status, especially in view of the fact that this is especially outside the ambit of an academic institution.
Moreover, even though the Ordinance mentions the words “independent” and “autonomous” to describe the NDIAC, the level of autonomy may be truly questionable. This is owing to facts such as the Central Government funding the NDIAC, the audit of the NDIAC to be carried out by the Comptroller and Auditor General of India to be forward to the Central Government, the Central Government having control over the appointment of the Chairman and one other member, and also having power of prior approval of opening its branches. The Chairman is to even offer his resignation to the Central Government, in addition to which the Central Government also has the power to remove any member from the NDIAC. Further, the Central Government also has power to make rules on salaries, allowances, tenures, appointments, qualifications, etc. Even the regulations made by the NDIAC require the prior approval of the Central Government.
With such a wide an pervasive control over the NDIAC, one wonders whether the Institution is really autonomous or independent. The purpose of introducing the NDIAC appears to be to attract foreign investors and to make India as an attractive hub of International Arbitration. Although the NDIAC poses an optimism to efficiency and uniformity of rules, empanelment as well as efficacy, it is doubtful whether foreign investors would like to come before an Institution which may have colours of not being neutral owing to the deep and pervasive control of the Central Government.
We had written earlier about these concerns, when the Bill was introduced as well. However, it seems the legislature has done nothing to address these concerns. The previous article can be accessed at: https://bit.ly/30vbtw9
The complete ordinance can be accessed at: https://bit.ly/2w76MKX