Amendments spur renewal of interest in arbitration

By Deepak Sabharwal, Deepak Sabharwal & Associates

When domestic and international commercial disputes arise, arbitration and other alternative dispute resolution (ADR) mechanisms offer many advantages over litigation in civil courts. Under the Arbitration Act, 1940, courts were allowed to interfere at every stage of an arbitration proceeding. The Arbitration and Conciliation Act, 1996, which replaced it, aimed at providing faster and efficient resolution of disputes but could not achieve the purpose.

Deepak SabharwalManaging partnerDeepak Sabharwal & Associates
Deepak Sabharwal
Managing partner
Deepak Sabharwal & Associates

In order to make India a hub for international arbitration and to facilitate quick enforcement of contracts, easy recovery of monetary claims and faster disposal of cases in courts, the 1996 act was amended in October 2015. Some of the major changes are: commencement of arbitral proceedings within 90 days or time given by the court and limiting the scope of the court’s subsequent interference (section 9); fixing 60 days for disposal of an application for appointment of arbitrator and fixing the arbitrator’s fee (section 11); declaration by the arbitrator about independence and impartiality, and insertion of the 5th and 7th schedules listing grounds for doubting independence and impartiality and for ineligibility (section 12); substitution of one arbitrator by another (section 14); making orders passed by the tribunal enforceable as those of courts (section 17); providing for filing a counter-claim or pleading a set-off falling within the scope of an arbitration agreement (section 23); requiring a tribunal to hold a hearing on a day-to-day basis and allowing for exemplary costs (section 24); requiring the tribunal to take into account contract terms and trade usage applicable to the transaction (section 28); mandating the passing of an award in 12 months with a maximum extension of six months and terminating the mandate beyond that, extendable only by the court and providing for substituting one or all the arbitrators and for reduction of the arbitrator’s fee (section 29A); providing fast-track procedure for deciding disputes without any oral hearings and passing of award in six months (section 29B); awarding future interest at 2% higher than the prevailing rate if not decided by the arbitrator (section 31); limiting the scope of public policy to challenge the award and providing for service of advance notice and disposal within one year of such notice (section 34); stay of award only if granted by the court (section 36).

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Deepak Sabharwal is the managing partner of Deepak Sabharwal & Associates.

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