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Report No. 176

Summary of Proposals

1. While proposing amendments to the Arbitration & Conciliation Act, 1996 it is felt necessary to adhere to the objectives of speedy disposal and least court intervention, which were the crucial aspects of the Act. However, where the Act has omitted to incorporate certain provisions of the Model Law, it is proposed to bring the Act in conformity with the Model Law. On that basis, so far as international arbitration is concerned, the provisions of Model Law are more or less adopted. However, in regard to domestic supervision, the proposals include a stricter supervision by court. The following are the proposals:

2. Section 5 of the Act does not need any amendment (para 2.1).

3. In section 8, the word 'judicial authority' should be replaced by the word 'court'. The words "unless it finds the agreement is null and void, inoperative or incapable of being performed" to be included so as to bring sec.8(1) in conformity with Art.8 of Model Law. In sec. 8, 'court' means the 'court' in which suit is filed. Appeals to lie to Division Bench of High Court from the decision of the court.

4. In sec.11, the words 'Chief Justice of India or his nominee' should be replaced by the words 'Supreme Court' thereby meaning 'Bench of two or more learned Judges of the court'. The words 'Chief Justice of High Court or his nominee' should be replaced by the words 'High Court' thereby meaning a 'Bench of two more more learned Judges of the court'.

This will bring sec.11 in conformity with Model Law which uses the word 'court'. This will clarify that power that is exercised under section 11 is a judicial power. The Supreme Court and High Court to clear off jurisdictional issues if raised at the stage of section 11 itself. If oral evidence is necessary, before the said courts, evidence is to be obtained by appointing Advocate Commissioners.

5. In sec.16, the Act permits arbitral tribunal to decide questions of their own jurisdiction, including objections as to the existence or validity of the arbitration agreement. Arbitral tribunal's decision on preliminary issues to be allowed to be questioned before court, within 30 days, even where the arbitrators have "rejected" the plea. The right to object to the decision "rejecting" the preliminary jurisdictional issues to be included in section 34 or section 37. In section 16(5), the word 'shall' should be replaced by the word 'may'.

6. In sections 12 and 13, decision of the arbitrators on preliminary issue of bias or disqualification "rejecting" the plea to be also subject to objections to court under section 34 or 37. In section 13(4), the word 'shall' should be replaced by the word 'may'.

7. Provision under section 9 (interim measures) in Part I should be made applicable even to foreign arbitration when the seat of arbitration is outside India. This will bring the Act in conformity with laws elsewhere kwhich are based on Model law.

8. Provision under sections 8, 38 and 39 also to apply to foreign arbitration where seat of arbitration is outside India and where such arbitrations are not covered by Part II (New York or Geneva Convention Awards). Whether other provisions in English Act 1996 to support foreign award are to be introduced? Should there be a definition of 'seat of arbitration'?

9. A provision similar to sec.21 of the 1940 Act, enabling any court (before which a suit or other proceeding is pending) to refer the parties to arbitration even if such an agreement is subsequent to the commencement of the suit or proceeding, should be introduced.

Provision to be made for challenging the award passed on such reference, in the same court. This will enable all courts, including High Court/Supreme Court to refer issues to arbitration, if parties so agree during the proceedings and deal with the correctness of the award in the same court (on grounds mentioned in sec. 34 and sec. 37) rather than give a fresh lease of life to the litigation.

10. S.34 (Sec.37) should be amended by providing (1) a right to object to the preliminary decision of the arbitral tribunal under sec.16 whether the tribunal accepts or rejects the jurisdictional pleas; (2) a right to object to the preliminary decision of the arbitrator under sec.13 whether the tribunal accepts or rejects the plea.

11. Sec.34 (or sec.37) to provide for objections to be filed where the arbitral tribunal omits to decide certain questions referred and conferring a power to remit the matter to the arbitral tribunal.

12. Sec.34 (or sec.37) should provide for objections to be filed if award does not contain reasons in regard to any dispute and seek a supplement award containing reasons.

13. 'Misconduct' should be included as a specific ground of attack in sec.34 (or sec.37). Whether it should apply to domestic as well international arbitration?

14. 'Error of law apparent on the face of the award' should be included as a specific ground in sec.34 (or sec. 37) (except where a specific question of law is referred to the arbitrators) but only in cases of domestic arbitration.

15. Provision enabling arbitrators to refer a question of law to the court should be included.

16. Provision for modification or remission of award should be included.

17. Power should be granted to court to supersede arbitration (in cases of domestic arbitration only).

18. Minority view should be appended to the award for information.

19. All awards should be filed in the 'court' for purposes of record by amending sec.31, so that authenticity of awards is taken care of.

20. Awards to be executable by court under section 36 only if they conform to laws relating to stamp duty/registration.

21. Employees of one of the parties should not be arbitrators, except in cases where they are employees of Govt. or Public Sector undertakings or corporations.

22. Whether upper time limit should be provided for completing arbitration proceedings, subject to extension by court only for special reasons, so far as domestic arbitrations are concerned?

23. Whether and what guidelines should be prescribed for fixation of fee of arbitrators and what special Code of Ethics is to be introduced to govern the arbitrators and lawyers appearing before arbitrators?



The Arbitration and Conciliation (Amendment) Bill, 2001 Back




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