ALAYA
LEGAL
ADVOCATES
The Arbitration and Conciliation Act, 1996
- The Arbitration and Conciliation (Amendment) Ordinance, 2015
C-17, II Floor, LSC I
Paschimi Marg
Vasant Vihar
New Delhi 110057
India
E: [email protected]
T: +91 11-41674458
ALAYA LEGAL
ADVOCATES
INDEX
1.
2.
3.
Introduction
Key Amendments:
 Amendment of Section 2
 Amendment of Section 8
 Amendment of Section 9
 Amendment of Section 11
 Amendment of Section 12
 Amendment of Section 17
 Insertion of new Section 29A
 Insertion of new Section 29B
 Amendment of Section 34
 Amendment of Section 36
Conclusion
ALAYA LEGAL
ADVOCATES
INTRODUCTION

Arbitration and Conciliation (Amendment) Ordinance, 2015
(‘Ordinance’) promulgated by the President of India in exercise of
powers conferred under Article 123 of the Constitution of India.
The Ordinance amends certain provisions of The Arbitration and
Conciliation Act, 1996 (‘1996 Act’).

Came into force with effect from October 23, 2015.

Required to be passed by the Parliament within six weeks from the
date it reassembles in the winter session failing which the
Ordinance shall lapse.
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ADVOCATES
KEY
AMENDMENTS
Section 2
(2) proviso
Amendment to Sub-Section (2) of Section 2
Section 2 (2) [Definitions-Scope] of the 1996 Act- proviso introduced
Now,

Section 9 (interim measures by court)

Section 27 (court assistance in taking evidence)

Section 37(1)(a) and Section 37 (3) (appealable orders)
of the 1996 Act shall apply to international commercial arbitrations
even where the place of arbitration is outside India.
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ADVOCATES
KEY
AMENDMENTS
Amendment to Sub-Section 1 of Section 8
Contd
Section 8
Section 8 [Power of court to refer parties to arbitration] of the 1996 Act
- modified

A non-signatory to an arbitration agreement can apply for
reference of disputes to arbitration.

Non-signatory should be a person claiming through or under a
party to an arbitration agreement.

Mandatory for court to refer parties to arbitration irrespective of
any precedent.

Court not bound to refer the parties to arbitration if it finds that
prima facie there is no valid arbitration agreement.
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ADVOCATES
KEY
AMENDMENTS
Addition of Sub-Sections (2) and (3) to Section 9
Contd
Section 9 [Interim measures by the court] of the 1996 Act - modified
Section 9

Arbitration proceedings shall commence within ninety days from
the date of passing of an order by court under Section 9 of the Act.

The aforesaid time period for commencement of arbitration
proceedings can be extended by the court.

Once arbitral tribunal has been constituted, court shall not
entertain an application under Section 9 [interim measures by
court] unless court is of the opinion that the remedy under
Section 17 [interim measures by arbitral tribunal] will not be
effective.
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ADVOCATES
KEY
AMENDMENTS
Addition of Sub-section (6A) in Section 11
Contd
Section 11
Section 11 [Appointment of arbitrators] of the 1996 Act - modified

While considering an application under Section 11 of the Act, the
powers of the court have been restricted to examining only the
existence of an arbitration agreement.

Amendment negates the decision of the Supreme Court in the case
of National Insurance Co. Ltd. v. Boghara Polyfab Pvt. Ltd. reported
as (2009) 1 SCC 267 wherein Supreme Court had held that in
addition to examining existence of arbitration agreement courts
may even decide whether the claim is time barred or a dead claim.
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ADVOCATES
KEY
AMENDMENTS
Amendment to Sub-Section (1) of Section 12
Contd
Section 12 [Grounds for challenge] of the 1996 Act- modified
Section 12

Potential arbitrator is required to disclose in writing the
existence of any relationship and/or interest in the parties or
in the subject-matter of the dispute.

Form for disclosure has been provided in the sixth schedule.

