Page 52 - The Insurance Times January 2025

3. Arbitration and Conciliation (Amendment) 4. Institutional Arbitration: Encourages insurers and poli-
Act, 2021 cyholders to use institutional arbitration for consistency
Objective: To protect the integrity of arbitral awards and professionalism.
and limit malpractices.
Procedure for Insurance Arbitration
Key Changes:
o Automatic Stay on Awards: Provided an automatic 1. Initiation of Arbitration:
stay on arbitral awards in cases of fraud or corrup- o The aggrieved party issues a formal notice to the
tion allegations. other party, indicating the intent to arbitrate and
detailing the nature of the dispute.
o Arbitrator Qualifications: Empowered the govern-
ment to specify the qualifications, experience, and 2. Appointment of Arbitrators:
norms for arbitrators. o In accordance with the Arbitration and Conciliation
Act, 1996, each party appoints one arbitrator, and
o Retrospective Application: Clarified the applicabil-
ity of the 2015 amendments retrospectively. the two appointed arbitrators jointly select a third
arbitrator to act as the presiding arbitrator. Alter-
Impact: Enhanced the credibility of arbitration in India natively, a sole arbitrator may be appointed by mu-
and ensured fair practices. tual agreement.

3. Submission of Statements:
4. Proposed Amendments: Arbitration and Con-
o The claimant submits a statement of claim outlin-
ciliation (Amendment) Bill, 2024
ing the facts and relief sought, while the respon-
Objective: To further streamline the arbitration process dent provides a statement of defense, and if appli-
and reduce judicial intervention.
cable, any counterclaims.
Key Proposals: 4. Conduct of Hearings:
o Promotion of Institutional Arbitration: Encour-
aged the use of arbitral institutions for appointment o Arbitration proceedings may involve oral hearings,
of arbitrators. written submissions, or a combination of both, de-
pending on the agreement between parties and the
o Technology Integration: Promoted the use of tech- arbitrators' discretion.
nology in arbitration proceedings, such as virtual
hearings. 5. Issuance of Arbitral Award:
o After evaluating the submissions and evidence, the
o Penalties for Delays: Introduced penalties for ar- arbitral tribunal renders a binding decision, known
bitrators and parties causing unreasonable delays.
as the arbitral award, which resolves the dispute.
Expected Impact: The proposed amendments aim to
strengthen India's arbitration framework and make it Advantages of Arbitration in Insurance
more time-bound and efficient.
1. Efficiency:
o Faster resolution compared to litigation.
How These Amendments Affect Insur-
2. Confidentiality:
ance Arbitration
o Arbitration proceedings are private, safeguarding
The amendments to the Arbitration and Conciliation Act sensitive business information.
have a direct impact on arbitration in the insurance indus-
try: 3. Flexibility:
1. Timeliness: The statutory time limits ensure quicker o Parties have greater control over procedural rules
resolution of insurance disputes, critical for policyhold- and timelines.
ers requiring urgent relief. 4. Expertise:
2. Arbitrator Transparency: Mandatory disclosures en- o Arbitrators with domain-specific knowledge provide
hance the credibility of arbitrators in high-stakes insur- more informed decisions.
ance disputes. 5. Binding Outcome:
3. Fast-Track Mechanism: Enables resolution of smaller o Arbitral awards are legally binding and enforceable
claims or straightforward disputes efficiently. under Indian law.

46 January 2025 The Insurance Times