“Revolutionizing Arbitration”: IIAC Launches Groundbreaking Regulations for Micro and Small Enterprises

Background –

On June 7, 2024, the India International Arbitration Centre (IIAC) introduced the India International Arbitration Centre (Conduct of Micro and Small Enterprises Arbitration) Regulations 2024. Recognizing the importance of micro and small enterprises in the Indian economy, these regulations aim to enhance the efficiency and speed of dispute resolution within this crucial sector.

Update –

The IIAC has acknowledged the necessity of promoting quicker and more effective dispute resolution mechanisms for micro and small enterprises. These newly established regulations are part of IIAC’s ongoing efforts to facilitate arbitration in this significant economic segment. According to a press release, the regulations underscore the importance of swift and efficient dispute resolution processes.

Key features –

1. Fee Structure – There are no filing fees for claims or counterclaims, and the arbitrator’s fees are set at a rate lower than that specified in the Fourth Schedule of the Arbitration and Conciliation Act, 1996. Additionally, the administration fees charged to parties are kept to a minimum.
2. Fast Track Procedure – The default method for all arbitrations is a fast track procedure based on the pleadings, documents, and submissions provided by the parties. Oral hearings are held only if all parties request them or if the Arbitral Tribunal deems them necessary for clarifying issues. The arbitral award is to be issued within six months from the date the Registrar informs the parties about the constitution of the Arbitral Tribunal. Parties can request that the fast-track procedure not be followed, subject to the Arbitral Tribunal’s approval.
3. Appointment of Arbitrator – A Sole Arbitrator is appointed by the IIAC Chairperson, advised by the Advisory Panel. The selection process ensures that the arbitrator is independent, impartial, and capable of conducting the arbitration efficiently and promptly.
4. Legal Aid – Micro and small enterprises experiencing financial difficulties can apply for legal aid by submitting supporting documents to IIAC. Approved applications may result in a waiver of up to 50% of the IIAC’s administration fee. Additionally, a counsel may be provided at no cost, subject to the Arbitral Tribunal’s decision on arbitration costs.
5. Use of Artificial Intelligence – IIAC plans to implement Artificial Intelligence software developed by Digital India Bhashini Division, an Independent Business Division within the Digital India Corporation under the Ministry of Electronics and Information Technology. This technology aims to simplify and enhance the transparency of the arbitration process across India, irrespective of the parties’ regional or linguistic differences. Features include real-time translation of documents and speech in various languages listed in the Eighth Schedule of the Indian Constitution to English/Hindi, marking the first use of such technology in dispute resolution in India.
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