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TMI BlogAMENDMENTS TO ARBITRATION AND CONCILIATION ACT, 1996X X X X Extracts X X X X X X X X Extracts X X X X ..... AMENDMENTS TO ARBITRATION AND CONCILIATION ACT, 1996 - By: - Mr. M. GOVINDARAJAN - Other Topics - Dated:- 21-8-2019 - - The Central Government brought an amendment to the Arbitration and Conciliation Act, 1996 ( Act for short). The said amendment bill got the assent of the President of India on 09.08.2019 and published in the Official Gazette on 09.08.2019. It is an effort to encourage institutional arbitration for settlement of disputes and make India a robust Alternative Dispute Resolution mechanism. The details of the amendment in the Amendment Act, 2019 are discussed in this article. Arbitral Institution The amendment Act brought a new institution called Arbitral Institution . For this purpose the amendment inserted a new section 2(ca) defining Arbitral Institution . The expression Arbitral Institution is defined as an arbitral institution designated by the Supreme Court or High Court under this Act. Appointment of arbitrators Section 11 of the Act provides the procedure for appointment of arbitrator. Section 11(1) provides that a person of any nationality may be an arbitrator, unless otherwise agreed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties. Section 11(2) provides that the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. Section 11(3) provides that failing any agreement in arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the Presiding arbitrator. Arbitral Institution A new section 11(3A) has been inserted by the amendment Act. The newly inserted section 11(3A) provides that the Supreme Court and the High Court shall have the power to designate Arbitral Institutions, from time to time, which have been graded by the Council under section 43-I , for the purposes of this Act. The proviso to this section provides that if there is no graded arbitral institutions are available the respective Chief Justice of the High Court may maintain a panel of arbitrators for discharging the functions and duties of the arbitral institutions. Any reference to the arbitrator shall be deemed to be an arbitral institution. The arbitrator appointed by a party shall be entitled to such fees at the rate as specified in the Fourth Schedule. The Chief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Justice of High Court shall review the panel of arbitrators. Appointment procedure The amendment brought a substitution for the long line of section 11(4). After the substitution of the same section 11(4) read as follows- 11(4) If the appointment procedure in sub-section (3) applies and- a party fails to appoint an arbitrator within 30 days from the receipt of a request to do so from the other party; and the two appointed arbitrators fail to agree on the third arbitrator within 30 days from the date of their appointment, the appointment shall be made, on an application of the party, by the arbitral institution, designated- by the Supreme Court in case of international commercial arbitration; or by the High Court in case of arbitrations other than international commercial arbitration. The amended Section 11(5) provides that failing any agreement referred to sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within 30 days from the receipt of a request by one party from the other party to so agree t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appointment shall be made on an application of the party in accordance with the provisions contained in sub-section (4) i.e., the appointment shall be made by the arbitral tribunal designated by the Supreme Court in case of international commercial arbitration or by the arbitral tribunal designated by the High Court in case of domestic arbitration. The amendment Act provides substitution for some words in long line of section 11(6). The amended section 11(6) provides that where, under an appointment procedure agreed upon by the parties- a party fails to act as required under that procedure; or the parties, or the two appointed arbitrators fail to reach an agreement expected of them under that procedure; or a person, including an institution, fails to perform any function entrusted to him or it under that procedure, the appointment shall be made, on an application of the party, by the arbitral institution designated- by the Supreme Court in case of international commercial arbitration; or by the High Court in case of arbitrations other than international commercial arbitration. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the case may be, to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment. Disclosure from the arbitrator The amended section 11(8) provides that the arbitral institutions referred to in sub-sections (4), (5) and (6), before appointing an arbitrator, shall seek a disclosure in writing from the prospective arbitrator in terms of section 12(1) and have due to regard to- any qualifications required o the arbitrator by the agreement of the parties; and the contents of the disclosure and other considerations as are likely to secure the appointment of an independent and impartial arbitrator. Appointment by arbitration institution The amended section 11(9) provides that in case of appointment of sole or third arbitrator in an international commercial arbitration, the arbitral institution designated by the Supreme Court may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities. Omission The amendment ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t omitted section 11(6A), 11(7) and 11(10). Appointment in more than one request Section 11(11) has been substituted by the amendment Act for a new one. The newly substituted section 11(11) provides that where more than one request has been made under sub-section (4) or (5) or (6) to different arbitral institutions, the arbitral institution to which the request has been first made under the relevant sub-section shall be competent to appoint. Reference to arbitral institution Section 11(12) has been substituted by the amendment Act for a new one. The newly substituted section 11(12) provides that where the matter referred to sub-sections (4), (5), (6) and (8) arise in an international commercial arbitration or any other arbitration, the reference to the arbitral institution in those sub sections shall be construed as a reference to the arbitral institution designated under sub-section (3A). Time limit Section 11(13) has been substituted by the amendment Act for a new one. The newly substituted section 11(13) provides that an application made under this section for an appointment of an arbi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trator or arbitrators shall be disposed of by the arbitral institution within a period of 30 days from the date of service of notice on the opposite party. Fees Section 11(14) has been substituted by the amendment Act for a new one. The newly substituted section 11(14) provides that the arbitral institution shall determine the fees of the arbitral tribunal subject to the rates specified in the Fourth Schedule. The explanation to this section clarified that this sub-section shall not apply to the international commercial arbitration and in arbitrations (other than international commercial arbitrations) where parties have agreed for determination of fees as per the rules of arbitral institution. Interim measures ordered by Tribunal Section 17 of the Act provides that a party may, during the arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to the arbitral tribunal for an interim measure. The amendment Act omitted the words in section 17 starting from or at any time section 36 . The amendment paves the way for filing an application f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or interim measure only during the arbitration proceeding not beyond the period. Statements of defence and claims Section 23 of the Act provides the procedure for the statements of defence and claims. The amendment Act inserted a new sub section (4) to this Act. The newly inserted section 23(4) provides that the statement of defence and claim under this section shall be completed within a period of 6 months from the date the arbitrator or all the arbitrators, as the case may be, received notice, in writing, of their appointment. Time limit for arbitral award Section 29A (1) provides the time limit within which the arbitral award is to be made. The amendment act substituted a new provision for section 29A(1). The newly substituted section 29A (1) provides that the award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of 12 months from the date of completion of the pleadings. The proviso to this section provides that the award in the international commercial arbitration may be made as expeditiously as possible and endeavor may be made to dispose of the matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r within a period of 12 months from the date of completion of the pleadings. Termination of arbitration Section 29A (4) provides that if the award is not made within the specified period, the mandate of the arbitrator shall terminate unless the Court extends it. The proviso to this section provides that if the Court finds that the delay is on the part of the arbitral tribunal the Court may order reduction of fees of arbitrators by not exceeding 5% for each month. The amendment Act inserted two additional provisos to section 29A(4). The newly inserted second proviso provides that where an application is made for time extension and is pending, the mandate of the arbitrator shall continue till the disposal of the said application. The third proviso provides that the arbitrator shall be given a reasonable opportunity before reduction of fees by the Court. Setting aside the arbitral award Section 34(2)(a) provides the grounds for setting aside the arbitral award by the court if the party making the application furnishes the proof for the grounds. The amendment Act substituted the words establishes on the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the record of the arbitral tribunal that instead of the words furnishes proof that . Confidentiality of information The amendment Act inserted a new section 42A which provides that notwithstanding anything contained in any other law for the time being in force, the arbitrator, the arbitral institution and the parties to the arbitration agreement shall maintain confidentiality of all proceedings except award where its disclosure is necessary for the purpose of implementation and enforcement of award. Protection of action taken in good faith The amendment Act inserted a new section 42B which provides that no suit or other legal proceedings shall lie against the arbitrator for anything which is in good faith done or intended to be done under this Act or rules or regulations made there under. Arbitration Council of India The amendment Act inserted a new part, Part IA dealing with the establishment o the Arbitration Council of India, its functions and powers, power to make regulations etc., Effect of arbitral proceedings prior 23.10.2015 The amendment Act inserted a new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 87. Section 87 provides that unless the parties otherwise agree, the amendments made to this Act by the Arbitration and Conciliation (Amendment) Act, 2015 shall- not apply to- arbitral proceedings commenced before the commencement of the Arbitration and Conciliation (Amendment) Act, 2015; court proceedings arising out of or in relation to such arbitral proceedings irrespective of whether such court proceedings are commenced prior to or after the commencement of the Arbitration and Conciliation (Amendment) Act, 2015; apply only to arbitral proceedings commenced on or after the commencement of Arbitration and Conciliation (Amendment) Act, 2015 and to court proceedings arising out of or in relation to such arbitral proceedings. This section came into effect from 23.10.2015. Qualification of Arbitrator The amendment Act inserted Eighth Schedule which prescribes the qualifications and experience required for the appointment of arbitrator. The following are the qualifications required for the appointment of an arbitrator- An Advocate having 10 years of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xperience; A practicing Chartered Accountant having 10 years practice; A practicing Cost Accountant having 10 years practice; A Company Secretary having 10 years practice; An Officer of Indian Legal Service; An Officer with a law degree having 10 years experience in the legal matters in the Government, Autonomous Body, Public Sector Undertakings or at a senior level management position in private sector; An Officer with Engineering degree having 10 years experience as an Engineer in the Government, Autonomous Body, Public Sector Undertakings or at a senior level management position in private sector or self employed; An Officer having senior level experience of administration in the Central Government or State Government or having experience of senior level management of a Public Sector Undertaking or a Government Company or a private company of a repute; A person having educational qualification at degree level with 10 years of experience in scientific or technical stream in the fields of telecom, information technology, intellectual property rights or other specialized areas i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Government, Autonomous body, Public sector undertakings or a senior level managerial position in a private sector. General norms applicable to arbitrator The arbitrator shall be a person of general reputation of fairness, integrity and capable to apply objectivity in arriving at settlement of disputes. He must be impartial and neutral and avoid entering into any financial business or other relationship that is likely to affect impartiality or might reasonably create an appearance of partiality or bias amongst the parties. He should not involve in any legal proceedings and avoid any potential conflict connected with any dispute to be arbitrated by him. He shall be conversant with the Constitution of India, principles of natural justice, equity, common and customary laws, Commercial laws, labor laws, law of torts, making and enforcing the arbitral awards. He should possess robust understanding of the domestic and international legal system on arbitration and international best practices in regard thereto. He should be able to understand the key elements of the contractual obligatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns in civil and commercial disputes and be able to apply the legal principles to a situation under dispute and also apply judicial decisions on a given matter relating to arbitration. He should be capable of suggesting, recommending or writing a reasoned and enforceable arbitral award in any dispute which comes before him for adjudication. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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