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Comparative Analysis of

Arbitration and Conciliation Act,

1996 & the Amendments of 2015

2nd July 2016

 Arbitration looked more like traditional Court

 Two unsuccessful attempts for amendments in 2001

and 2010

 Misinterpretation of certain sections led to confusion.

 BALCO judgment of the Supreme Court of India 1

[1] Bharat Aluminium v. Kaiser Technical Services(2012) 9 SCC 649
 The Arbitration and Conciliation (Amendment) Act, 2015 received
Presidential assent on 31 December, 2015.

 Notified in the Official Gazette on 1 January, 2016, the Amendment Act is

deemed to have come into force with effect from 23 October, 2015.

 The most important changes :

1) Litigants can knock the doors of the High Courts for all purposes
relating to international arbitration.

2) Time limit for arbitral award has been set to twelve months from the
arbitral tribunal being constituted.

3) The mere filing of an application for setting aside arbitral award (u/s 34 )
shall not by itself render the award unenforceable.
The term 'Court' under Section 2(1) (e) of the Act has been amended
and now means the High Courts having original civil jurisdiction.

The definition remains the same in case Foreign parties need

of a domestic arbitration. not litigate in remote
areas of the country
 In all international commercial as they can directly
arbitrations, High Courts have been
knock the doors of
made the exclusive forum, which was
the High Court .
earlier the Principal Civil Court.

 District Courts will have no jurisdiction.

 It will only apply to court proceedings

initiated after the Ordinance.
The controversy
Principal Act had a complete caused
restriction on any Indian court by the SC decision in
exercising jurisdiction “BALCO” is settled
whatsoever with respect to an due to this
arbitration not seated in India. amendment.
This section will have
a retrospective effect!
The amendment remedies this
irregularity by providing that
provisions for interim
measures(Sec 9) and taking
assistance of court(Sec 27) in
seeking evidence and section 37
(appeals from orders) can be
invoked even if the arbitration is
seated outside India.

Section 2 ( 2) This Part shall apply where the place of arbitration is in India:[Provided that subject to an
agreement to the contrary, the provisions of sections 9, 27 and clause (a) of sub-section (1) and sub-section (3)
of Section 37 shall also apply to international commercial arbitration, even if the place of arbitration is outside
India, and an arbitral award made or to be made in such place is enforceable and recognized under the
provisions of Part II of this Act.
 Section 7(4)(b) in the arbitration agreement has been inserted
in the new Act which includes communication through
electronic means which provide record to the agreement.

 Exchange of emails or any other way of electronic

communication would constitute an agreement in writing.

 Based on the judgment of the Supreme Court judgment Shakti

Bhog Foods 1 , this amendment is clarificatory in nature.

[1]Shakti Bhog Foods Ltd. vs. Kola Shipping Ltd.[(2009) 2 SCC 134]
 The law as it stood made it  The courts should take a prima facie
mandatory for a judicial authority view as to existence of a valid
to refer the parties to arbitration
and the scope of any review was arbitration agreement. This will apply
extremely limited. irrespective of any decision by the
Supreme Court or any other court.

. Negates the decision of

the Supreme Court in
 Amendment allows even non-
signatories to an arbitration agreement
Sukanya Holdings v
to be joined as parties in a domestic
Jayesh H Panda, where it
had ruled that joinder of
non-signatories to an
 Section 8(2) where where an original
arbitration agreement
arbitration agreement is not available
was not permissible
with a party and it is retained by the
other party, a petition can be filed to
call upon the other party to product the
 Newly added proviso u/s 9 which states that proceedings shall
commence within a period of 90 from the date of interim order.

 The courts will be restrained from entertaining an application for

interim relief once arbitration has commenced.

 An order of the arbitral tribunal passed u/s 17 granting interim

measures will be enforced as if it was an order of the court.

 No application for interim measure under Section 9 shall be entertained

after the arbitral tribunal has been constituted, unless the remedies
under Section 17 have been rendered ineffective
 The Ordinance has replaced the
 The High Courts may frame rules for
words “Chief Justice” with either
the purpose of determination of the
“Supreme Court” or “High
fee payable to arbitrators.
Court”. 1
 Sub-section 13 has been inserted
 The Court will only look into the
which states that the SC or the HC
question of existence of the
shall make an effort to dispose of the
arbitration agreement.
application of appointment within
60 days from the date of service of
 Sub section 7 has been amended
notice on the opposite party.
and no appeal, including a
Letters Patent Appeal, will lie
against the decision of the
Supreme Court or High Court
with regard to appointment of

[1] SBP & Co v Patel Engineering Ltd (2005) 8 SCC 618

 An obligation requiring arbitrators to make an express disclosure on conflicts.

 Section 12 (1) is substituted to provide in detail the circumstances in which a

person appointed as an arbitrator must disclose.

 Schedule 5 is also added to the Act which provides the guidelines to determine
justifiable doubts as to the independence or impartiality of an arbitrator.

 Schedule 6 is also added which provides the form in which such disclosure
should be made. Section 12(5) along with the Seventh Schedule is inserted.

Will be applicable to
where the tribunal is
yet to be constituted
29A 29B
 Award shall be made within a period  Parties may agree in writing to
of 12 months resolve their dispute in a fast track
procedure(before or at the time of
arbitral proceedings)
 Parties may by consent extend the
period for a further period not  Time limit for making an award is
exceeding 6 months capped to 6 months

 Arbitrator may be terminated if  No oral arguments.

award not made within the
prescribed time  Sole arbitrator

 In case the award is not made within

 Reduction of fees not more than 5% the prescribed time period, the
if the award is not passed within the provisions of section 29 A will be
prescribed time applicable.

