The President of India had promulgated an ordinance, for amending the Arbitration & Conciliation Act, 1996, which had come into force w.e.f. 23rd October 2015. This Ordinance was later placed in Parliament and passed. The Arbitration and Conciliation (Amendment) Act, 2015 received the assent of the President of India on 31st December 2015 and published in the Gazette of India. To get a copy of the Act click here. The amendments are prospective in nature and will not affect any arbitration proceedings commenced before 23rd October 2015.
The salient features of the amendments are as under:-
- Sec. 11- Disposal of application for appointment of arbitrator and arbitrator’s fees
In order to avoid delay in applications filed before Supreme Court and High Courts, for the appointment of arbitrators, it is provided that, the courts shall endeavour to dispose of the matter within a period of sixty days. Further, a schedule of fee payable to arbitrators has been provided in Fourth Schedule.
- Sec. 12- Disclosure by arbitrator-Bar on appointment of related parties
In order to ensure the neutrality of arbitrator, it has been provided that when a person is approached in connection with the possible appointment of the arbitrator, he shall disclose in writing about the 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, as mentioned in 7th Schedule he shall be ineligible to be appointed as an arbitrator. The proviso to this section provides that a related party can be appointed only with the written agreement of the parties subsequent to the arising of the dispute and invalidates all agreements entered prior to this amendment, to the contrary.
- Sec. 24-Exemplary cost for seeking adjournment
A proviso has been inserted in Sec 24 providing for exemplary costs for seeking adjournments without sufficient cause.
- Sec. 25-Forfeiture of right to file reply
By amendment of Sec 25, the arbitrator has been given the power to forfeit the right of the respondent to file a reply to claim, in case of default in filing of reply, without sufficient cause.
- Sec. 29A-Time limit for making award
A new section has been inserted stating 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 the 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, the arbitrator may get additional fees, if the parties may agree.
- Sec. 29B-Fast track arbitration procedure
A provision for fast track procedure for conducting arbitration has been inserted. Parties to the dispute may agree that their dispute be resolved through the fast track summary procedure. Award in such cases shall be given in six months period.
- Sec. 34-Challenge to arbitration award
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 of 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. A new provision to provide that application to challenge the award is to be disposed of by the Court within one year.
- Sec. 36-No automatic stay of award on appeal
Filing of an application under Sec 34 challenging the arbitration award does not automatically stay the execution of the award. The award can only be stayed where the Court passed any specific order on an application filed by the party. In the case of award for payment of money, the court can also direct deposit of money before granting a stay.
- Sec. 31A-Provision for payment of costs of arbitration
A new Section 31A is 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 litigation/arbitration.
Apart from above, Sections 2(1)(e) , 2(1)(f)(iii), 7(4)(b), 8(1) and (2), 9, 14(1), 17, 23, 28(3), 31(7)(b), 34 (2A) 37, 48, 56 and Section 57 are also amended.
The Arbitration and Conciliation (Amendment) Act, 2015, in Sec. 26 provides that the amendments shall not apply to the arbitral proceedings commenced, in accordance with the provisions of Sec.21 of the principal Act, before the commencement
of this Act (ie. before 23.10.2015), unless the parties otherwise agree.