Expert Committee On Arbitration Law Proposes Complete Overhaul Of Arbitration And Conciliation Act, 1996
The Expert Committee on Arbitration Law, formed on June 12, 2023, to assess the functionality of the Arbitration Law in the country and propose reforms to the Arbitration & Conciliation Act, 1996, has released its long-awaited report. Key highlights of the report include a comprehensive analysis of the current arbitration law, detailed recommendations for reform, and the presentation...
The Expert Committee on Arbitration Law, formed on June 12, 2023, to assess the functionality of the Arbitration Law in the country and propose reforms to the Arbitration & Conciliation Act, 1996, has released its long-awaited report. Key highlights of the report include a comprehensive analysis of the current arbitration law, detailed recommendations for reform, and the presentation of a draft Bill designed to implement the proposed changes. Additionally, an Explanatory Memorandum is included in the report to elucidate the provisions of the Bill.
Members of the Committee:
- 1.Dr. T. K. Viswanathan Former Secretary General, Lok Sabha Parliament of India (Chairman)
- 2.N. Venkatraman, Senior Advocate
- 3.Gourab Banerji, Senior Advocate
- 4.A.K. Ganguli, Senior Advocate
- 5.Dr. Shardul Shroff, Shardul Amarchand Mangaldas & Co.
- 6.Bahram Vakil, AZB & Partners
- 7.Dr. Rajiv Mani Secretary, Legislative Department, Ministry of Law and Justice and holding additional charge as Law Secretary, Legal Affairs
- 8.R. Sreenivas Joint Secretary, Legislative Department, Ministry of Law and Justice and Law Secretary
- 9.Shreyas Jayasimha, Aarna Law
- 10.Saurav Agarwal, Advocate
- 11.Vyom Shah, Advocate
- 12.CEO, Niti Aayog
- 13.President, CII
- 14.Chairman, NHAI/ Secretary, MoRTH
- 15.Secretary, Ministry of Railways
- 16.Secretary, Department of Economic Affairs
- 17.Secretary, Department of Public Enterprises/ CPSEs
- 18.Secretary, Ministry of Housing & Urban Affairs/ DG, CPWD
Some recommendations made by the Committee:
Amendment To The Preamble And The Short Title Of The Arbitration And Conciliation Act 1996
Amendment
- (i)of the Long Title and Short Title
- (ii)in the Preamble
- (iii)in subsection (1) of section 1 to omit the words “and conciliation”.
Replacement Of “Place” With “Seat” Or “Venue” In The Act.
- a.Amendment of section 20(3) by substituting the word “place” with the word “venue”;
- b.Amendment of sections 2(2), 20(1), 20(2), 28(1) and 31(4) by substituting the word “place” with the word “seat”.
Amendment To The Definition Of 'Court' Having Regard To The Amendment Relating To The Seat Of The Arbitration
Insertion of new section 2A to provide a definition of Court in the following terms-:
- (i)Courts means the Court first and foremost having jurisdiction over the seat of the arbitration and only if such seat is not determined then having jurisdiction over the subject matter of the arbitration;
- (ii)(ii) To make a consequential amendment to section 42;
- (iii)(iii) to further incentivise institutional arbitration, it is proposed that for arbitrations having a Specified Value of Rs. 50 crores or higher, the Court under section 2(1)(e) will be the jurisdictional High Court, having original jurisdiction or jurisdiction to hear appeals from subordinate Courts over the seat of the arbitration and if no seat has been determined, then the Court having jurisdiction over the subject matter of arbitration;
- (iv)(iv) it is proposed to provide in the definition that the Specified Value will be calculated on the basis of principles specified in section 12 of the Commercial Courts Act, 2015.
Administrative Assistance By Techno-Legal Utilities
- (i) amendment to section 6 to include Techno Legal Utilities as a suitable institution to provide administrative assistance;
- (ii)Insertion of new Section 6A –to provide for 'Techno-Legal Utilities', which provide techno-legal services to ad hoc as well as to institutional arbitrations. TechnoLegal services include, but are not limited to, secure online platforms for efficient document sharing, technological support for transcription, recordings and virtual hearings and cybersecurity measures.
- (iii)Insertion of new section 6B for regulating the functioning of the Techno-Legal Utility and providing for such Techno-Legal Utilities to be serviced by a registry with properly delineated functions.
