The new amending Act 2015 amended the Arbitration & Conciliation Act, 1996, with effect from 23rd October 2015. The said amendment has improved the efficiency of the arbitration proceedings in India in a big way. The objective of the author is to explain the importance of the amendments and to suggest ways to make use of them effectively. In the last issue, we examined the effect of S.29 (A) of the Act, which imposes time lines for the arbitrators to deliver the arbitral award. In this issue let us see the effect of the other amendments.
The foundation of arbitration system lies in the neutrality of the arbitrator and hence even the party appointed arbitrators are expected to be impartial and independent by all means. If for any reason, the arbitrator looks biased to one party, the arbitration will become a futile exercise and will not end up in an effective resolution of disputes. Even now the bigger party to the contract, assuming the position of arbitrator appointing authority, is in practice in our country. In India some of the arbitrators are repeatedly nominated by some companies as arbitrators and because of that relationship the arbitrators may look, partial or not independent to the other party. In some other cases, lawyers and law firms continuously nominate some arbitrators in all their cases and hence the arbitrators may look favourable to them, in the eye of the opposite party. It is not necessary that the arbitrator is actually biased to destroy the confidence of the other party, but repeated nominations themselves will make the other party suspicious about the integrity of the arbitrator. As per the newly inserted S. 12 (I) of the Act, every arbitrator has to disclose in writing the existence either direct or indirect, of any past or present relationship with or interest in any of the parties or in relation to the subject matter, which may likely to give rise to justifiable doubts as to his independence or impartiality. It also further requires the arbitrator to disclose, any reason which may affect his ability to complete the proceedings in 12 months as mandated in S. 29 (A), since Act requires the award be passed by the arbitrator within 12 months from the date of his appointment.
The above said introduction to the arbitration Act, will surely ensure transparency and speedy disposal of arbitration proceedings. Once there is justifiable doubt over the impartiality and independence of an arbitrator, the parties loose the confidence on the proceeding itself. Internationally also there was a feeling among the parties that some of the arbitrators were not impartial. That is one of the reasons why, arbitrators are chosen from neutral countries in International arbitrations. That is why International Bar Association trough out a guideline in the name of “IBA guidelines on conflict of interest in International Arbitration.” Now the appointing authority (either the High court or any other authority as per the contract) requires to consider the declaration of the arbitrator before confirming his appointment. To make it more clear the scheduleV introduced by the amending Act, which provides for a list of relationships of the arbitrator with the parties or the Counsel, which can give rise to the justifiable doubt in the minds of the parties. It is also the duty of the arbitrator to disclose any such situation throughout the proceedings, if such a thing happens.
The other major problem faced by parties while handling an ad-hoc arbitration is the nonavailability of the dates of arbitrator and consequential delays in the proceedings. Since 90% of the arbitrations in India are ad-hoc arbitrations, the administration of the proceedings is also done by the arbitrators themselves. Only the arbitrator themselves know their availability and hence their declaration to that effect is essential. A few arbitrators are available in the market and they are also too busy and getting their dates is very difficult. Some of them do arbitration work parttime and hence they are not able to allocate required time to complete the arbitration proceedings. Hence the disclosure with regard to their availability under S. 12 (b) of the Act, will help the appointing authority as well as parties to know about his availability in the next 12 months to complete the appointment process. This provision will ensure disposal of cases within the mandatory period.
One of the attractions in the international arbitration proceedings administered by the popular arbitral institutions like ICC, LCIA, SIAC, HKIAC, KLRCA etc., in popular seats like London, Singapore, New York, Hong Kong, Paris etc., is the practice of awarding full costs of the winning party at the end of the proceedings. But in India arbitrators and courts mostly do not award costs or hesitantly award only minimum costs. They don’t understand that by imposing costs on the losing party, they are helping the party who was unnecessarily dragged into an arbitration proceeding by the losing party. Hence the losing party was the winner in India as per the old practice. Now the newly added S.31 (A) have changed the scenario of costs by specifying the cost calculation method and expenses which can come under the head of costs of an arbitration. This section also makes it clear that an agreement cannot put the burden of costs on one party, before the dispute. The said section also empowers the arbitrator to decide the costs on the basis of the conduct of the parties, frivolous claim &counter claim, non-accepting of the reasonable settlement made by the other party etc., and hence the new system will surely discourage frivolous arbitration proceedings and appeals. Hence the parties should produce all the relevant documents and information relating to costs and claim the same.
www.grandmasters.in | 8 Years & Counting
www.rcls.in | 8 Years & Counting
www.itlegalsummit.com | 8 Years & Counting
www.bfls.in | 8 Years & Counting
www.maels.in | 8 Years & Counting
www.plcs.co.in | 8 Years & Counting
Copyright © 2020 Lex Witness - India's 1st Magazine on Legal & Corporate Affairs Rights of Admission Reserved
