The Arbitration and Conciliation (Amendment) Ordinance, 2015

The President on 23rd October 2015 promulgated an ordinance to amend the Arbitration and Conciliation Act, 1996. The Ordinance is majorly aimed at easing the business for foreign investors in India. Some of the changes made by the Ordinance are:
1. In Section 2(1)(e) of the Act the ordinance has divided the definition of “court” in two parts. For the purpose of arbitration other than international commercial arbitration “court” means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary civil jurisdiction, whereas for the purpose of international commercial arbitration “court” means the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of courts subordinate to that High Court.
2. A proviso to Section 2(2) is added which provides that subject to an agreement to the contrary Section 9, 27, 37(1)(a), 37(3) shall also apply to international commercial arbitration, even if the place of arbitration is outside India, and an arbitral award made or to be made in such place is enforceable and recognised under the provisions of part II of the Act.
3. In Section 7(4)(b) after the words “or other means of telecommunication”, the words “including communication through electronic means” has been inserted.
4. Section 8(1) is amended to provide that a judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, on application by a party to the arbitration agreement or a person claiming through or under him, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists. A proviso is also added to Section 8(2) providing that where a original arbitration agreement or its certified copy is not available with a party so applying and it is retained by the other party, than the party applying for such reference may also file a petition praying the court to call upon the other party to produce the original arbitration agreement its duly certified copy before that court.
5. In Section 9 sub-sections (2) and (3) have been inserted which provide that after a court has ordered interim measure under Section 9 (1), the arbitral proceedings shall commence within a period of ninety days from the date of such order or within such further time as the court may determine. It is also been provided that once the tribunal has been constituted, the court shall not entertain an application for interim measure, unless the court finds that circumstances exist which may not render the remedy provided under Section 17 efficacious.
6. In Section 11 the words “the Chief Justice or any person or institution designated by him” wherever they occur are substituted by the words “the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court”. Also it is provided through Section 11(13) that an application made for the appointment of an arbitrator shall be disposed of as expeditiously as possible and an endeavour shall be made to dispose of the mater within the period of sixty days from the date of service of notice on the opposite party.
7. Section 12 (1) is substituted to provide in detail the circumstances which a person appointed as arbitrator must disclose. Schedule 5 is also added to the Act which provides the guidelines to determine whether the circumstances exists which give rise to justifiable doubts as to the independence or impartiality of an arbitrator. Schedule 6 is also added which provides the form in which such disclosure should be made. Section 12(5) along with the Seventh Schedule is inserted which provides that any person whose relationship, with the parties or counsel or the subject matter of the dispute, falls under any of the categories specified in the Seventh schedule shall be ineligible to be appointed as an arbitrator.
8. Section 17 is been substituted to provide in detail the interim measures that a party can claim from the arbitral tribunal sub-section (2) is also added to clarify that an order issued by the arbitral tribunal under Section 17(1) shall be deemed to be an order of the court for all purposes and shall be enforceable under the Code of Civil Procedure, 1908 in the same manner as if it were an order of the Court.
9. Section 29-A is inserted to specify that an award shall be made by the arbitral tribunal within the period of twelve months from the date the arbitral tribunal enters upon the reference. This period may be extended for a period not exceeding six months with the consent of the parties. It is also provided that if the award is not made within the period of 12 months or the extended period, the mandate of the tribunal shall terminate unless the court has, either prior to or after the expiry of the period so specified, extended the period.
10. Section 29B is also inserted providing that the parties to an arbitration agreement, may, at any stage either before or at any time of appointment of the arbitral tribunal, agree in writing to have their dispute resolved by fast track procedure which include among others that the arbitral tribunal may decide the dispute on the basis of written pleadings, documents and submissions filed by the parties without any oral hearing.
11. In Section 34, the Explanation in sub-section (2) is substituted by Explanation (1) and (2) clarifying that an award will 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 (Explanation 2 provides 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) ; or
(iii) It is in conflict with the most basic notions of morality or justice.
Explanation (2A) is also inserted to provide 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 it shall not be set aside merely on the ground of an erroneous application of law or by re-appreciation of evidence. Similar changes are also made in Section 48 of the Act.
12. Section 37(1) is amended to provide that an appeal may also lie against an order refusing to refer the parties to arbitration under Section 8 of the Act.
13. Schedule 4 is also inserted providing model fee of arbitration in accordance with the sum in dispute.

2 comments

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    Arbitration & Conciliation (Amendment) 2015 has the following lacuna:

    (i) In Schedule 6, the time period of completing arbitral proceedings does not correspond to the amended provisions of Section 12; it should be one year.
    (ii) By not touching the time period of completion of arbitral proceedings and court proceedings of cases already in progress before the promulgation of ordnance, such old cases will get further delayed (both in arbitration and courts) as the effort will be directed only to new cases putting the old cases to maybe cold storage.

    • Avatar

      kindly refer to section 29A in this regard which mandates completion of arbitral proceedings within a period of 18 months and further extension to be granted only by court. The section shall apply to even pending arbitral proceedings also, since where ever the Ordinance has restricted the applicability of Ordinance it has done so in express terms.
      section 29A being a procedural section it should apply to pending cases as well.

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