AMENDMENT IN ARBITRATION LAW IN INDIA 2016

Highlights of the Amendment to the Arbitration and Conciliation Act-2016

History of Arbitration law in India• Indian Arbitration Act, 1899 (Only in presidency

towns of Calcutta, Bombay and Madras)• Civil Procedure Code, 1908• Arbitration Act, 1940 ( Only for domestic

arbitrations)• Arbitration (Protocol and Convention Act), 1937

(Geneva Convention awards)• Foreign Awards (Recognition and Enforcement

Act), 1961 ( New York Convention Awards)• Indian Arbitration and Conciliation Act, 1996

Arbitration Act, 1940

• Delays in arbitration proceedings• Interference of courts and delays in court

proceedings.• Interminable, complex and expensive.• Enforcement through courts.

Indian Arbitration and Conciliation Act, 1996

• Applicable for both domestic and international awards.

• Based on UNCITRAL model laws, 1985 and UNCITRAL conciliation rules, 1980

• Provision of conciliation • Problems of delays continued as once

arbitration challenged under section 34 award. Remains in-executable.

• Delays in courts

The Arbitration And Conciliation (Amendment)Act,2015

OBJECTIVE• Make arbitration a preferred mode of

settlement• Making India a hub of International

commercial arbitration.• Making arbitration expeditions, efficacies and

cost effective remedy.• Seek to curb the practice leading to wastage

of time.

OBJECTIVE

• Independence & impartiality of the Arbitrator.• Making arbitrator responsible for delay in the

arbitration proceedings attributable to him.• Reducing interference of courts.

AMENDMENTS

Definition of Court• Section 2(1)(e)• Court means ‘civil court’ for domestic arbitration• High Courts- International commercial

arbitration.• Section2(2) .• It envisages that part -1 shall apply where the

place of arbitration is in india and that provisions of sections 9,27,37(1()a) and 37(3) shall apply to International commercial arbitration even if seat of arbitration is outside india.

Section 8Reference to arbitration• Mandates judicial authority to refer the

parties to arbitration if arbitration agreement exists.

• A provision has been added to apply to court for production of arbitration agreement to the custody of opposite party

Section 9 (Interim measures)

• Arbitral proceedings have to commence within a period of 90 days from the date of order of interim measure.

• Section 27, Section 37 1(a), 37(3) shall also apply to international commercial arbitration, even if the seat of arbitration is outside India. “Bhatia International v/s Balso kaiser”

Section 11- Expeditious Appointment of arbitrator• Supreme court/ High court or designated person

by them is to appoint arbitrator within 60 days from the date of service by the opposite party.

• “Chief Justice of High Court” replaced by “High Court”, “chief justice of India” replaced by “Supreme Court”

• The decision of High Court/ Supreme Court final.• Appeal before the Supreme Court by SLP.• Fix limits on the fee payable to the arbitrators.

Section 12 .Disclosure of interest by Arbitrator before Appointment• Declaration by the arbitrator about his

independence and impartiality.• Circumstances given in V/ VII schedule very

exhaustive.• Parties to disputes may waive off the

provisions (by written agreement)• Govt. bodies may not appoint their employees

or consultants as arbitrators.

Section 17- Interim measure by Arbitral tribunal• Interim orders passed by the tribunal would

be enforceable as if it is an order of court.• If arbitral tribunal is constituted, courts should

not entertain applications under section 9 barring exceptional circumstances.

Section 24 , Expeditious Process

• Arbitral tribunal to hold the hearings for presentation of evidence or oral arguments on day to day basis

• Not to grant any adjournments unless sufficient causes shown.

• Tribunal to impose exemplary cost where adjournments is sought without sufficient cause.

Section 25 ,Expeditious Process

• Respondents’ failure to communicate his statement of defence as forfeiture of his right to file such statement of defence.

• Tribunal to continue with proceedings without treating such failure as admission of allegations by the claimant.

Section 28, Discretion to Arbitrator

• Tribunal to take into account the terms of the contract and trade usage applicable to the transaction.

• Relieves arbitrators from strictly adhering to terms of the contract while deciding the case. However, the arbitrator can not still ignore the terms of contract.

• Brings in an element of discretion in favour of the arbitrators.

Section 29A, time bound proceedings

• Award is to be made within 12 months from the date of reference

• Further extendable to six months by the consent of the parties.

• Mandate of arbitrator terminates unless the court extends it for sufficient cause or on such other terms as it may seem fit

Section 29A, time bound proceedings

• While extending the time the court may order reduction of fees of arbitrator by up-to 5%, for each month of such delay for reasons attributable to arbitrators.

• Application for extension of time shall be disposed within 60 days

Section 29-B,FAST TRACK PROCEDURE

• Tribunal makes award within 6 months• Tribunal decides the disputes on the basis of

written pleadings, documents and submissions without oral hearings unless considered necessary

• Additional fee payable to arbitrator.• Tribunal may pass the decision making to one of

the parties to proceedings to bear whole or as a part of such cost as may be decided by the tribunal

SECTION 31, Rate of interest linked to current rate• In absence of any decision of arbitrator, levy

of future interest on awarded amount @ 2% higher than the current rate of interest.

SECTION 34, Quick disposal of Challenge• Application of challenge has to be disposal within a

year from date of service of notice to opposite party.• No provision to extend this time limit• Ground of challengeInternational commercial arbitration If award is initiated by fraud or corruption Contravention with the fundamental policy of Indian

law. Conflict with the basic notions of morality and justice

SECTION 34

• Ground of challengeDomestic arbitration can be challenged on the ground of Patent

illegally on the face of award but the award shall not be set aside merely on the ground of erroneous appreciation of law or by re-appreciation of evidence

SECTION 36, No automatic Stay

• Award would not be automatically stayed by merely filing an application under Section 34.

• There has to be specific order from the court staying the execution of award.

• Court may grant stay subject to deposits of whole or part of the awarded amount.

SECTION 37, Appeal against refusal to refer dispute to arbitration under section 8

• Filing an appeal against refusal of judicial authority to refer parties to arbitration under section 8.