 It stipulates a common regime for

 The Principal Act had a default post-
costs under the Act – both for
award interest rate of 18% p.a.
arbitration proceedings and
 The parties can now claim interest at litigations arising out of arbitration.
the rate of 2 % higher than prevailing
market rates.  Costs include legal fees, expenses of
witness, courts, arbitrator.

 The main objective of including the

"costs follow the event" regime is to
check the filing of frivolous claims/

 Awards could be challenged if they were  “Public policy” has been defined in
contrary to public policy. the new amendments. The scope of
public policy has been narrowed.
 Losing parties filed application u/s 34
and made the court treat the challenge  Awards in arbitrations exclusively
as a first appeal and the power to between Indian parties can be
entertain the challenge was with the challenged on the ground of patent
District Court. illegality.

 The interpretation of public policy  Challenge petitions are to be

through various judgments was leading concluded within 1 year.
to confusion.

 Award could be set aside merely on the

ground of erroneous application of the
law or by re-appreciation of evidence.
 In the Principal Act a mere filing of Section 34 challenging the arbitral award
resulted in an automatic stay of the award.

 The amendment mandates separate applications to be filed by the losing party

and Court will have to record reasons for granting a stay.

 The Court has the discretion to impose such conditions as it deems fit, while
deciding an application for stay of an award.

Thyssen Stahlunion Gmbh vs. Steel Authority of India (1999) 9 SCC 334

Section 36 (2) “Where an application to set aside the arbitral award has been filed in the Court under section 34,
the filing of such an application shall not by itself render the award unenforceable, unless upon a separate
application made for that purpose, the Court grants stay of the operation of the award in accordance with the
provisions of sub-section (3) hereof;” Section 36 (3) “Upon filing of the separate application under subsection (2)
for stay of the operation of the award, the court may, subject to such conditions as it may deem fit, grant stay of the
operation of the award for reasons to be recorded in writing.”
Prospective or
Retrospective ?
 Upon a clarification being
sought by the Madras "Nothing contained in this Act shall apply
High Court, subject to to the arbitral proceedings commenced,
correction, Section 26 was in accordance with the provisions of
added to the amended Act Section 21 of the Principal Act, before the
when the Ordinance was commencement of the New Act unless the
replaced by the Act. parties otherwise agree but the New Act
shall apply in relation to arbitral
proceedings commenced on or after the
date of commencement of this Act."

Thyssen Stahlunion Gmbh vs. Steel Authority of India (1999) 9 SCC 334

New Tirupur Area Development Corporation vs. Hindustan Construction limited, Madras High Court, A.No. 7674
of 2016 in O.P. No. 931 of 2015
 The Amendment Act clarifies that the Act shall not apply to arbitral
proceedings commenced, u/s 21 of the main act, before the
commencement of the Act.

 The Old Act provided for an automatic stay of the Award upon a Section 34
application being filed before the Court. The amended Act provided for a
separate application to be filed for a stay of the Award upon the Section 34
application being filed. The amended Act further contemplated the
discretion to grant stay to be exercised in accordance with the principles of
Order 41 of the CPC.
The Bombay High Court has part heard a matter with respect to amendment to
Section 36 of the Act to the effect, that mere filing of an application for challenging
the award by a losing party would not automatically stay execution of the award. 1

 A Single Judge of the Calcutta High Court in Electrosteel Castings Ltd. vs. Reacon
Engineers (India) Pvt. Ltd. (AP No.1710 of 2015) held that in light of Section 26, the
amended provisions did not apply an arbitrations commenced prior to the amended
to Act. Another Single Judge of the Calcutta High Court has held the same in Nitya
Ranjan Jena vs. Tata Capital Finance Services (GA 145 of 2016).

 However, a Division Bench of the Calcutta High Court in Tufan Chatterjee vs. Ranjan
Dhar (FMAT No.47 of 2016) 2 has drawn a distinction between 'arbitral proceedings', as
used in Section 26, and arbitration related court proceedings, and has held that the
amended Act will apply to pending arbitration related Court proceedings. The Court
held that proceedings filed under Section 9, prior to the commencement of the
amended Act, are affected by the amended Act so as to limit the powers of the Court
in granting interim reliefs once the tribunal is constituted, as contemplated by the
amended Section 9.

[1]Rendevous Sports World vs. the Board of Control for Cricket in India, Bombay High Court, Chamber
Summons No. 1530 of 2015
[2] Sri Tufan Chatterjee vs. Sri Rangan Dhar, 2016 SCC Online Cal 483
 The Madras High Court has taken a view in New Tirupur Area
Development Corporation Ltd. vs. M/s Hindustan Construction Co.
Ltd. that the provisions of the amended Act will, despite Section 26,
apply to arbitration related Court proceedings commenced before the
commencement of the amended Act. This was on the basis that the
term 'in relation' was not included before the term 'arbitral
proceedings' in the first part of amended Section 26. In a sense, the
same thing as is held by the Division Bench of the Calcutta High

 The Supreme Court in Thyssen ruled that use of the words in relation
to arbitral proceedings which commenced before amendments in the
Act would apply to arbitral proceedings which commenced prior to the
Act coming into force unless otherwise agreed by the parties and Act
would apply in relation to arbitral proceedings which commenced on
or after the Act came into force. The usage of the words in relation to
cannot be interpreted in a narrow manner and would include all
proceedings including court proceedings.

New Tirupur Area Development Corporation vs. Hindustan Construction limited, Madras High Court,
A.No. 7674 of 2016 in O.P. No. 931 of 2015
Thank You!