Proposed Amendments to the Arbitration Act – Consultation Paper released by the Law Ministry

Bar&Bench News Network

Apr 13, 2010

The Arbitration and Conciliation Act, enacted in 1996 with a view to provide an efficient forum to resolve disputes outside the formal judicial framework is set for a major overhaul. The Law Ministry, Government of India has released a consultation paper on the amendments to the Arbitration Act. Speaking at the release of the consultation paper, Law Minister Moily said "Arbitration should not be continuation of the courts. The idea should be resolving the issue at the earliest."

In a press release issued by the Law Ministry on April 7, 2010, the Ministry has acknowledged the need to address the lacunas in the existing Arbitration Act framework. The press release states that “The Supreme Court and High Courts have interpreted many provisions of the Act and while doing so they have also realized some lacunas in the Act which leads to conflicting views. Further, in some cases, courts have interpreted the provisions of the Act in such a way which defeats the main object of such legislation. Therefore, it becomes necessary to remove the difficulties and lacunas in the Act so that ADR method may become more popular and object of enacting Arbitration law may be achieved.”

Prior to proposing any amendments to the Arbitration Act, the Law Ministry has initiated a consultative process and is seeking views of various stake holders such as judges, lawyers, arbitration institutions and the public at large. The idea behind the proposed amendments is to minimize court intervention in arbitral proceedings and to institutionalize the arbitration process in India. Law Ministry is hopeful that with the proposed amendments India will become a hub for international commercial arbitration. The consultation paper will be made available on the website of the Law Ministry within the next few days. This is a great opportunity for interested parties to provide their constructive comments on the proposed amendments.

The Government of India has been contemplating amendments to the Arbitration Act for quite a while. In 2001, the 176^th Law Commission Report, which was chaired by the then Law Commission Chairman Justice B.P Reddy, had given an exhaustive set of recommendations to overhaul the Arbitration Act. On the basis of these recommendations of the Law Commission, an Arbitration and Conciliation (Amendment) Bill, 2003 was introduced in the Rajya Sabha. The Standing Committee on Personnel, Public Grievances, Law and Justice was of the view that the provisions of the Bill gave room for excessive intervention by the Courts in the arbitration proceedings. The Bill had various other contentious issues that resulted in the Bill being withdrawn from the Rajya Sabha. This time around, one would have to wait and watch how long it takes for the consultation paper to result in concrete amendments to the Arbitration Act.

Comments(2)

1. "Vis-a-vis the view for lesser role for courts in arbitration, as a prctitioner in arbitration, I am candidly of the opinion that in certain areas, to uphold the rule of law, courts' involvement is absolutely necessary. ". V.Ramaswamy, Advocate, New Delhi
2. "Sir,With the nimble foot of the age and concomitant impatience for the expeditious hearing of the cases of civil nature inclusive of the industrial and trade disputes the gnawing need of the non-litigious practice and out of court settlement are emergently felt. Litigants to keep pace with this trend prefer to set to rest their disputes within reasonably shorter duration and inter alia saving the upgrown case expenses. These potent factors together have given birth to mediative, conciliatory and arbitration laws and advisory law firms to counsel for the remedies that can be reached without any let or hindrance. However, the contemporary curiosity lies with the question as to whether the arbitral issues between two disputing parties should be limited to the courts or there be specific adjudicatories to resolve those both the doors of relief being open to them. Currently, the Union Law Ministry makes humble attempt of amending the Arbitration and Conciliation Act, 1996 with a view to make it easily accessible to the beneficiaries and dispel the self-contradictory elements available there within amidst the investitive power and implemental procedures. Above all, the enterprising Law Minister, Mr. Moily has lent his congenial voice about the intent there of, “Arbitration should not be continuation of the courts. The idea should be resolving the issue at the earliest.”. Amazingly, international commercial arbitration has waxed its applicability no sooner the area of Merger and Acquisition has been acted upon and Memoranda of Understanding(MOUs) amongst Multi-national Companies(MNCs) are allowed. However, the bare purpose behind the proposed amendments to the said Act is to minimize court intervention in arbitral proceedings and to institutionalize the arbitration process in India that is a verdant pasture of twenty first century commercial mercantile possibilities. But, what the Supreme Court is up to causes the protagonists serious concern. Again the issues are not merely domestic but very much international as broadly, the said Act spoke equally for the domestic and international commercial arbitration adopted by the United Nations Commission on International Trade Law(UNCITRAL) and stood for the effectuation of the external arbitral awards and conciliating the matters connected there with and incidental there to. On its own right and reason, section 8 of the said Act empowers the court to refer a matter before it to arbitration, in the event that the matter falls within the scope of an arbitration agreement between the parties, more explicitly where there is an arbitration clause. The SC in Radhakrishnan v Maestro Engineer case, ruled that the Court, as opposed to the Arbitrator, was the more competent forum to deal with the dispute, scrutinize oral and documentary evidence in specific, so raised by the parties which part of duties does not hold good to the former while relying on Abdul Kadir decision etc. To boot, the Arbitrator has no jurisdiction to try serious allegations such as fraud, financial malpractice and collusion that have criminal implications in respect of which provisions of the Criminal Procedure Code and the Evidence Act come into play together with that of the Code of Civil Procedure which are mandatory. Conversely, the Arbitrator’s role is limited to the reference to the Contract Act. Although Alternative Disputes Resolution(ADR) Mechanism is the dire need of the hour to bring the disagreeing parties to terms of agreement let us conclude assuming the latest initiative to amend or re-draft the Arbitration Law as an optimistic pep to redefine the scope and ambit of ‘arbitral proceedings’ purported for quick, efficient and amicable settlement of disputes that breaches no inter-jurisdictional severability and further that incurs neither the judicial displeasure nor incites the arbitrator's impunity.Pradeepta Mishra". Pradeepta Mishra, Hc Of Orissa, Cuttack

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