The Lok Sabha on Thursday (17 December) passed by a voice vote the Arbitration and Conciliation (Amendment) Bill, 2015, which aims to make the country more investor-friendly. The bill, which seeks to amend the Arbitration and Conciliation Act of 1996, was introduced in the Lok Sabha on December 3 by Law and Justice Minister D.V. Sadananda Gowda.
Replying to a debate on the bill, the minister said it would give a new dimension to the Indian legal system.
Suggestions made by a parliamentary committee and the Law Commission were taken into consideration while preparing it, Gowda said, adding that the government was working to update the country’s legal system.
Under the Arbitration and Conciliation Act, the relevant court for all arbitration matters would be a principal civil court or high court with original jurisdiction. The Amendment Bill modifies this to lay down that in the case of international arbitration, the relevant court would only be the relevant high court.
Part I of the Arbitration and Conciliation Act that included provisions relating to interim orders by a court, order of the arbitral tribunal, appealable orders etc. only applied to matters where the place of arbitration was India. Under the new Amendment Bill, these provisions would also apply to international commercial arbitrations even if the place of arbitration is outside India. However, this would apply unless the parties agreed otherwise.
Under the Arbitration and Conciliation Act, if any matter that is brought before a court is the subject of an arbitration agreement, parties will be referred to arbitration. The Bill amends this by laying down that this power of referral is to be exercised by a court even if there is a previous court judgment to the contrary. The Court must refer the parties to arbitration unless it thinks that a valid arbitration agreement does not exist.
The existing Act states that a party to arbitration may apply to a court for interim relief before the arbitration is complete. For example, a party may seek interim protection of goods, amounts, property, etc. that is the subject matter of the arbitration before a court. The Amendment Bill changes this provision to specify that if the Court passes such an interim order before the commencement of arbitral proceedings, the proceedings must commence within 90 days from the making of the order, or within a time specified by the Court. Moreover, it is provided in the Amendment bill that the Court must not accept such an application, unless it thinks that the arbitral tribunal will not be able to provide a similar remedy.
The existing Act permits the court to set aside an arbitral award if it is in conflict with the public policy of India. This includes awards affected by (i) fraud or corruption, and (ii) those in violation of confidentiality and admissibility of evidence provisions in the Act. The Amendment Bill modifies this provision to also include those awards that are (i) in contravention with the fundamental policy of Indian Law or (ii) conflict with the notions of morality or justice, in addition to the grounds already specified in the Act.
The Arbitration and Conciliation Act allows the parties to appoint arbitrators. If they are unable to appoint arbitrators within 30 days, the matter is referred to the court to make such appointments. The Amendment Bill now states that, at this stage, the Court must confine itself to the examination of the existence of a valid arbitration agreement.
The Amendment Bill also makes changes to the time period for arbitral awards. This Bill has a provision that requires an arbitral tribunal to make its award within 12 months. This may be extended by a six month period. If an award is made within six months, the arbitral tribunal will receive additional fees. If it is delayed beyond the specified time because of the arbitral tribunal, the fees of the arbitrator will be reduced, up to 5%, for each month of delay.
At the same time, the Bill also make changes in the time period for disposal of cases by a Court. The Bill provides that any challenge to an arbitral award that is made before a Court, must be disposed of within a period of one year.
In order to facilitate faster disposal of disputes, the Bill permits parties to choose to conduct arbitration proceedings in a fast track manner. The award would be granted within six months.
With the passing of this Bill by Lok Sabha, this Bill is now required to be passed by the Rajya Sabha.
