Law Commission releases amendments to Arbitration Act

As India attempts to turn into a preferred hub for arbitrations, the Law Commission today came out with amendments to the Arbitration Act by proposing minimal interference by courts, time limit to complete proceedings and recommending a structural fee schedule for arbitrators.
The Commission said the Arbitration and Conciliation Act, 1996 has been in force for almost two decades in the country. But "in this period of time, although arbitration has fast emerged as a frequently chosen alternative to litigation, it has come to be afflicted with various problems including those of high costs and delays, making it no better than either the earlier regime which it was intended to replace or to litigation to which it intends to provide an alternative," the report of the law panel, submitted to Law Minister Ravi Shankar Prasad, said.

It said delays are inherent in the arbitration process and costs of arbitration can be tremendous. Even though courts play a pivotal role in giving finality to certain issues, after and even during an arbitration, there exists a serious threat of arbitration-related litigation getting caught up in the huge list of pending cases before courts.
"The object of quick alternative disputes resolution frequently stands frustrated," it said.
Though arbitration may be conducted ad hoc or under institutional procedures and rules, institutional arbitration provides distinct advantages which are unavailable to parties opting for ad hoc arbitration, it said.
The Commission has encouraged the culture of institutional arbitration in India which it said will go a long way to redress the institutional and systemic malaise that has seriously affected the growth of arbitration.

It hoped High Courts and the Supreme Court, while acting in the exercise of their jurisdiction of the Act, will take steps to encourage the parties to refer their disputes to institutionalised arbitration.