ARBITRATION AND CONCILIATION (AMENDMENT) ORDINANCE, 2015: A CRITICAL ANALYSIS

Overview: The Arbitration & Conciliation Act, 1996 (1996 Act) was a legislation which consolidated the Arbitration law in India. The inadequacies and defects in the Arbitration Act, 1940, the Foreign Awards (Recognition & Enforcement) Act, 1961 and the Arbitration (Protocol and Convention) Act, 1937 were sought to be cured by the 1996 Act. Despite such an effort to consolidate the law and iron out the creases of the previous legislations for achieving effective alternate dispute resolution, the 1996 Act paved way for unprecedented litigation concerning Arbitrations. The Arbitral process suffered substantial delay. In this background, to remedy the defects the 1996 Act, the President on 23rd October, 2015 has promulgated the Arbitration and Conciliation (Amendment) Ordinance, 2015. The object that the amendment seeks to achieve is twofold. First, to expedite arbitration process and secondly to lay down guidelines and provisions for the judiciary to abide by while disposing applications before it.

Opportunity Lost: Indian lawyers and justice delivery system is under severe criticism for its slow pace not only due to the system (itself) but due slower ( or virtually lack of) reforms. Indian lawyers, at times have been ridiculed by their foreign counterparts as very ingenious in using or abusing the justice delivery system to delay and thus defeat the very purpose of justice delivery system- Justice Delayed Is Justice Denied. Alternate Dispute Resolution primarily using Arbitration, Conciliation & Mediation has been a popular way as effective alternate to traditional justice delivery system. However, in India it is considered to be “smart” to avoid being subjected to fast track, effective alternative way in the nature of International Commercial Arbitration (ICA). Defeating the ICA is considered as a favourite past time of Indian lawyers. In this backdrop, the changes effected by the Ordinance may be considered as an opportunity lost. Today more than any time in the history of international trade, we are experiencing unprecedented transactions across the borders, jurisdictions and countries. With the explosion of Internet, IoT, 3D Plazma Printing and other technology advances, International Commercial Arbitrations needed far greater emphasis. The amendments ought to have considered setting up quarantined International Arbitration Centre so that ICAs can be more meaningful and India can be an example in line with London (LCIA), Singapore (SIAC) and Dubai ( DIAC).

Increased Court Intervention: The Arbitration Act of 1940 had a provision (Section 28) where the Courts only could enlarge the time for making awards, unless the arbitration agreement provided for it by mutual consent of both parties. Invariably in every major arbitration wth high stakes that was under the old law, either of the Party, was before the Court seeking time extension. At times, the Parties took turns in approaching the Courts for time extension. This invariably happened at the last hour when the time for making the award was about to expire. This resulted in uncertainties, delay and additional costs. The Ordinance now under Section 29A mandates that the Court alone can extend the time. The Courts have been further empowered to stipulate certain additional directions while extending the time including substitution of arbitrator/s without annulling previous proceedings. This is an area that would allow Courts’ interference in arbitral proceedings.

Acknowledgements: Mr. Amol Bavare, Partner- Legasis Partners

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