SEBI Recommends Direct Arbitration For Repetitive And High-Value Complaints

SEBI Recommends Direct Arbitration For Repetitive And High-Value Complaints

It will improve the Online Dispute Resolution system in the Indian securities market and make it more efficient

The Securities and Exchange Board of India (SEBI) has proposed a mechanism to directly send certain disputes for arbitration instead of first going through conciliation.

The capital markets regulator explained that complaints involving financial claims of Rs.10 crore or above, and repetitive in nature, must go straight to arbitration. This would help in resolving long-standing and complex disputes faster.

It held that cases directly referred for arbitration include those filed by specific institutions, recovery claims made by trading members, matters where both parties agree to arbitration, and legal or time-barred issues identified early in the process.

However, if a party chose not to go for arbitration, the case would be closed in the Online Dispute Resolution (ODR) portal. The entity could still pursue it through other legal channels.

SEBI also advocated that settlements reached through conciliation should be accepted electronically and be legally binding.

Additionally, the ODR institutions must maintain separate panels for conciliators and arbitrators, ensuring that one person does not serve in both roles. The professionals would be evaluated annually to maintain the quality of dispute resolution.

While streamlining the process, SEBI suggested that all market infrastructure institutions (MIIs) and ODR institutions should jointly prepare a Standard Operating Procedure (SOP) for the ODR system.

This SOP would provide step-by-step guidance on lodging complaints – documents required, handling repetitive or invalid complaints, and the responsibility of every entity during different stages, like pre-conciliation, conciliation, and arbitration.

It would include rules for recording proceedings, payment of fees, enforcement of arbitration awards, and actions to be taken against participants breaking the norms.

SEBI added that the document would be available online and reviewed every year to keep it updated.

It has invited public comments on these proposals until 12 May.