Highlights of the Arbitration and Conciliation (Amendment) Act, 2015 and The Arbitration and Conciliation (Amendment) Bill, 2018

This is a blog authored by Mahak Paliwal, a student of B.B.A L.L.B (Hons.) Symbiosis Law School, Pune. This article has been written during her internship at Cholamandal IP under the guidance of Senior Counsel at Cholamandal IP Law Firm P.Sanjai Gandhi.

Arbitration in recent times has gained prominent attraction from parties involved in the disputes especially commercial disputes. In India, the provisions pertaining to the settlement of the dispute by the means of arbitration is contained in Arbitration and Conciliation Act, 1996. The fastening the process of resolution but also, has succeeded to attract foreign investment by demonstrating sound legal framework in the nation. However, with the increased awareness about arbitration, needs of the time and relying on the recommendations of the Law Commission the state authorities decided to promulgate an amendment to the Arbitration and Conciliation Act 1996 via Arbitration Ordinance 2015. The scope of arbitration as a mode of dispute settlement has considerably flourished post the Arbitration and Conciliation (Amendment) Act, 2015. It is being increasingly preferred as a mode of commercial disputes settlement. Although, wide enough yet 2015 stood rich in loopholes. To nullify the same, the Union Cabinet led by Hon’blePrime Minister Narendra Modi approved the Arbitration and Conciliation (Amendment) Bill, 2018 drafted by a High Level Committee under the chairmanship of Hon’ble Justice B. H.Srikrishna. The bill is intended to achieve the goal of enhanced institutional arbitration with the aid of an independent body. The ratification made in 2015 act in the lieu of approved bill is likely to reduce cost, be party effective and facilitate timely disposal.

The amendments made in 2015 had caused paramount changes in the principal act. The foremost amendment was made in sec. 2 (e) which defines the term ‘Court’. The alteration in the meaning of term plainly differentiates the jurisdiction under both domestic and international commercial arbitration. The term “Court” is understood to mean only High Court of competent jurisdiction for the purpose of International Commercial Arbitration. Also, proviso (2) added to sec. 2 implies applicability of section 9(interim measures), sec. 27(taking of evidence), and sec. 37(1)(a), 37(3) to international commercial arbitration as opposed to the prior Act. Further, u/s 7 an agreement to solve dispute via arbitration entered into through electronic means shall be interpreted to mean an arbitration agreement in writing. If an interim order has been passed by the court of competent jurisdiction u/s 9(1) the proceedings shall be instituted within the time frame of next ninety days. The amended legislation further debars court from entertaining any application relating to interim measure unless exceptional circumstances exist. Only the Apex or the High Court is eligible to appoint an arbitrator as opposed to the Hon’ble Chief Justice of India or the Chief Justice of High Court (as per 1966 law) u/s 11 of the Arbitration and Conciliation (Amendment) Act, 2015. The amendment inserted a new schedule which catalogs the grounds on the basis of which the independence of arbitrator appointed u/s 12 can be put to scrutiny.

The Arbitration and Conciliation (Amendment) Act, 2015 has eradicated the loophole present in sec 17. Post-amendment the interim order pronounced by the tribunal was not enforceable by any of the parties. Now, the order of tribunal passed u/s 17 of the act stands at par with the court’s order u/s 9 of the act. Further, the amendment allows the respondents to produce counterclaim provided it lies under the umbrella of the arbitration agreement. Section 24 of the 2015 act mandated the working of the tribunal on daily basis. The amendment to section 25 secures the respondent’s right to convey his statement for pleading protection. The new amendment assigns the same meaning to interest rate under section 31 as it has been assigned under sec 2(b) of the Interest Act, 1978. Sec 34 of the Arbitration and Conciliation Act 1996 has undergone a major transformation via Arbitration Ordinance 2015. The amendment has inserted new sub section 2A, 5 and 6 in section 34. The decision that has been passed and pronounced can be pushed aside only if it is found to be against nation’s policy. For obtaining a stay on the execution of an award simply filing an application is not enough a specific order is to be obtained u/s 36. The previous act declared mere filing of an application sufficient to automatically put a stay on the operation of the grant. Lastly, the new law u/s 37(1) proficiently makes provision for an appeal where the parties have been denied an appeal against the judicial pronouncement u/s 8. It also added an explanation to sec. 48 and 57.

The Arbitration and Conciliation (Amendment) Bill, 2018 substantially provides for establishing a statutory body (Arbitration Council of India (ACI)) to promote and engage institutional arbitration in the nation, amending sec. 29A, 42A and 42B in the act and introduction section 87 in the existing act. The most renowned and distinguishing feature of the bill is the formulation of the ACI which would perform the function of grading arbitral disputes, initiating measures to promote arbitration, evolve guidelines for seeking uniform standards and maintaining electronic depository. The amendment to section 29A made back in 2015 hampered the ability of tribunal to terminate proceedings within given time period. The bill has removed timeline limit for the international arbitration and brought forth a cut off period of 12 months. The bill has introduced sec42A and 42B to do away with lacunae left not entertained by the 1996 and 2015 amended. The bill imposes a duty upon all the organs involved to maintain confidentially of the proceedings. To do away with the disparate interpretation of section 26, section 87 has been incorporated in the act. Section 87 provides makes it plain that the Amendment Act, 2015 cannot be imposed upon the parties to the arbitral dispute unless that parties agree either explicitly or impliedly to the same.

The amendment made to the Arbitration and Conciliation Act 1996 via ordinance of 2015 has excelled extraordinarily in promoting the timely process of arbitration, impartiality and independence of the arbitrators. In my opinion the amendment has made an exceptional contribution in reducing the interference of judiciary and the courts in the arbitration matters. However, in my view it will be safe to say that, the 2015 amendment does possess certain loopholes which will be improved if the Arbitration and Conciliation (Amendment) Bill, 2018 is passed and becomes a law.

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