The Arbitration & Conciliation (Amendment) Act, 2019 : Key amendments

-Gunjan Chhabra, Partner

The Arbitration & Conciliation (Amendment) Act, 2019 (2019 Act) has received the President’s Assent on 9thAugust, 2019 and has been published in the official gazette. The Act is still to be enforced, as it provides for the date of enforcement to be notified by the Central government by way of publication in the official gazette, which is still to be done. However, currently it is only a matter of time, that the Act brings far reaching consequences to the Arbitration scenario of India.

The 2019 Act has brought far reaching consequences, which are aimed at making India a much more arbitration friendly jurisdiction. Whether it does so or not is frankly as clear as mud.

However, the present article aims to bring out with certain clarity, the amendments being brought about by the 2019 Act, and also how it compares on these aspects with the 2015 Amendment as well as the prior 1996 Act.

Amendments Brought About by the 2019 Act.Arbitration & Conciliation (Amendment) Act, 2019Arbitration & Conciliation (Amendment) Act, 2015 Arbitration & Conciliation Act, 1996
Arbitral InstitutionsThe Supreme Court and High Court have power to designate arbitral institutions from time to time, which have been graded by the Arbitration Council under the Act. Provided in jurisdictions where there are no Arbitral institutions, the High Court may maintain a panel of arbitrators for discharging the duties of the arbitral institutions.Arbitral Institutions exist, but as such are not recognized under the Act.Arbitral Institutions exist, but as such are not recognized under the Act.
Application for Appointment of Arbitrators(Section 11)To be made to Arbitral Institution designated by Supreme Court in the case of International Commercial Arbitration and by Arbitral Institution designated by the High Court, in the case of arbitrations other than International Commercial Arbitrations. To be made to the Supreme Court (or person or institution designated) in the case of an International Commercial Arbitration, and to the High Court (or person or institution designated) in the case of an arbitration other than an International Commercial Arbitration.To be made to the Chief Justice of India (or person or institution designated), in the case of an International Commercial Arbitration, and to the Chief Justice of the High Court (or person or institution designated)  in the case of an arbitration other than an International Commercial Arbitration.
Time period for disposing off application for Appointment of Arbitrator(Section 11)30 days from the date of service of notice to the opposite party.60 days from date of service of notice to the opposite party.No such time period.
Fee schedule for ArbitratorsArbitrator appointed by an arbitral panel shall be entitled to fee at the rate specified in the Fourth Schedule. An arbitral Institution shall fix the fee of the Arbitrator, and while doing so they shall have due regard to the fourth schedule.  This shall not apply to International Commercial Arbitrations or where parties agreed for determination of fees as per rules of arbitral institution.Model fee provided by the Fourth Schedule of the Act and the Courts may form rules after taking into consideration such model fee.No such fee structure.
Interim measures than can be granted by an Arbitral Tribunal(Section 17)A bit of narrowing down, as now a Section 17 application cannot be moved before arbitrator “any time after the making of the arbitral award but before it is enforced..” as these words have now been omitted from the Section.Very wide powers-Any party, during arbitral proceedings or any time after making the award but before it is enforced, can apply to arbitral tribunal for a wide variety of interim measures, verbatim that provided to courts under Section 9.Narrow powers.- Tribunal can take any interim measure for protection as tribunal may consider necessary in respect of subject matter of dispute., or to provide appropriate security in connection with the measure ordered.
Time Period for Completion of Pleadings in Arbitration(Section 23)Statement of Claim and Defence to be completed within a period of six months from the date the arbitrator or all three arbitrators, as the case may be received notice, in writing, of their appointment.No time period specifically provided for pleadings, but generally to be included within the time limit of the arbitral proceedings.No such time limits provided.
Time Period for passing of award (Section 29A)The award in matters other than International Commercial Arbitration, shall be made within a period of twelve months from date of completion of pleadings.  Where an application before Court under Section 29A(5) for extension of time period, the mandate of the arbitrator shall continue till disposal of the said application. Remaining provisions of the 2015 Amendment act apply as it is. The award to be made within a period of twelve months from the date the arbitral tribunal enters upon reference. If the award made within a period of six months from the date the tribunal enters upon reference, the tribunal shall be entitled to receive such amounts of additional fees, as parties agree. The period may be mutually extendable by another six months. Upon expiry of twelve months, or extended period, if award is still not made, the arbitrators shall terminate unless the Court has, either prior to after expiry of period, extended the period.No such time period provided.
