When the earlier regime of arbitration as governed by Arbitration Act, 1940, the Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards(Recognition and Enforcement)Act, 1961 was substituted by the Arbitration and Conciliation Act, 1996, two main objectives sought to be achieved were: (i) ‘to make provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration’; and (ii) ‘to minimise the supervisory role of Courts in the arbitral process’. The old regime of arbitration had become complex, time consuming and expensive and was thus being inept of meeting the very purpose of alternative dispute resolution mechanism. As was observed by the Hon’ble Supreme Court of India in much quoted judgment Guru Nank Foundation v Rattan Singh (1981) 4SCC 634, the arbitration regime as then existed had ‘made lawyers laugh and legal philosophers weep’. Court noted that ‘informal forum chosen by the parties for expeditious disposal of their disputes has by decisions of the Court been clothed with legalese of unforseeable complexity’.
Almost two decades after its enactment, the 1996 Act had been afflicted with the very same maladies that it was originally meant to remedy. Concerns were being voiced by litigants, bar and bench alike, about the arbitration proceedings becoming expensive, embroiled in frequent court interventions and resultantly having become extremely time consuming.
The Law Commission of India, in its 246th Report, dedicated to the reform of the existing arbitration regime in India, recognized ‘delays’ in the proceedings, as one of the major issues that the 1996 Act had become plagued with. Reasons for the ‘delays’, as reckoned in the Report included (i) Judicial Intervention that was twofold- first, the bar for judicial intervention had been set at a low threshold by the Judiciary and second, huge docket explosion in courts, resulting in arbitration related litigations getting delayed AND (ii) culture of frequent adjournments, ingrained in the Indian system.
The recently enacted Arbitration and Conciliation (Amendment) Act, 2015, has made extensive amendments to the 1996 Act, inter alia, to address the aforesaid concern of delay in arbitration proceedings, in three pronged manner:
In amended Section 9, where a Court passes an order for any interim measure of protection, the arbitral proceedings are to be commenced within 90 days from the date of such order. The time limit can however be extended by Court. Also when an application is made under Section 11 for appointment of an arbitrator, endeavour is to be made to dispose of the matter within 60 days from the date of service of notice to the opposite party.
Additionally procedural changes under Sections 12, 24 & 25 have been introduced for time bound disposal. The arbitral tribunal is required to hold oral hearings for presentation of evidence and for oral argument on day to day basis, and not grant any adjournments unless sufficient cause is made out. The arbitration tribunal now has the discretion to treat the right of the respondent to file his statement of defense as having been forfeited in case of inordinate delays.
A very important Section 29A has been inserted which provides that Arbitral award is to be passed within 12 months from the date the arbitral tribunal enters upon reference. The period can be extended by the consent of the parties by a maximum of 6 months. Thereafter, the mandate of the arbitrator is to terminate unless the period is extended by Court for sufficient cause and on such terms and conditions as may be imposed by the Court. Section29A(5) read with Section 29A(9) provides that the endeavour of the Court should be to dispose off an application for extension of time within 60 days from the date of service of notice to the opposite party. Also Section 29B has been inserted to provide for a fast track procedure in which case the award is to be passed within a period of 6 months on the basis of written pleadings, documents and submisisons and without oral hearing, unless such oral hearing is requested by the parties or deemed necessary by the arbitral tribunal.
To ensure expeditious conclusion of appeal proceedings all application for setting aside of arbitral award under Section 34 are to be disposed off within a period of one year from the date of service of notice upon the other party. There is also a clarification under Section 36 to the extent that filing of an application under Section 34 shall not itself render the award unenforceable unless the Court grants an order of stay.
Through amendments to Sections 24, 29 the Arbitral tribunal has been given the power to impose exemplary costs on the party seeking adjournment at the stage of presentation of evidence or oral hearing without sufficient cause, and upon any of the parties for breach of time limit for passing of award under Section 29A. A new Section 31A has been inserted which gives arbitral tribunal and the Court the power to impose costs in relation to all proceedings under the Act. Determination of costs, will, inter alia, be based on the conduct of the parties and whether the party had made a frivolous counter claim leading to delay, and whether any reasonable offer for settlement has been refused.
The above amendments brought into effect by the 2015 Act, along with other significant amendments which have been incorporated with the objective of removing difficulties created due to conflicting judgments and making arbitrations cost effective and more efficient surely seem a step in the right direction to establish a robust arbitration regime in India.
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