Cabinet approves amendments to arbitration and conciliation Acts

The union cabinet toady approved amendments to the arbitration and conciliation laws in a bid to ensure neutrality of the arbitrators as also to fast-track the process and eliminate chances of fraud or corruption.

In order to ensure neutrality of arbitrators, it is proposed that a person being considered for appointment as arbitrator should disclose in writing about existence of any relationship or interest of any kind with the parties concerned.

Further, if a person is having specified relationship, he will not be eligible to be appointed as an arbitrator.

The arbitral tribunal should 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 per cent 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.

In order to fast-track procedure for conducting arbitration, parties have to agree to fast-track the dispute resolution mechanism. Award in such cases will be given in six months period.

To limit the grounds for challenging an arbitral award, to term 'Public Policy of India" (as a ground for challenging the award) has been restricted 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.

A new provision provides that application to challenge the award is to be disposed of by the court within one year.

Also, 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.

A new sub-section in Section 11 to be added to the effect that an application for appointment of an arbitrator shall be disposed of by the high courts or the Supreme Court as expeditiously as possible and an endeavour should be made to dispose of the matter within 60 days.

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 litigation/arbitration.

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 the court.

Apart from above, amendments to various sections are also proposed for making the arbitration process more effective.

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 Law Commission of India in its 246th report has recommended various amendments in the Arbitration and Conciliation Act, 1996, so that India may become a hub of International Commercial Arbitration.