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Amendments to the Arbitration and

Conciliation Bill, 2015
By: PIB | August 26, 2015

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The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave
its approval for amendments to the Arbitration and Conciliation Bill, 2015 taking
into consideration the Law Commissions recommendations, and suggestions
received from stake holders. The Government of India has decided to amend the
Arbitration and Conciliation Act, 1996 by introducing the Arbitration and
Conciliation (Amendment) Bill, 2015 in the Parliament.
The salient features of the amendments are as under:
(i) In order to ensure neutrality of arbitrators, it is proposed to amend Section 12
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. Further, if a person is having specified relationship, he shall be ineligible
to be appointed as an arbitrator.
(ii) Insertion of a new provision that the Arbitral Tribunal shall make its award
within a period of 12 months. Parties may 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 may also order reduction of fees of arbitrator(s) not
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exceeding five percent 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 a period of six months, arbitrator may get additional
fees if the parties may agree.
(iii) It is proposed to insert a provision for fast track procedure for conducting
arbitration. Parties to the dispute may agree that their dispute be resolved
through fast track procedure. Award in such cases shall be given in six months
period.
(iv) Amendment of Section 34 relating to grounds for challenge of an arbitral
award, to restrict the term Public Policy of India (as a ground for challenging the
award) by explaining that only where making of award was induced or affected
by fraud or corruption, or it is in contravention with the fundamental policy of
Indian Law or is in conflict with the most basic notions of morality or justice, the
award shall be treated as against the Public Policy of India.
(v) A new provision to provide that application to challenge the award is to be
disposed of by the Court within one year.
(vi) Amendment to Section 36 to the effect that mere filing of an application for
challenging the award would not automatically stay execution of the award.
Award can only be stayed where the Court passed any specific order on an
application filed by the party.
(vii) A new sub-section in Section 11 to be added to the effect 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.
(viii) A new Section 31A is to be added for providing comprehensive provisions
for costs regime. It is applicable both to arbitrators as well as related litigation in
Court. It will avoid frivolous and meritless litigation/arbitration.
(ix) Section 17 is to be amended for empowering the Arbitral tribunal to grant all
kinds of interim measures which the Court is empowered to grant, under Section
9 and such order shall be enforceable in the same manner as if it is an order of
Court.

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Apart from above, amendments in Sections 2(1)(e) , 2(1)(f)(iii), 7(4)(b), 8(1) and (2),
9, 11, 14(1), 23, 24, 25, 28(3), 31(7)(b), 34 (2A) 37, 48, 56 and in Section 57 are also
proposed for making the arbitration process more effective.
Background:
The Government of India has under its consideration proposals for making
Arbitration a preferred mode for settlement of commercial disputes by making it
more user-friendly and cost effective. This will lead to expeditious disposal of
cases. The Govt. of India is committed to improve its legal framework relating to
Arbitration. The Law Commission of India in its 246th Report has recommended
various amendments in the Arbitration and Conciliation Act, 1996, so that India
may become a hub of International Commercial Arbitration. The Law Commission
has also submitted a Supplementary to Report No. 246 on Amendments to the
Arbitration Act, 1996 on Public Policy- Developments post Report 246, wherein
the Law Commission taking into account subsequent decisions of the Supreme
Court has recommended reformulation of amendment in Section 34(2)(b) of the
Act.
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