Monday, October 26, 2015

Quick Overview: Arbitration (Amendment) Ordinance, 2015

Below is Guest Post from Paavni Anand. Paavni is a fourth year student at the West Bengal National University of Juridical Sciences, Kolkata.

President Pranab Mukherjee has promulgated the Arbitration and Conciliation Amendment Ordinance, 2015 to amend the Arbitration and Conciliation Act 1996. The Ordinance is largely aimed at encouraging ease of doing business in India in a bid to promote foreign investment in India. The following major amendments have been proposed: 

1. A distinction has been made as regards to jurisdiction for international commercial arbitration, and for all other matters. For the former, the appropriate High Court shall have jurisdiction, whereas for the latter, the principal Civil Court of original jurisdiction or the High Court shall have jurisdiction. 

2. The following sections shall apply to international commercial arbitration even when the place of arbitration is not in India: 

  • Section 9 which deals with interim measures by the Court, 
  • Section 27 that deals with Court assistance in taking evidence, 
  • Section 37(1)(a) which states than an appeal shall lie on orders granting or refusing to grant measures under Section 9, and 
  • Section 37(3) which states that no second appeal shall apply in such cases 
3. In a case the arbitration agreement or certified copy thereof is not available to the party applying for reference for arbitration, such party can file an application praying the Court to call upon the other party to produce the same. 

4. If the court passes any interim measure under Section 9, the arbitral proceedings must commence within 90 days of the court doing so. 

5. No application for interim measure under Section 9 shall be entertained after the arbitral tribunal has been constituted unless the remedies under Section 17 have been rendered inefficacious. 

6. The High Court may frame rules for the purpose of determination of fees of the arbitral tribunal and the manner of its payment to the arbitral tribunal. However, such rules shall not apply to international commercial arbitration and in arbitrations where parties have agreed for determination of fees as per the rules of an arbitral institution. 

7. The provisions to ensure independence of arbitrators have been elaborated upon under Section 12. The Fifth Schedule has also been inserted enumerating certain grounds for the same. A potential arbitrator must disclose in writing circumstances such as the existence of direct or indirect, past or present relationship with any of the parties or in relation to the subject matter of the dispute which is likely to give doubts as to independence shall be disclosed. Further disclosures in writing with respect to circumstances which are likely to affect their ability to devote time towards the arbitration shall be made. The applicability of this sub-section can be waived by the parties in writing, subsequent to the dispute having arisen. 

8. Interim measures ordered by the arbitral tribunal have been delineated as follows: 

  • Appointment of a guardian for a minor or person of unsound mind 
  • Measures protecting goods, or amount of money, or property which is subject matter of the dispute 
  • Interim injunction or appointment of receiver 
  • Such other measures for protection 
9. A time limit of twelve months from the date of entry of the tribunal upon reference has been provided under Section 29A before which the award shall be made by the tribunal. Additional fees shall be provided to the tribunal if an award is made between six months. If the parties give consent to an extension, it shall be made for a further period up to six months. 

10. Fast track procedure has been instituted under Section 29B wherein parties may agree in writing to have their dispute resolved by a fast track procedure. The award shall be made within six months.There shall be no oral hearing, and decisions shall be made on the basis of written pleadings, documents, and submissions filed by the parties, along with any further information called for from the tribunal. Oral hearings shall be made if all the parties agree and the tribunal finds it necessary. A new Section 31A has been added giving specific provisions for costs regime. 

11. The ambit of setting aside an award for being in conflict with public policy under Section 34 has been broadened to include not only contravention with Section 75 or Section 81, but also if it is in contravention with the “fundamental policy of Indian law” or if it in conflict with the “most basic notions of morality or justice”. 

The ordinance is largely in line with the recommendations put forth in the 246th Report of the Law Commission of India. The amendments would be a step forward in making arbitration an easier, faster and more cost effective method of dispute resolution, especially to attract foreign investors to invest in India. 

The full text of the ordinance can be accessed below.

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