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Amendments in Arbitration and Conciliation Act 1996

Posted on 07 April 2010,    
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Amendments in Arbitration and Conciliation Act 1996

Dr.M.Veerappa Moily, Minister of Law and Justice will release a paper on Proposed Amendments in Arbitration and Conciliation Act, 1996 here tomorrow.  

     The Arbitration and Conciliation Act, 1996 deals with law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards. The objects and basis of the said Act is to speedy disposal with least court intervention. 

      In the year 2001, the Law Commission of India undertook a comprehensive review of the working of the said Act and recommended many amendments to the Act in its 176th Report.   On the basis of the said Report the Arbitration and Conciliation (Amendment) Bill 2003 was introduced in Rajya Sabha in, 2003. The Bill was then referred to the Departmental Related Standing Committee on Personnel, Public Grievances, Law and Justice for examination and report.  The said Committee submitted its Report to Parliament in 2005.  The Committee was of the view that the provisions of the Bill gave room for excessive intervention by the Courts in the arbitration proceedings and emphasized upon the need for establishing an institution in India which would measure up to international standards and for popularizing institutionalized arbitration.  In view of the large number of amendments recommended by the Committee and because many provisions of the Bill were contentious, the said Bill was withdrawn from the Rajya Sabha. 

   It may be stated that with the passage of time, some difficulties in its applicability of the Act of 1996 have been noticed. The Supreme Court and High Courts have interpreted many provisions of the Act and while doing so they have also realized some lacunas in the Act which leads to conflicting views. Further, in some cases, courts have interpreted the provisions of the Act in such a way which defeats the main object of such legislation. Therefore, it becomes necessary to remove the difficulties and lacunas in the Act so that ADR method may become more popular and object of enacting Arbitration law may be achieved. In order to remove these difficulties, it is proposed to amend certain provisions of the Act. However before amending the Act, it is desirable to obtain views of different stake holders viz. Judges, lawyers, arbitration institutions and public at large. Therefore, a consultation paper has been prepared and being released for seeking comments. Following provisions are proposed for amendments:

  1. Section 2 (2) – Scope of application of Part I of the Act
  2. Section 11-  Appointment of Arbitrators
  3. Section 12- Disclosure by Arbitrator regarding any  interest in the matter
  4. Section 28 (3)- Taking into account terms of the agreement and trade usage
  5. Section 31 (7) –Rate of interest
  6. Section 34- providing meaning of “public policy of India” and for harmonising  it with Sections 13 and 16
  7. Section 36- Enforcement of arbitral award
  8. Insertion of provisions for implied arbitration agreement in commercial contract of high consideration value.


   These proposed amendments would result in minimal court intervention in the matter of arbitration, enhance institutional arbitration and disclosure of any interest by the arbitrator. By these amendments, India would become a hub of International commercial arbitration. 



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