Report No. 246

Other Amendments

73. The Commission has also proposed some amendments in order to clarify certain other provisions in the Act. An amendment has been proposed to the definition of "international commercial arbitration", in section 2 (f)(iii) by removing the reference to a "company", which is already covered in section 2(f)(ii).

The intention behind the proposal is that the test for determining the residence of a company must be based on its place of incorporation and not the place of central management/control. This adds greater certainty to the law, and re-enforces the "place of incorporation" principle laid down by the Supreme Court in TDM Infrastructure Pvt Ltd v. UE Development Pvt Ltd, (2008) 14 SCC 271.

74. Two sets of amendments have also been proposed to section 7. It is clarified that an arbitration agreement must concern "subject matter capable of settlement by arbitration." This gives statutory recognition to the doctrine of arbitrability. The proposed sections 7(3A) and 7(3B) is intended to bring the Indian law in conformity with the UNCITRAL Model law and clarifies that an arbitration agreement can be concluded by way of electronic communication as well.

75. The Commission has also proposed an amendment to section 25 (b) to clarify that where, on the default on the Respondent in communicating his statement of defence, the arbitral tribunal shall also (in addition to having the right to continue with the arbitration) have the discretion to treat the right of such Respondent to file a statement of defence as having been forfeited.