Accreditation of Arbitrators under the Arbitration and Conciliation (Amendment) Act, 2019

Gunjan Chhabra, Partner

The Arbitration and Conciliation (Amendment) Act, 2019 (2019 Act) recently received the assent of the President and has been published in the Official Gazette on 9thof August, 2019. Although the act has still not been enforced because the Act provides for the official date of applicability to be notified by way of publication in the official gazette, yet it is only a matter of time now.

With the coming into effect of the 2019 Act, there are a lot of apprehensions as it provides for massive changes in how things have been operating till date. One major apprehension is of the special provision of Accreditation of Arbitrators under the 2019 Amendment. It now provides for the Arbitration Council of India to accredit arbitrators and even provides for detailed criteria of doing so.

The Introduction of the Eight Schedule

The 2019 Act has introduced the provision for an Arbitration Council to be set up, who amongst other powers, has the role of accrediting arbitrators. The newly introduced Section 43J provides that the accreditation norms for arbitrators inclucing qualifications and experience are provided in the Eighth Schedule, which may be amended by the Central Government after consultation with the Arbitration Council.

This has resultantly brought into the picture the Eight Schedule, which provides not only the qualifications, but also the character traits which a person needs to have in order to be accredited as an arbitrator.

Qualifications and Experience of an Arbitrator

The Eighth Schedule provides the Qualifications and Experience of being an arbitrator as follows:-

  1. An advocate within the meaning of the Advocates Act, 1961 having ten years of practice experience as an advocate; or 
  2. A chartered accountant within the meaning of the Chartered Accountants Act, 1949 having ten years of practice experience as a chartered accountant; or
  3. Is a cost accountant within the meaning of the Cost and Works Accountants Act, 1959 having ten years of practice experience as a cost accountant; or 
  4. Is a company secretary within the meaning of the Company Secretaries Act, 1980 having ten years of practice experience as a company secretary; or 
  5. Has been an officer of the Indian Legal Service; or 
  6. Has been an officer with law degree having ten years of experience in the legal matters in the Government, Autonomous Body, Public Sector Undertaking or at a senior level managerial position in private sector; or 
  7. Has been an officer with engineering degree having ten years of experience as an engineer in the Government, Autonomous Body, Public Sector Undertaking or at a senior level managerial position in private sector or self-employed; or 
  8. Has been an officer having senior level experience of administration in the Central Government or State Government or having experience of senior level management of a Public Sector Undertaking or a Government company or a private company of repute; 
  9. Is a person, in any other case, having educational qualification at degree level with ten years of experience in scientific or technical stream in the fields of telecom, information technology, Intellectual Property Rights or other specialised areas in the Government, Autonomous Body, Public Sector Undertaking or a senior level managerial position in a private sector, as the case may be.

It appears that the above qualifications are very widely worded, and in essence the implication seems to be that any and everyone is qualified to be an arbitrator, as long as they have ten years of working experience in their particular field, which appears to be a fair enough rider.

General Norms applicable to Arbitrators

As explained above, apart from the specific educational or technical qualifications as provided above, a general listing of the character traits of an Arbitrator have also been listed out. These are as follows:-

  1. The arbitrator shall be a person of general reputation of fairness, integrity and capable to apply objectivity in arriving at settlement of disputes; 
  2. The arbitrator must be impartial and neutral and avoid entering into any financial business or other relationship that is likely to affect impartiality or might reasonably create an appearance of partiality or bias amongst the parties; 
  3. The arbitrator should not involve in any legal proceeding and avoid any potential conflict connected with any dispute to be arbitrated by him; 
  4. The arbitrator should not have been convicted of an offence involving moral turpitude or economic offence; 
  5. The arbitrator shall be conversant with the Constitution of India, principles of natural justice, equity, common and customary laws, commercial laws, labour laws, law of torts, making and enforcing the arbitral awards; 
  6. The arbitrator should possess robust understanding of the domestic and international legal system on arbitration and international best practices in regard thereto; 
  7. The arbitrator should be able to understand key elements of contractual obligations in civil and commercial disputes and be able to apply legal principles to a situation under dispute and also to apply judicial decisions on a given matter relating to arbitration; and 
  8. The arbitrator should be capable of suggesting, recommending or writing a reasoned and enforceable arbitral award in any dispute which comes before him for adjudication

The above qualifications and character traits seem to be very widely worded and it does not appear that many people will face a fear of exclusion owing to these criteria. However, it does also mean that these criteria are extremely subjective and the Arbitration Council will end up having a lot of discretionary powers.

That having been said, in every case where an appointment of an arbitrator has to be made, the Fifth and the Seventh Schedule would still apply.

Incase you’re curious about the Arbitration Council of India, read here.

To read about the other key amendments brought about by the 2019 Act, read here.

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