Since the passing of the Arbitration &
Conciliation Act of 1996, many difficulties and shortcomings came to be noticed
in the said Act; and with a view to overcome those shortcomings and difficulties,
and with a view to facilitate quick enforcement of contracts, easy recovery of
monetary claims, and award of just compensation for damages suffered, and
reduce the pendency of cases in Courts and hasten the process of dispute
resolution through Arbitration, and to encourage and strengthen the alternate
medium of dispute resolution, and to encourage investment and economic
activities, extensive Amendments have been made in the present Arbitration
& Conciliation aCT, 1996.
The amended provisions would be applicable to Arbitration
proceedings which have commenced, in accordance with the provisions of section
21 of the Act, on or after 23.10.2015, unless the parties otherwise agree to
application of amended provisions.
The
important Amendments are –
1. The definition of
“Court” contained in Section 2(1)(e) is amended whereby High Courts would have
the jurisdiction to entertain Application arising from International Commercial
Arbitration, even if the place of Arbitration is outside India.
2. Section 7 of the
Act which provides for written Arbitration Agreement, now states that communication
through electronic means would be regarded as “arbitration agreement in
writing”.
3. Section 8 of the
Act is amended whereby if an
application is made by any party or by any person claiming through or
under him, to judicial authority to refer parties to arbitration, the judicial
authority is obliged to refer the parties to arbitration, unless the judicial
authority prima facie finds that no valid arbitration agreement exists. Section
8 is further amended whereby the party applying for reference to Arbitration is
not obliged to produce the original arbitration agreement or duly certified
copy of the same if the same is in the possession of the adversary; and the
party applying for reference to Arbitration may seek direction from the Court
to direct the adversary to produce the original arbitration agreement or duly certified
copy of it.
4. Section 9 of the Act is amended whereby if
any Order of Interim measure of protection has been passed by the Court prior
to the commencement of the arbitration proceedings, then, the arbitration
proceedings must commence within a period of 90 days from the date of
such order or at such further time as the court may direct. Section 9 now places
the position of Arbitrator on the same pedestal as that of the Court in so far
granting Interim measure of protection is concerned. Section 9 says that once the
arbitral tribunal has been constituted, court would not entertain any Application
for interim measure, unless the court finds that having regard to
circumstances, the remedy provided u/s 17 of the Act (Powers of the Arbitral
Tribunal to grant Interim Reliefs) may not be efficacious; and accordingly
Section 17 is amended whereby it is deemed that Interim Orders passed by the Arbitral
tribunal are regarded as Orders of the Court for all purposes and are enforceable
in the same manner as if it were an Order of the Court.
5. Section 11 is substantially amended whereby
the authority to appoint Arbitrator is now vested in the Supreme Court, and in
the High Courts, instead of respective Chief Justices, as it was before the
amendments. Further, in this jurisdiction, the scope of inquiry for the Supreme
Court and High Courts is confined to the examination of the existence of an
arbitration agreement between the parties therein. Now it is also provided that Application for appointment of Arbitrator
must be disposed of as expeditiously as possible and effort should be made by Supreme
Court and High Courts to dispose of the said
Application within a period of 60 days from the date of service of notice to
the opposite party. It is also
provided that no appeal, including Letters Patent Appeal, would lie against the
decision of the Supreme Court and High Courts u/s 11.
6. Section 12 of the Act is amended whereby it
is provided that when an Arbitrator is approached for his possible appointment
as an Arbitrator, he must disclose in writing (a) the circumstances, if any, which
are likely to give rise to justifiable doubts regarding his independence or
impartiality; or (b) grounds which may affect his ability to complete the
arbitration within 12 months. The amendments have specified an elaborate list
of grounds in Fifth Schedule which would guide in determining whether circumstances
exist which gives rise to justifiable doubts as to the independence or
impartiality of the arbitrator, and if any of these grounds apply, the
arbitrator is required to make disclosure in writing, in a format specified in
Sixth schedule. Section 12 further
provides that a person would be ineligible to be appointed as an Arbitrator if
he happens to have relationship with the parties or the Counsel therein or with
the subject matter of the dispute and he falling in any of the categories
specified in the Seventh Schedule. Parties can however waive such “ineligibility”
by express agreement in writing after the disputes have arisen.
7. Section 17 of the Act is substantially
amended whereby it is deemed that Interim Orders passed by the Arbitral tribunal
are regarded as Orders of the Court for all purposes and are enforceable in the
same manner as if it were an Order of the Court. Further, Section 17 lists the
nature of Interim Reliefs which can be granted by the Arbitral Tribunal.
