Supreme Court seeks Centre's response to plea seeking constitution of Arbitration Council of India

The Supreme Court on Friday sought a response from the Union of India to a plea seeking directions for the constitution of an Arbitration Council of India (ACI), a statutory body envisaged under the Arbitration and Conciliation (Amendment) Act, 2019 [Anil Kalyandas Thanvi Vs Union of India]..A Bench comprising Justices JK Maheshwari and Atul Chandurkar issued notice on the petition filed by a cotton trader, Anil Kalyandas Thanvi..An Arbitration Council of India (ACI) is contemplated in Sections 43A and 43B of the Arbitration and Conciliation Act, 1996. These provisions were introduced by a 2019 amendment to the Arbitration Act.Subsequent amendments were made in 2021. Draft notifications were issued in 2020. The relevant provisions were notified in October 2023. Despite this, the ACI has not been constituted for over six years, the petition highlighted. The matter will be heard by the Court after six weeks.Apart from seeking the constitution of the ACI, the petitioner has also sought directions for framing uniform policies and guidelines for the conduct, regulation and accreditation of arbitral institutions and arbitrators. The petitioner pointed out that the Eighth Schedule to the Arbitration Act, which earlier prescribed qualification criteria for arbitrators, now stands omitted. The petitioner has argued that this omission has made the role of the ACI even more critical, as the statutory body was intended to ensure minimum professional standards and institutional credibility in arbitration..The petition raises serious concerns over arbitrations conducted by trade associations, alleging that such arbitrations are arbitrary, unregulated and violative of Articles 14 and 19(1)(g) of the Constitution.It further contended that several institutions compel parties to submit to arbitrary rules, unfair appointment procedures and internal mechanisms as a condition for doing business, leaving parties with limited remedies under the Arbitration and Conciliation Act. The plea has alleged that some institutions require mandatory membership or limit arbitral panels in a manner that favours their own members.According to the petitioner, these practices undermine the principles of independence, impartiality and equal treatment of parties, which form the foundation of the arbitration law..The petition has challenged internal appellate mechanisms provided under the rules of certain trade associations as well. It alleges that these mechanisms conflict with statutory remedies available under Sections 34 and 37 of the Arbitration and Conciliation Act.The plea states that the lack of uniform regulation has led to poor-quality arbitral awards. It has also resulted in conflicting rulings by High Courts. This, the petitioner argues, weakens the guarantee of equal protection of laws under Article 14..The Cotton Association of India (CAI) has been specifically named in the petition. The petitioner is engaged in the cotton trade and is a member of CAI.It has been alleged that CAI insists on the inclusion of its arbitration rules as a pre-condition for trading. The plea claims that this forces traders to agree to arbitrary rules.The petition challenges the Rules of Arbitration of CAI dated April 26, 2024. It alleges that the rules override parties’ agreements and even the Arbitration and Conciliation Act. A declaration has been sought that the rules are unconstitutional..The petitioner was represented by Advocate Jeetender Gupta..[Read Order].Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.