::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
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 and reasons in the
Arbitration and conciliation bill, 1995 are as follows.
- Comprehensively cover international commercial arbitration and domestic
- 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.
Aggrieved 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
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
(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
(v) A new provision to provide that application to challenge the award is to
be disposed of by the Court within one year.
(vi) Amendment to Section 36 to the effect that mere filing of an application
for challenging the award would not automatically stay execution of the award.
Award can only be stayed where the Court passed any specific order on an
application filed by the party.
(vii) A new subsection in Section 11 to be added to the effect that an
application for appointment of an Arbitrator shall be disposed of by the High
Court or Supreme Court as expeditiously as possible and an endeavour should be
made to dispose of the matter within 60 days.
(viii) A new Section 31A is to be added for providing comprehensive
provisions for costs regime. It is applicable both to arbitrators as well as
related litigation in Court. It will avoid frivolous and meritless
(ix) Section 17 is to be amended for empowering the Arbitral tribunal to
grant all kinds of interim measures which the Court is empowered to grant, under
Section 9 and such order shall be 'enforceable in the same manner as if it is an
order of Court.
The Government of India has under its consideration proposals for making
Arbitration a preferred mode for settlement of commercial disputes by making it
more user friendly and cost effective. This will lead to expeditious disposal of
cases. The Govt. of India is committed to improve its legal framework relating
to Arbitration. These changes will introduce fairness, speed and economy in the
resolution of disputes arbitration. It will also bring arbitration practice in
India in conformity with the arbitration practices in international community.
It will also reduce the unnecessary judicial interference in the arbitration
proceedings. Shortcomings of the present process has led to Indian parties
starting arbitration proceedings abroad.