8. Section 23 of the Act is amended whereby
now it is possible for the Respondent adversary to put up a Counter Claim or
may plead set off, if the same falls within the scope of Arbitration Agreement.
9. Section 24 of the Act is amended whereby
now it s further provided that the arbitral tribunal shall, as far as possible,
hold oral hearings for the presentation of evidence or for oral argument on
day-to-day basis, and not grant any adjournments unless sufficient cause is
made out, and may impose costs including exemplary costs on the party seeking
adjournment without any sufficient cause.
10. Section 25 of the Act is amended whereby
now it is provided that in case if there was a default on the part of Respondent
to file his statement of defense within the time agreed upon or within the time
granted by the Arbitral Tribunal, the Arbitral Tribunal would have the discretion
to treat the right of the Respondent to file such statement of defence as being
forfeited.
11. Section 28 of the Act is amended whereby
now it is further provided that the arbitral tribunal whilst deciding and
making an award, must take into consideration the terms of the contract and
trade usages applicable to the transaction.
12. Section 29A is added wherein now it is
provided that Arbitral tribunal must make an Award within 12
months from the date the arbitral tribunal was duly constituted. However,
the parties may by consent extend the aforesaid period by 6 months. And if
the award is not made within such period of 18 months, then unless, the court
extends the period, prior to or after expiry of the aforesaid period on an
application by a party, the mandate of arbitrator would stands terminated. Further,
as provided in amended section 24, the arbitral tribunal shall, as far as
possible, hold oral hearings for the presentation of evidence or for oral
argument on day-to-day basis, and not grant any adjournments unless sufficient
cause is made out, and may impose costs including exemplary costs on the party
seeking adjournment without any sufficient cause.
13. Section 29B is further added wherein a
concept of Fast track procedure is contemplated. It provides that the parties
may, prior to or at the time of appointment of the arbitral tribunal, agree to
a fast track procedure, preferably a sole arbitrator chosen by the parties
therein, who shall decide the dispute on basis of written pleadings, documents
and submissions filed by the parties without any oral hearing. However, oral
hearing may be held if all parties request or if the Arbitral tribunal
considers it necessary. The award should be made in this procedure within a
period of 6 months from the date the arbitral tribunal was duly constituted.
14. Section 31 of the Act is amended whereby
now it is provided that The amount awarded by the arbitral tribunal would carry
higher interest by 2% p.a. more than the current rate of interest, from the
date of the award to the date of payment, unless otherwise specified by the
arbitral tribunal. The expression “current rate of interest” shall have the same
meaning as assigned to it under clause (b) of section 2 of the Interest Act,
1978.
15. Section 31A is inserted wherein
comprehensive provisions are made touching upon every attribute of the costs.
16. Section 34 of the Act is amended whereby
now it is clarified that an Award would be said to be in conflict with the public
policy of India, only if, (i) the making of the award was induced or affected
by fraud or corruption or was in violation of section 75 or section 81; or (ii)
it is in contravention with the fundamental policy of Indian law; or (iii) it
is in conflict with the most basic notions of morality or justice. It is
further clarified that, the test as to whether there is a contravention with
the fundamental policy of Indian law shall not entail a review on the merits of
the dispute. It is further provided that an arbitral award arising out of
arbitrations other than international commercial arbitrations, may also be set
aside by the Court, if the Court finds that the award is vitiated by patent
illegality appearing on the face of the award: Provided that an award shall not
be set aside merely on the ground of an erroneous application of the law or by
re-appreciation of evidence. It is further provided that an application u/s 34 shall
be filed by a party only after issuing a prior notice to the other party and
such application shall be accompanied by an affidavit by the Applicant
endorsing compliance with the said requirement. It is further provided that Application
under this section shall be disposed of expeditiously, and in any event, within
a period of one year from the date on which the notice referred to in
sub-section (5) is served upon the other party.
17. Section 36 of the Act is amended whereby
now it is provided that where an Application u/s 34 is
filed challenging the Award, the
filing of such an application by itself shall not render that award unenforceable.
The party has to make a separate Application in that behalf; and upon filing of
such Application, the Court may, subject to such conditions as it may deem fit,
grant stay of the operation of such award and for reasons to be recorded in
writing.
18. In the backdrop of the provision of new
section, that is section 11(14), a Fourth Schedule is inserted which prescribes
a Model Fee which may be charged by Arbitral Tribunal, subject to Rules framed
by the respective High Courts in that behalf.
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