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Amendments to the arbitration Act cleared

BS Reporter  |  New Delhi 

Amendments to the arbitration Act cleared

The government will move an amendment Bill in Parliament to make India a favourable place to settle disputes through arbitration.

The Cabinet on Wednesday cleared the Arbitration and Conciliation (Amendment) Bill, 2015 for this purpose, amid companies such as Vodafone choosing overseas courts for this purpose.

Sources said the Union government has also decided to form a group of secretaries to deal with key issues related to the civil aviation policy including those related to tax relation. Some of the members would include secretaries from the civil aviation ministry, home ministry, finance ministry and defence ministry, sources added.

The amendments include specifying and restricting the term "Public Policy of India" on the ground of which an arbitral award could be challenged. An award would be construed as against the Public Policy of India if it is induced or affected by fraud or corruption, or is in contravention with the fundamental policy of Indian law or is in conflict with the most basic notions of morality or justice, an official statement said.

The amendments, based on the recommendations of the Law Commission, would insert a new provision that application to challenge the award is to be disposed of by the court within one year.

Then, there would be a change in the existing law to the effect that mere filing of an application for challenging the award would not automatically stay execution of the award. The award can only be stayed where the court passed any specific order on an application filed by the party.

To ensure neutrality of arbitrators, it is proposed to amend Section 12 of the existing Act to the effect that when a person is approached in connection with possible appointment of arbitrator, he shall disclose in writing about existence of any relationship or interest of any kind, which is likely to give rise to justifiable doubts. If a person has specified relationship, he will be ineligible to be appointed as an arbitrator.

Also a new provision would be inserted that the arbitral tribunal will make its award within a period of 12 months. Parties might extend such period up to six months.

Thereafter, it can only be extended by the court, on sufficient cause.

The court while extending the period might also order reduction of fees of arbitrator(s) not exceeding five per cent for each month of delay, if the court finds that the proceedings have been delayed for reasons attributable to the arbitral tribunal. If the award is made within six months, the arbitrator might get additional fees if the parties might agree.

Besides, a new provision would be inserted for a fast-track procedure for conducting arbitration. Parties to the dispute might agree that their dispute be resolved through the fast-track procedure. Award in such cases shall be given in six months period.

Again, a new sub-section in Section 11 would be added to ensure that an application for appointment of an arbitrator shall be disposed of by the high court or Supreme Court as expeditiously as possible and an endeavour should be made to dispose of the matter within 60 days.

A new section would be included for providing comprehensive provisions for costs regime. It will applicable both to arbitrators as well as related litigation in a court. It will avoid frivolous and meritless litigation and arbitration.

The existing Act would be amended for empowering the arbitral tribunal to grant all kinds of interim measures, which the court is empowered to grant and such order will be enforceable in the same manner as if it is an order of a court.

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First Published: Thu, August 27 2015. 00:21 IST