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Amendments to the Arbitration and

Conciliation Bill, 2015By:PIB| August 26, 2015

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The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave

its approval for amendments to the Arbitration and Conciliation Bill, 2015 takinginto consideration the Law Commissions recommendations, and suggestions

received from stake holders. The Government of India has decided to amend the

Arbitration and Conciliation Act, 1996 by introducing the Arbitration and

Conciliation (Amendment) Bill, 2015 in the Parliament.

The salient features of the amendments are as under:

(i) In order to ensure neutrality of arbitrators, it is proposed to amend Section 12to 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

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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 months

period.

(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 ofIndian 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.

(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 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 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 litigation/arbitration.

(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.

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Topics:

Amendments to the Arbitration and Conciliation Bill (http://www.livelaw.in/tag/amendments-to-the-

arbitration-and-conciliation-bill/)

Arbitration and Conciliation Bill 2015 (http://www.livelaw.in/tag/arbitration-and-conciliation-bill-2015/)

Law Commission of India (http://www.livelaw.in/tag/law-commission-of-india/)

Law relating to Arbitration (http://www.livelaw.in/tag/law-relating-to-arbitration/)

Apart from above, amendments in Sections 2(1)(e) , 2(1)(f)(iii), 7(4)(b), 8(1) and (2),

9, 11, 14(1), 23, 24, 25, 28(3), 31(7)(b), 34 (2A) 37, 48, 56 and in Section 57 are also

proposed for making the arbitration process more effective.

Background:

The Government of India has under its consideration proposals for makingArbitration 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. 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. The Law Commission

has also submitted a Supplementary to Report No. 246 on Amendments to theArbitration Act, 1996 on Public Policy- Developments post Report 246, wherein

the Law Commission taking into account subsequent decisions of the Supreme

Court has recommended reformulation of amendment in Section 34(2)(b) of the

Act.

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