Fifth Schedule has been added to the Act which lists grounds
to serve as a guide for determining the independence and
impartiality of the arbitrator.
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ADVOCATES
KEY
AMENDMENTS
Section 12 [Grounds for challenge] of the 1996 Act- modified
Contd
Section 12
contd.

A person whose relationship with the parties/counsel/subjectmatter of the dispute falls under any of the categories
specified in seventh schedule cannot be appointed as an
arbitrator.

This sub-section is applicable irrespective of any prior
agreement of the parties to the contrary.
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ADVOCATES
Addition of Sub-Section (5) in Section 12
Section 12
contd.

However, parties can waive the applicability of this sub-section of
by an express agreement in writing after the disputes have arisen
between the parties.

This sub-section does not have retrospective effect.
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Amendment of Section 17
Section 17
Section 17 [Interim measures by arbitral tribunal] of the 1996 Actmodified

Arbitral Tribunal has been empowered to grant interim measures
which a court can grant under Section 9 [Interim measures by
court] – powers extended.

Orders passed by the Arbitral Tribunal shall be enforceable under
the Code of Civil Procedure, 1908 in the same manner as if it was
an order of the court.
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Insertion of new Section 29A
Section 29 A
Section 29A [time limit for arbitral award] - inserted by the Ordinance.

Award shall be made within a period of twelve months from the
date the arbitral tribunal enters upon reference. Arbitrator(s) shall
be deemed to have entered upon reference on the date of receipt
of written notice of appointment.

The aforesaid time period can be extended for a further period
not exceeding six months by mutual consent of the parties.

Thereafter the time can be extended only by the court on an
application of any of the parties only for sufficient cause.

The court while extending the period may substitute one or all the
arbitrators whereinafter the arbitration shall continue from the
stage already reached.
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Insertion of new Section 29B
Section 29B [Fast Track Procedure] – inserted by the Ordinance.
Section 29 B

Parties may either before or at the time of appointment of arbitral
tribunal agree in writing to have their disputes resolved by a fast
track procedure.

Fast track procedure contemplates decision by the arbitral tribunal
on the basis of written pleadings, documents and submissions
filed by the parties without any oral hearing.

Oral hearing may be held only if all the parties request or the
arbitral tribunal considers it necessary to clarify certain issues.

Award under this Section is required to be made within six months
from the date the arbitral tribunal enters reference failing which
provisions of Section 29A(3)-29A(9) shall apply to the proceedings.
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ADVOCATES
Amendment to Section 34
Section 34
Section 34 [Application for setting aside arbitral award] of the 1996 Actmodified.



Clarifies that an award can be set aside on the ground of conflict
with public policy only if:
(i) the making of the award was induced or affected by
fraud or corruption or was in violation of Section 75 or
Section 81;
(ii) it is in contravention with the fundamental policy of Indian
law; or
(iii) it is in conflict with the most basic notions of morality or
justice.
Award passed in domestic arbitration can be set aside if court finds
that the award is vitiated by patent illegality appearing on the face
of the award.
Application under this section is required to be disposed of by the
court within one year from the date notice is served on the other
party.
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Substitution of new section for Section 36
Section 36 [Enforcement] of the 1996 Act – modified.
Section 36

Mere filing of application under Section 34 of the Act will not stay
the operation of the award.

Party required to file separate application for grant of an order
staying operation of the award.

Amendment negates the judgment of the Supreme Court in the
case of National Aluminium Co. Ltd v Pressteel & Fabrications
reported as (2004) 1 SCC 540 wherein it was held that the
mandatory language of Section 34 entails that an award when
challenged under Section 34 within the time stipulated therein
becomes unexcutable.
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ADVOCATES
TO CONCLUDE;
CONCLUSION
Arbitration as a mechanism for dispute resolution been made more
effective and efficient. Business houses can now look to quick
resolution of commercial disputes.
In summary;
 Amendments introduced to make arbitrations time efficient and
cost effective.
 Ensure minimal judicial interference.
 Ensure independence and impartiality of arbitrators.
 Effectiveness of the amendments will depend on judicial
interpretation.