Amendments to the Arbitration and Conciliation Bill, 2015

The amendments to this Bill are based on the Law Commission’s recommendations and suggestions received from stakeholders. Law Commission of India (LCI) in its 246th Report had recommended various amendments in Arbitration and Conciliation Act, 1996 in order to pave way for India to become a hub of International Commercial Arbitration.

Law commision observed in its 246th report that the Act the enacted withanaim to consolidate and amend the law relating to domestic arbitration and international commercial arbitration. Statement of objects andreasons in the Arbitration and conciliation bill, 1995 are as follows.

• Comprehensively coverr inrternational commercial arbitration and domestic arbitration;
• Minimise the supervisory role of courts in the arbitral process;
• ensure that final arbitral award is enforced in the same manner as the decree of court.

Aggrevied party from the arbitration decision has the power to go to court under the section 34 of the act. Law commission believes that the power given under this section to the courts should not be excessively used otherwise it undermines the whole process of arbitration. Award from arbitration should be set aside only in the following cases.

• if it is against the fundamental policy of India;
• against the justice and morality;
• if the award is illegal, illegality should not be mere a technical illegality;

In light of this government has come up with the changes to the Arbitration and conciliation act. The salient features of the amendments are as under:

(i) In order to ensure neutrality of arbitrators, it is proposed to amend Section 12 to the effect that when a person is approached in connection with possible appointment of arbitrator, he shall disclose in writing about existence of any relationship or interest of any kind, which is likely to give rise to justifiable doubts. Further, if a person is having specified relationship, he shall be ineligible to be appointed as an arbitrator.

(ii) Insertion of a new provision that the Arbitral Tribunal shall make its award within a period of 12 months. Parties may extend such period up to six months. Thereafter, it can only be extended by the Court, on sufficient cause. The Court while extending the period may also order reduction of fees of arbitrator(s) not exceeding five percent for each month of delay, if the court finds that the proceedings have been delayed for reasons attributable to the arbitral tribunal. If the award is made within a period of six months, arbitrator may get additional fees if the parties may agree.

(iii) It is proposed to insert a provision for fast track procedure for conducting arbitration. Parties to the dispute may agree that their dispute be resolved through fast track procedure. Award in such cases shall be given in six months period.

(iv) Amendment of Section 34 relating to grounds for challenge of an arbitral award, to restrict the term ‘Public Policy of India” (as a ground for challenging the award) by explaining that only where making of award was induced or affected by fraud or corruption, or it is in contravention with the fundamental policy of Indian Law or is in conflict with the most basic notions of morality or justice, the award shall be treated as against the Public Policy of India.

(v) A new provision to provide that application to challenge the award is to be disposed of by the Court within one year.

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