Government proposes time-bound arbitration with fast-track option

With an eye to make India an arbitration hub, the union cabinet on Wednesday approved a number of amendments to the Arbitration and Conciliation Bill, 2015 to make the resolution of commercial disputes less time-consuming with an option of fast-tracking the process.

The cabinet approved the a series of amendments based on the recommendations of the Law Commission and inputs from other stakeholders to ensure that every arbitration was completed within 12 months, a period extendable by another six months.

Thereafter any further extension would be granted by the court only on being satisfied to existence of sufficient grounds. However, such an extension would be accompanied with reduction in the fee of the arbitrator if it comes to the conclusion that the delay was attributable to the acts of the arbitrator.

There is also an incentive provision where an arbitrator may get an additional fee if an award is made within six months. But this would be subject to parties to the arbitration agreeing to extend monetary appreciation.

The amendments approved also provides for fast track arbitration - wherein the arbitration award will be given in six months' time.

In a proposed amendment to ensure neutrality, there would an amendment to section 12 of the bill, mandating the arbitrator to "disclose in writing about existence of any relationship or interest which may give rise to justifiable doubts about his neutrality". Any person in the position of conflict of interest would be ineligible to be appointed as an arbitrator.

Another significant proposed amendment to section 36 says that a challenge to the arbitration award before the court would not halt its implementation unless the court put its execution on hold. Coupled with this, another proposed amendment mandates that court will dispose it off within one year.

In yet another significant proposed amendment, section 11 says that an application for appointment of an arbitrator shall be disposed of by the high court or Supreme Court as expeditiously as possible and should be decided within 60 days.

Section 31A is proposed to be added to govern the "cost regime" of the arbitration that would be applicable to both to arbitrators as well as related litigation in court with the intention of avoiding "frivolous and meritless" litigation.

The amendment to section 17 would empower the arbitral tribunal to grant all kinds of interim measures which the courts are empowered to grant and would be enforceable in the same manner as court orders.