Key highlights of Arbitration and Conciliation (Amendment) Ordinance, 2015 #indianlaws

President of India on 23rd October 2015 promulgated ordinance namely, Arbitration and Conciliation (Amendment) Ordinance, 2015 bringing significant changes to the Arbitration and Conciliation Act, 1996 

  • Substituted meaning of the term ‘Court‘ – [Section 2(e)] – The new definition now makes a distinction between domestic and international commercial arbitration. Court inferior to High Court shall not have the jurisdiction to entertain arbitration application involving one foreign party.
  • In section 2(f)(iii) – the word “a company or” has been omitted from the definition of international commercial arbitration.
  • Applicability of 9, 27 and 37(1)(a) extended to International Commercial Arbitration – [Section 2(2)] – The insertion of proviso to this sub-clause has extended the applicability of sections 9 (pertaining to interim measures by the court), 27 (regarding court assistance in taking evidence), 37(1)(a) (regarding appeal against orders granting or declining measures under Section 9) and 37(3) (providing for second appeal) even in the cases of international arbitration where seat of arbitration is not India.
  • Arbitration Agreement (when to be considered as in writing – Section 7(4)) – The arbitration agreement is also be treated as in writing if it is contained in an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement. Now the scope within means of telecommunication also includes communication through electronic means.
  • Arbitration Agreement (Non-availability of original or certified copy) – In such event, the concerned party can file an application to seek direction from Court whereby calling upon the other party to produce the same.
  • Commencement of Arbitral proceedings (Amendment to Section 9) – Where Court passes any interim measure, as provided for in Section 9, the arbitral proceedings must commence within ninety (90) days from the date of passing of such order or such time as determined by Court. Further, once the arbitral tribunal has been constituted, unless court finds that remedies under Section 17 have been rendered inefficacious, no application under Section 9(1) would be entertained.
  • Appointment of Arbitration (Amendment in Section 11) – The application for appointment of Arbitrators pending before the courts to be disposed of speedily and within the maximum time limit of 60 days by Supreme Court, High Court or any entity nominated by the Supreme Court or High Court (instead of the Chief Justice as it was presently), as applicable. Further, the High Court may such rules as necessary for determination of fees of the arbitral tribunal and mode of payment thereof, however, such rules would not be applicable to international commercial arbitration or where parties concerned have agreed on fees to be determined as per applicable rules of the relevant arbitral institution.
  • Neutrality of Arbitrator – Provisions concerning the independence of arbitrators have been more clarified by amending Section 12 of the 1996 Act. A new schedule (Schedule five) have been inserted detailing requisite grounds. The arbitrator to be appointed is now required to disclose all essential details like existence of direct or indirect relationship in any form with any of the parties concerned, factors likely to affect ability of arbitrators to devote sufficient time in completing the entire arbitration within 12 months etc.
  • Substitution of Section 17 of the 1996 Act (Interim measures as ordered by Arbitral Tribunal) – Party may during the proceedings or at any time after the making of award or before it is enforced, apply to the tribunal for appointment of a guardian for a minor or person of unsound mind for the purposes of such proceedings; interim measures protecting goods, or amount of money, or property which is subject matter of the dispute; interim injunction or the appointment of a receiver or such other measures for protection as may appear just to the tribunal.
  • Filing of counter claim or set-off (Amendment of section 23) – Sub-section 2A has been inserted to this section whereby Respondent may also file a counter claim or plead set-off.
  • Hearing and Evidence (Section 24) – The tribunals shall as far as possible, hold oral hearings for presentation of evidence or for oral argument on day-to-day basis and shall not grant adjournments unless sufficient cause is made. Costs including exemplary costs may be imposed on the party seeking adjournment without sufficient cause.
  • Statement of Defence by Respondent – Forfeiting rights (Section 25) – Where Respondent party fails to communicate their statement of defence within the time frame agreed upon by the parties or determined by the arbitral tribunal, the tribunal shall have the discretion to treat the right of the respondent party to file such a statement of defence as having been forfeited.
  • Time limit for passing arbitral award – (Insertion of new Section 29A) – Award is required to be made within a period of 12 months. The provision now also provides for additional fees to the tribunal if an award is made between six months and where parties give consent to an extension, it shall be made for a period up which can be extended upto six months. Thereafter any further extension can come only through the intervention of Court.
  • Fast track procedure (Section 29B) – Parties under this provision may agree in writing to have their dispute resolved by such procedures as provided for in sub-clause (3) of the section. The award shall be made within six months and there shall be no oral hearing. The decision will have to 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.
  • Cost Regime (Insertion of Section 31A) – A specification provision has now been provided introducing costs regime for arbitration and arbitration related disputes.
  • Award if conflicting public policy (Amendment to Section 34) – where award is in conflict with public policy under Section 34, its scope has been widened to now also include besides contravention with Sections 75 or Section 81, contravention if with fundamental policy of Indian law or with the most basic notions of morality or justice.
  • Stay of award (Substitution of Section 36) – An arbitration award shall only be stayed by a specific order of the court.