Standard of Proof for getting an Award Set Aside by recourse to the Court. (Section 34)The words “furnishes proof that” have been replaced by the words “establishes on the basis of the record of the arbitral tribunal”. Note: This change was made basically to avoid filing of affidavits of evidence, and examination and cross-examination of witnesses in a Section 34 Petition. Read More here.The words “furnishes proof that” were being used which caused certain courts to call for filing of affidavits of evidence and examination and cross-examination of witnesses in a Section 34 Petition.The words “furnishes proof that” were being used which caused certain courts to call for filing of affidavits of evidence and examination and cross-examination of witnesses in a Section 34 Petition.
Making the Appeal provisions under Section 37 (domestic arbitrations) and Section 50(International Commercial Arbitrations) superior to any other law in force.The words “Notwithstanding anything contained in any other law for the time being in force, an appeal” have been added. This gives the Section 37 Appeal provisions supremacy over Commercial Courts Act or other law, which had the likelihood of causing confusion.Not applicable.Not applicable.
Confidentiality(Section 42A)Section 42A added which requires the arbitrator/arbitral institution and the parties to the arbitration to maintain confidentiality of the arbitration process.No such provision.No such provision.
Protection of action taken in Good Faith by the Arbitrator(Section 42B)Provides for no suit or other legal proceedings to lie against an arbitrator for acts done in Good Faith.No such provision.No such provision.
Arbitration Council of India (Part IA) added after Part I in the Act.Arbitration Council of India will be set up whose role would be to :Take measures to promote and encourage ADR, and to form policy and guidelines for uniform standards in respect of arbitrations.Frame policies, grant recognition to professional institutes providing accreditation of arbitral institutions, hold training workshops and courses, promote institutional arbitrations, conduct examinations, etc.The Central Government has quite a large control over the Arbitration Council. Read more here.  
Grading of Arbitral Institutions(Section 43-I)Arbitration Council is to grade arbitral institutions on various criteria such as infrastructure, quality and calibre of arbitrators.  
Accreditation of Arbitrators(Section 43-J)(Eighth Schedule)Norms for accreditation of arbitrators by the Arbitration council, to be provided in the Eighth Schedule. The Eighth Schedule provides both qualifications as well as attributes of persons to enable them to be accredited as arbitrators. Read more here.No such accreditation. No such accreditation.
Electronic Depository of all awards(Section 43K)The Arbitration Council is to maintain an electronic depository of arbitral awards made in India and such others which may be specified.   
Reference to Arbitration in the case of an International Commercial Arbitration(Section 45)The words “unless it prima faciefinds” have been inserted instead of the words, “unless it finds”. This ensures that a judicial authority seized of an action, in respect of which arbitration agreement exists, needs only to give a prima facie finding that the arbitration agreement is not null, void, inoperative or incapable of being performed, in order to refer the parties to arbitration. The words “prima facie” were missing, which meant that the Courts may be forced to go into a detailed finding of whether the arbitration agreement is null, void, inoperative or incapable of being performed.The words “prima facie” were missing, which meant that the Courts may be forced to go into a detailed finding of whether the arbitration agreement is null, void, inoperative or incapable of being performed.
Clarifying the Applicability of the Arbitration & Conciliation (Amendment) Act, 2015Section 87 inserted w.e.f 23rd October, 2015, that amendments made by the 2015 act shall not apply to:-Arbitral proceedings commenced before the Commencement of the Arbitration and Conciliation (Amendment) Act, 2015;Court proceedings arising out of or in relation to such arbitral proceedings irrespective of whether such court proceedings are commenced prior to or after the commencement of the Arbitration and Conciliation (Amendment) Act, 2015.Apply only to arbitral proceedings commenced on or after the commencement of the Arbitration and Conciliation (Amendment) Act, 2015 and to court proceedings arising out of or in relation to such arbitral proceedings. Read here about how different courts have been interpreting the applicability.When the Arbitration and conciliation (Amendment) Act, 2015 was enforced, there was a lot of confusion between different courts regarding its applicability since the words “in relation to arbitration proceedings” seemed to be missing from Section 26 of the Amendment Act. Read hereabout how different courts have been  interpreting the applicability.Not applicable.

It is quite evident at this stage itself that a lot of modifications brought about by the 2019 Act are not very clear. A lot of loopholes have been left unfilled and will definitely become a cause for concern. One instance of such a confusion is whether party autonomy is still a factor for deciding the fee for arbitrators? Can arbitrators still decide their fee in excess of fourth schedule?

Similarly there are several loopholes in the accreditation mechanism, the nature and functions of the Arbitration Council of India, the purpose of grading of professional institutes and arbitration institutions etc. 

However, at this stage it appears that only judicial findings will be able to get some clarity on these issues. 

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