India has long been seen as the dark sheep in the field of Arbitration, both international and domestic. Even with the coming of the Arbitration and Conciliation Act, 1996, no significant improvement was seen at the dismal rate at which contracts were being enforced. Ad-hoc arbitrations, the most popular form of arbitration until recently, were most of the time, fallacious, without proper procedure and without proper arbitrators. Institutional Arbitration also did not fare any better. Although there were proper mechanisms in place, the high cost of institutional arbitration meant that only a select few would approach such a procedure for dispute resolution. Appeals to judicial courts would result in substantial delays and huge losses in business. This, coupled with the general lack of awareness in this field, led to India ranking a devastating low (133/189) in the World Bank’s Ease of Doing Business at the beginning of this decade.
However, with the coming of modern Arbitration Institutions, trends started changing with many companies now having a definitive arbitration policy and many choosing arbitration over litigation. A study shows that almost 90% of Indian companies are now having a rigid arbitration policy in place. Despite such a momentum, there still exists a gap which the Arbitration and Conciliation Act 1996 has not been able to fill up and this has ultimately led to the passing of the Arbitration and Conciliation (Amendment) Act, 2015 by the Parliament. The Act came into force in January 2016. The amendment has resulted in substantial improvements in the arbitration scenario in India and has led to India now ranking a decent 100/190 in the Ease of Doing Business Index. Following are few of the important changes that have taken place:
- Definition of ‘Court’: ‘Court’ has a significantly different meaning now as compared to the previous legislation (Arbitration and Conciliation Act,1996) with respect to international arbitration, albeit it is the same for domestic matters. In international arbitrations, parties no longer have to approach the lower courts as with respect to such matters, only the ‘HCs of competent jurisdiction’ have the authority to adjudicate. ‘Court’, with respect to International Arbitration, now mean the High Court only. This move will substantially reduce the period for the delivery of justice. (Section (2)(e), New Act)
- Interim Measures: Earlier, arbitral tribunals were not allowed to provide interim relief to aggrieved parties. With the coming of the new act, tribunals are now empowered to provide all sorts of interim relief which a court is also empowered to do under the principal act. However, the new act also discourages the court to provide any interim relief at all, which is used to under the former act. Also, the 60-day period has been given under the new act, after which the arbitral proceeding has to continue in spite of the interim order. (Section 9 & 17 of the new Act)
- Appointment of Arbitrators: Earlier, arbitrators were appointed either by the Chief Justice of India or Chief Justice of the respective High Courts. According to the new Act, such power of appointment has now been given to the Supreme Court or High Courts or persons designated by them, and a 60-day deadline has been set for such appointment. The decisions made by these bodies are final and binding and only an appeal to the Supreme Court by the way of special leave (Art 136) is allowed. (Section 11 of the new Act)
- Independence of Arbitrators: The new Act ensures that the arbitrator appointed is neutral to the matter in hand. This is done by making it compulsory for the arbitrator to disclose any relationship with the contesting parties
- Time limit for an arbitral award:The new Act makes it mandatory for the arbitral tribunal or institution to pass an award within 12 months from its constitution, which may be extended by a further period of six months. If not met within the stipulated time frame, the mandate of the tribunal will be terminated.
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