Amendment in the Arbitration & Conciliation Act, 1996

The Arbitration and Conciliation (Amendment ) Ordinance 2015, recently promulgated by the President, draws heavily from the proposals of the 246th Law Commission Report, released last year. Most legal experts see the amendments as a positive step that will help bridge the gap between Indian and foreign arbitration standards. 

The ordinance will positively impact the existing framework of arbitration law in India as it addresses the various concerns regarding delay and excessive intervention by the courts, explains public policy, permits interim relief in foreign seated arbitration, and emphasises neutrality of arbitrators.

The courts that will deal with international commercial arbitrations are the high courts. This should be a comfort for the foreign parties choosing India as a seat of arbitration or for enforcement of foreign awards in India. Availability of interim relief in arbitrations seated outside India will protect the foreign parties by securing assets in India. Tribunal is given same powers as the court to grant interim relief and enforceable in same manner as an order of court, which will reduce the burden of courts. A party getting interim relief from court is under obligation to initiate arbitration within 90 days.

The ordinance incorporates provisions of IBA Guidelines on Conflicts of Interests in International Arbitration, which shall determine neutrality of arbitrators and ensure independence and impartiality of arbitrators introducing transparency in entire process.

The ordinance explains meaning of public policy of India in narrower way and would be helpful to courts while determining the challenge to domestic award and enforcement of foreign awards. Ordinance omits to introduce concept of emergency arbitrator and applicability to pending proceedings as suggested by Law Commission, however it should apply to all new legal proceedings brought after its promulgation, even if these are for enforcing rights accrued earlier, except for the explanation of public policy that should apply to existing proceedings.

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