Validation Of Insufficiently Stamped Or Not Duly Stamped Arbitration Agreement
- (i)To insert a new section 7A to provide that notwithstanding any judgment, decree or order of any Court or anything contained in the Indian Stamp Act, 1899, or any other law in force, an arbitration agreement not duly stamped or insufficiently stamped shall be admitted in evidence and shall be acted upon by any Court, an arbitral tribunal, or any other judicial authority for the purposes of the Act and the arbitral tribunal shall direct a party to pay the requisite stamp duty at an appropriate stage.
- (ii)To provide in section 9 of the Amending Act a validation clause to provide that section 7A in the principal Act shall be deemed always to have been in force at all material times with effect from 22nd August 1996 and accordingly no suit or other proceedings shall be initiated, maintained or continued in any Court, tribunal or other authority challenging the appointment of arbitrators or the conduct of proceedings or any action taken thereof on the ground that the arbitration agreement was not duly stamped or insufficiently stamped in accordance with the relevant provisions of the Indian Stamp Act 1899 or any other law for the time being in force.
Timeline For Disposal Of Applications Under Section 8
It proposed to amend section 8 to provide that an application filed under subsection (1) shall be disposed of by the Court as expeditiously as possible and endeavour shall be made to dispose of the matter within a period of sixty days from the date of the application.
Applications To Court For Interim Measure Of Protection Under Section 9.
Amend Section 9:
- (i)to substitute subsection (2) to provide that where, before the commencement of the arbitral proceedings, a party applies to a Court for any interim measure of protection under sub-section (1), it shall also commence the arbitral proceedings within 30 days from the date of making such application to the Court;
- (ii)to insert a new subsection (2A) to provide that where, before the commencement of the arbitral proceedings, a party applies to a Court for any interim measure of protection under sub-section (1), the Court, for the purposes of enabling the parties to approach the arbitral tribunal for adequate interim measures under section 17, may grant relief under sub-section (1) and shall further direct that if the arbitral proceedings are not commenced by the party within the period specified in sub-section (2), the interim measure granted under the said sub-section shall stand vacated on the expiry of the said period;
Appointment Of Arbitrators-Amendments To Section 11:
It proposed to amend section 11 to make the three significant changes in appointment of arbitrators by inserting three new subsections (2A),(2B) and (2C) in section 11.
- (i)To address the problem of arbitration clauses providing for unilateral power to constitute/ appoint arbitral tribunals it proposed to provide in the proposed new sub section (2A) that the procedure for appointment of arbitrators shall offer equal right to parties to choose the arbitrators or presiding arbitrator, as the case may be, and no party shall have the exclusive right to appoint a sole arbitrator or a presiding arbitrator.
- (ii)To address arbitration clauses providing for panel-based appointment of arbitrators it proposed to insert a new sub-section (2B) to the effect, that the procedure for appointment of arbitrators shall offer equal right to parties to choose from a panel of arbitrators or presiding arbitrators, as the case may be, and no party shall have the exclusive right to insist that the other party appoint arbitrators from a panel offered by it for the appointment of an arbitrator or presiding arbitrator.
Insertion Of The Eight Schedule Model Rules Of Procedure
It proposed to insert a new Eight Schedule containing a Model Code of Procedure.
Enforcement Of Awards Under Section 36
Amend sub section (3) of section 36 to insert two provisos before the second proviso to provide:-
- (i)that the Court may grant stay of the arbitral award upon deposit of 50% of the principal amount awarded and the furnishing of security for the remaining sum awarded, with interest accrued up to the date of furnishing security.
- (ii)that in the event of deposit being made of such amount as directed by the Court, or in the event of such higher amount at the option of the party making the deposit, further interest on the amount so deposited shall cease only in the event of unconditional withdrawal of the deposited amount by the other party.”
Modifications To Provisions Regarding Appeals Under Section 37
- (i)to insert new sub section (1A) to provide that notwithstanding anything contained in any other law, an appeal under sub-section (1) shall be made within 60 days from the date of receipt of the order appealed against, but not thereafter;
- (ii)to substitute sub section (2) to provide that an appeal shall also lie to a Court from an order of the arbitral tribunal –
- a.rejecting the challenge referred to in subsection (4) of section 13;
- b.accepting or rejecting the plea referred to in subsection (2) or subsection (3) of section 16;
- c.granting or refusing to granting an interim measure under section 17;
- (iii)to insert new sub section (1A) to provide that notwithstanding anything contained in any other law, an appeal under sub-section (2) shall be made within 30 days, but not thereafter, from the date of receipt of the order appealed against.