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Report No. 176

1.8 Major reforms in speeding up pending and future arbitrations, applications and appeals under the 1996 Act and also under the 1940 Act.

The Supreme Court has, time and again, lamented that there is enormous delay in the arbitral process in our country. We have already referred to the said remarks. It has, therefore, been decided by the Commission that some serious reforms must be brought in to speed up the entire arbitral process, both before the arbitral tribunal and before the Courts, whether such proceedings are pending under the 1996 Act or under the 1940 Act. Section 5 of the Act of 1996 is proposed to be amended by adding an Explanation as to the meaning of the words 'any other law for the time being in force'.

Under the Explanation, the above words will include the Code of Civil Procedure (5 of 1908), any law providing for internal appeals within the High Court (like Letters Patent, or High Court Acts) and any law which provides for intervention by one judicial authority in respect of orders passed by another judicial authority (e.g. tribunals under the Consumer Protection Act). The effect of the Explanation is that intervention by resorting to remedies under all the above laws will be barred.

So far as the procedure before the arbitral tribunal is concerned, the proposal is to amend sections 23 and 24 of the 1996 Act by permitting the arbitral tribunal to fix time schedules for filing pleadings and for recording evidence (including affidavit evidence) and omitting from the said sections those clauses which permit parties to fix up the procedure or the time schedule. The proposals under sections 23 and 24 give full power to the arbitral tribunal to fix the procedure and time schedule for filing of pleadings and for recording evidence and said time schedule shall be binding on the parties or those who represent them.

Further, under the proposed section 24A, the arbitral tribunal is empowered to take serious action if its orders are not complied with and under the proposed section 24B, the parties or the arbitral tribunal may approach the Court for implementation of the orders of the arbitral tribunal and the Court is given wide powers to take steps to have such orders implemented. The above said provisions in sections 23, 24, 24A and 24B are proposed to be applied not only to future proceedings under the new Act of 1996 but also the pending proceedings under the Act as also the pending proceedings under the 1940 Act, before the arbitrators.

Next, for future arbitrations under the 1996 Act, the arbitrators will have one year and thereafter another period not exceeding one year as agreed by the parties, under the proposed section 29A, for passing the award. Thereafter, if the award is not passed, parties are to move the Court for extension and if the parties do not apply, the arbitrators can also apply for the same. Till the application is made, the arbitration proceedings are suspended, but once an application is made to the Court, the arbitration proceedings shall continue and are not to be stayed by the Court.

On the other hand, the Court shall pass an order within one month fixing the time schedule or it may also pass orders as to costs taking into account various factors which have led to the delay and also the amount already spent towards fee etc. The Court will continue to pass such orders granting time and fixing the procedure, till the award is passed. The above procedure is also to be applied to arbitrations which are pending under the 1996 Act for more than three years as provided in sec. 33 of the amending Act.

Applications under section 34(1) to set aside awards and appeals under sec. 37(1) are to be disposed of within six months and appeals under sec. 37(2) within three months from the date of commencement of the amending Act. A similar procedure is envisaged for future applications and appeals. For the purpose of speeding up of pending arbitration proceedings under the 1940 Act, separate provisions are proposed to be made in sec. 34 of the Amending Act for granting one year for completion, failing which the procedure indicated in sec. 29A of the Court fixing the time schedule will apply, till the award is passed.

So far as pending applications under the old Act of 1940 to make the award a rule of Court or objections to set aside an award and appeals under sec. 39 of the old Act are concerned, under sec. 34 of the Amending Act, they have to disposed of within one year from the date of the amending Act. Pending appeals/revisions against interim orders in proceedings arising out of the old Act are to be disposed of within six months from the date of the amending Act.

The Commission hopes that the above reforms contained in the proposed amendments to sections 23 and 24, addition of proposed sections 24A and 24B and sections 29 of the Principal Act, 33 and 34 of the Amending Act are many sections will bring about a welcome change in the attitude of all persons connected with arbitrations - namely, the parties, the persons who represent them, the arbitrators and the Courts, and that hereafter not only arbitrations and Court proceedings under the Act of 1996 but also those under the 1940 Act, which are still pending, will all get a big push within one year from the commencement of the proposed amending Act and the blot upon the Indian arbitration system will stand removed. Great care has been taken to see that there is no change in the law relating to international arbitration.



The Arbitration and Conciliation (Amendment) Bill, 2001 Back




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