Page 51 - The Insurance Times January 2025

Insurance Arbitration

Insurance Arbitration Clause and Procedure in

India

Introduction Objective: To streamline arbitration proceedings and
reduce delays.
Arbitration serves as an effective alternative dispute reso-
lution (ADR) mechanism for disputes in insurance contracts, Key Changes:
often governed by the Arbitration and Conciliation Act, 1996. o Timelines: Introduced a 12-month time limit to con-
Over the years, this Act has undergone several amendments clude arbitration proceedings, extendable by six
to improve efficiency, ensure transparency, and align India's months with mutual consent.
arbitration framework with global standards. o Independence of Arbitrators: Mandated arbitra-
tors to disclose any potential conflicts of interest.
This article explores the insurance arbitration clause, its
procedural aspects, cost implications, and governing laws, o Fast-Track Procedure: Introduced an optional fast-
track mechanism for resolving disputes within six
with a focus on the major amendments to the Arbitration
months.
and Conciliation Act that have shaped its evolution.
o Cost Allocation: Allowed arbitral tribunals to
Understanding the Insurance Arbitration specify the costs of arbitration.

Clause o Court Intervention: Limited judicial intervention
during arbitration proceedings.
An insurance arbitration clause is a provision within an in-
Impact: This amendment significantly reduced delays
surance contract that mandates the resolution of disputes
and increased the efficiency of arbitration in India.
through arbitration rather than through traditional court
litigation. This clause typically encompasses:
Scope of Disputes: Defining the types of disputes sub- 2. Arbitration and Conciliation (Amendment)
ject to arbitration, such as claim denials, policy inter- Act, 2019
pretations, or coverage issues. Objective: To institutionalize arbitration and enhance
the quality of arbitrators.
Initiation Process: Outlining the steps to commence
arbitration, including notification procedures and Key Changes:
timelines. o Arbitration Council of India (ACI): Established to
Governing Rules: Specifying the procedural rules and promote arbitration and maintain a panel of ac-
legal framework applicable to the arbitration process. credited arbitrators.
o Statement of Claim: Introduced stricter timelines
Major Amendments to the Arbitration for filing claims and defenses.

and Conciliation Act, 1996 o Confidentiality: Mandated confidentiality of arbi-
Since its enactment, the Arbitration and Conciliation Act, tral proceedings, except for the award.
1996, has been amended multiple times to address proce- o Enforceability of Awards: Streamlined enforce-
dural inefficiencies, improve timelines, and establish India ment mechanisms for arbitral awards.
as a hub for arbitration. Here are the key amendments:
Impact: Focused on establishing India as a global arbi-
1. Arbitration and Conciliation (Amendment) tration hub by improving transparency and institution-
Act, 2015 alizing arbitration practices.

The Insurance Times January 2025 45