ARBITRATION AND CONCILLIATION ACT,1996

 

The Arbitration and Conciliation Act, 1996 improves upon the previous laws regarding arbitration in India namely the Arbitration Act, 1940, the Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and Enforcement) Act, 1961.Further, the new statute also covers conciliation which had not been provided for earlier.The Act also derives authority from the UNCITRAL Model law on International Commercial Arbitration and the UNCITRAL rules on conciliation.The Model law on International Commercial Arbitration was framed after taking into consideration provisions regarding arbitration under various legal systems. Thus, it is possible to incorporate the model law into the legal system of practically every nation.The Act of 1996 aims at consolidating the law relating to domestic arbitration, international commercial arbitration, enforcement of foreign arbitral awards and rules regarding conciliation.

The main objectives of the Act are as follows:

  • To ensure that rules are laid down for international as well as domestic arbitration and conciliation.
  • To ensure that arbitration proceedings are just, fair and effective.
  • To ensure that the arbitral tribunal gives reasons for its award given.
  • To ensure that the arbitral tribunal acts within its jurisdiction.
  • To permit the arbitral tribunal to use methods such as mediation and conciliation during the procedure of arbitration.
  • To minimise the supervisory role of courts.
  • To ensure that an arbitral award is enforceable as a decree of the court.
  • To ensure that the result of conciliation proceedings may be treated as arbitral awards on agreed terms.
  • To treat awards given in a foreign country to which any one of the two international conventions apply as followed by India as being a foreign arbitral award.

Part I relates to domestic arbitration, Part II relates to enforcement of certain foreign awards, Part III provides for conciliation and Part IV contains certain supplemental provisions.

Part I may be applied only where the seat/place of arbitration is in India except where a particular law provides that the dispute cannot be submitted for arbitration.

SALIENT FEATURES OF THE NEW BILL

  • AMENDMENT TO SECTION 11 (APPOINTMENT OF ARBITRATORS)

The amendment seeks to change the present system of appointment of arbitrators by the Supreme Court or High Court, to a system where the arbitrators shall be appointed by the “arbitral institutions” designated by the Supreme Court or High Court;

Under the new bill, the appointment of an arbitrator shall be made on an application by the party, to 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 arbitrations, as the case may be. The Supreme Court and High Court shall have the power to designate arbitral institutions, which have been graded by the Arbitration Council of India. However, in the case of those High Courts within whose jurisdiction graded arbitral institution are not available, then, the Chief Justice of the concerned High Court may maintain a panel of arbitrators for discharging the functions and duties of an arbitral institution.

An application made by a party for appointment of an arbitrator shall be disposed of by the arbitral institution within a period of thirty days from the date of service of the notice to the other party, thereby disposing of the applications in an expeditious manner.

The amendment eliminates the need to file a formal application for appointment of an arbitrator before the court, thus speeding up the process by reducing the burden from the court and bringing down the inordinate delays occurring in dispute resolution.

  • AMENDMENT TO SECTION 23 (STATEMENTS OF CLAIM AND DEFENCE)

Under the amendment the statement of claim and statement of defence shall be completed within a period of six months from the date the appointment of an arbitrator, thus creating a strict timeline for completion of pleadings for the purpose of section 29A, for ensuring a speedy disposal of arbitral proceedings.

  • AMENDMENT TO SECTION 29A (TIME-LIMIT FOR ARBITRAL AWARD)

The award in matters other than international commercial arbitrations shall be made by the arbitral tribunal within a peAriod of twelve months from the date of completion of pleadings.

However, the awards in the matter of international commercial arbitrations shall be made as expeditiously as possible and endeavour may be made to dispose of the matter within a period of twelve months from the date of completion of pleadings.

The amendment seeks to change the commencement of the timeline from the date of the ‘constitution of the tribunal’ to the date of ‘completion of pleadings’. The completion of pleadings under the amendment shall mean filing of statement of claim and statement of defence.

Further the amendment seeks to relax the time limit for completion of the international commercial arbitration, because of the perceived difficulty of working within the time frame of twelve months in many international commercial arbitrations.

  • INTRODUCTION OF SECTION 42A (CONFIDENTIALITY OF INFORMATION)

Under the amendment the arbitrator, the arbitral institution and the parties to the arbitration agreement shall maintain confidentiality of all arbitral proceedings except where its disclosure is necessary for the purpose of implementation and enforcement of the award. The amendment mandates that the arbitrator, arbitral institution and the parties shall keep confidentiality of all arbitration proceedings. It binds the parties to an arbitration agreement to very broad confidentiality obligations with a single exception.

  • INTRODUCTION OF SECTION 42B (PROTECTION OF ACTION TAKEN IN GOOD FAITH)

The amendment seeks to protect the arbitrator/s from any suit or other legal proceedings for any action or omission done in good faith in the course of arbitration proceedings. The immunity to the arbitrators will ensure independence of the arbitrators while conducting the arbitral proceedings without any fear of proceedings ensuing therefrom.

 

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