Report No. 176
1.2 Representations for amendment of the Act
Ever since the Act of 1996 came into force on 22.8.96, demands have been voiced requesting amendments to the provisions of the 1996 Act, in so far as they related to Arbitration. It was considered by the Law Commission in 1998, that it would not be appropriate to take up amendments of the Act of 1996 in haste and that it would be desirable to wait and see how the courts would grapple with the situations that might arise.
Quite recently, representations have come before the Commission pointing out that in certain areas, the courts have found great difficulty in the interpretation or implementation of the some of the provisions of the Act. It has been stated that in several cases, parties have been deprived of a right to seek prompt interim relief pending proceedings in international arbitration agreements, where the seat of arbitration is outside India.
This, it is said, has resulted in the Indian parties not being able to obtain any interim orders before commencement of international arbitration or during or after conclusion of the proceedings, from Indian courts. In several cases the awards might ultimately remain only on paper, at the end of the day. This has led to conflicting judgments in the High Courts.
Likewise divergent views have been expressed as to the stage at which jurisdictional issues could be decided and also as to whether orders of the Chief Justice of India or his nominee or that of the Chief Justice of the High Court or his nominee, as the case may be, appointing arbitrators - should be treated as administrative orders or as judicial orders.
It has also been pointed out that where the arbitrator rejects objections relating to jurisdiction or rejects pleas of bias, by way of interim decision, no immediate right of appeal is provided and parties have to go ahead with the arbitration proceedings till the award is made. Even thereafter, the objection relating to bias is not included in the list of grounds specified in Sec. 34 or under Sec. 37 (2).
It has again been pointed out that while an appeal is permitted where the award deals with a dispute not contemplated by or not falling within the terms of the submission or matters beyond the scope of the submission for arbitration, no appeal is provided in a case where the arbitrator omits or refuses, in spite of an application under sec.33(4) to decide an issue which definitely arises out of the pleadings of the parties. Several other drawbacks have been pointed out in various representations.
The Commission felt that the Bar, the litigants and other arbitral institutions might have experienced other difficulties and might be waiting for an opportune time to seek appropriate amendments. In the light of the above, the Commission felt that now , five years after the enactment of the legislation, it was appropriate to review its working by obtaining further views from all concerned and propose the requisite amendments to the Act.