Introduction
In 2024, the India International Arbitration Centre (IIAC) introduced new regulations tailored for micro and small enterprises (MSEs). These regulations mark a significant departure from traditional arbitration practices. They aim to expedite proceedings, reduce costs, and address the unique needs of MSEs. Here’s a detailed look at the key changes and their importance:
Fast Track Procedure
Decision Based on Written Submissions: As per Rule 11(2)(a), the Arbitral Tribunal decides disputes primarily based on written pleadings, documents, and submissions from the parties. Oral hearings occur only if all parties request them or if the tribunal finds it necessary to clarify specific issues. This approach eliminates unnecessary delays and resolves disputes based on clear, documented evidence.
Streamlined Hearings: As per Rule 11(2)(d), when conducting oral hearings, the tribunal avoids technical formalities and adopts procedures suited for quick case resolution. This streamlining ensures efficient hearings focused on promptly resolving the dispute.
Six-Month Time Frame: As per Rule 11(2)(e), the tribunal must issue awards within six months from the date of its constitution. The Registrar can extend this period only for specific, recorded reasons. If the tribunal fails to issue the award within this timeframe, its mandate terminates. This strict deadline ensures that disputes are resolved without prolonged delays.
Reduced Fees
To make arbitration more accessible for MSEs, the IIAC has revised its fee structure. The appended Schedule provides the fee structure for Administration and Arbitrator’s fee separately. These new regulations specify lower arbitration fees compared to standard rates. This reduction acknowledges the financial constraints that smaller enterprises face. By lowering costs, the IIAC makes the arbitration process more affordable and less burdensome. This encourages more MSEs to choose arbitration over traditional litigation, which can be prohibitively expensive and time-consuming.
| S. no | Amount in Dispute (Indian Rupees) [claim + counter-claim (if any)] | Administration Fee (Indian Rupees) (excluding Goods and Services Tax) |
| 1. | Upto 25,00,000 | 10,000 |
| 2. | Above 25,00,000 and upto 1,00,00,000 | 25,000 |
| 3. | Above 1,00,00,000 and upto 5,00,00,000 | 50,000 |
| 4. | Above 5,00,00,000 | 75,000 |
| S. no | Amount in Dispute (Indian Rupees) [claim + counter-claim (if any)] | Administration Fee (Indian Rupees) (excluding Goods and Services Tax) |
| 1. | Upto 2,00,000 | 20,000 |
| 2. | Above 2,00,000 and upto 5,00,000 | 30,000 |
| 3. | Above 5,00,000 and upto 10,00,000 | 50,000 |
| 4. | Above 10,00,000 and up to 1,00,00,000 | 50,000 plus 2% of amount in excess of 10,00,000 |
| 5. | Above 1,00,00,000 and up to 10,00,00,000 | 2,30,000 plus 1% of amount in excess of 1,00,00,000 |
| 6. | Above 10,00,00,000 and upto 20,00,00,000 | 11,30,000 plus 0.75% of amount in excess of 10,00,00,000 |
| 7. | Above 20,00,00,000 | 18,80,000 plus 0.50% of amount in excess of 20,00,00,000 with the total fee capped at a maximum of 30,00,000. |
Special Provisions and Need for Changes
Several factors necessitated the introduction of these new regulations:
Unique Challenges Faced by MSEs: MSEs often encounter significant delays and higher costs in traditional arbitration. These challenges can be detrimental to their operations, as prolonged disputes can disrupt business activities and financial stability. The new regulations aim to provide a more efficient and cost-effective dispute resolution mechanism, ensuring that MSEs can resolve disputes quickly and continue their operations smoothly.
Promoting Ease of Doing Business: By streamlining arbitration procedures and reducing costs, the IIAC aims to enhance the business environment for MSEs. Easier and quicker dispute resolution helps MSEs focus on growth and development.
Legal and Policy Support: The changes align with broader governmental policies aimed at supporting MSEs, which are crucial to the economy. The Indian government recognizes the importance of MSEs and has been implementing policies to support their growth and sustainability. By offering a tailored arbitration framework, the IIAC supports these enterprises in managing disputes effectively, contributing to a more robust and resilient business ecosystem.
Conclusion
The India International Arbitration Centre’s 2024 regulations represent a significant step forward in making arbitration more accessible and efficient for micro and small enterprises. By introducing a fast track procedure, reducing fees, and addressing the unique needs of MSEs, these regulations facilitate quicker dispute resolution and support a better business environment for smaller enterprises. These changes reflect a thoughtful approach to ensuring that arbitration serves as a practical and beneficial option for businesses of all sizes. The IIAC’s commitment to supporting MSEs through these regulations underscores the importance of tailored legal frameworks in promoting economic growth and stability.