ANALYSIS OF 2015 AMENDMENTS

This research project is submitted in partial fulfilment of course Alternative

Dispute Resolution for obtaining the degree B.B.A., LL.B. (Hons.) during the
academic year 2020-2021.

Submitted By:
ANURAG RANJAN (2011)
B.B.A., LL.B. (HONS.)
SEMESTER: 6th

Submitted To:
MR. HRISHIKESH MANU
FACULTY OF ALTERNATIVE DISPUTE RESOLUTION

April, 2021

CHANAKYA NATIONAL LAW UNIVERSITY, NYAYA NAGAR,

MITHAPUR, PATNA- 800001.
 ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and deep regards to my guide
MR. HRISHIKESH MANU sir for his exemplary guidance, monitoring and constant
encouragement throughout the course of this research. The blessing, help and guidance given
by him time to time shall carry me a long way in the journey of life on which I am about to
embark.

I also take this opportunity to express a deep sense of gratitude to him for providing
me this research topic and for his cordial support, valuable information and guidance, which
helped me in completing this task through various stages.

Lastly, I thank almighty, my parents, brothers and friends for their constant encouragement
during this pandemic, without which this assignment would not be possible.

Thank You!

ANURAG RANJAN

ROLL NO. - 2011

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 DECLARATION

I hereby declare that the work reported in the B.B.A., LL.B. (Hons.) a research
project titled “ANALYSIS OF 2015 AMENDMENTS” submitted at Chanakya National
Law University; Patna is an authentic record of my work carried out under the supervision of
MR. HRISHIKESH MANU. I have not submitted this work elsewhere for any other Degree
or Diploma. I am fully responsible for the contents of my research project.

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 CONTENTS

RESEARCH METHODOLOGY ................................................................................. 5

AIM AND OBJECTIVES .......................................................................................... 5

HYPOTHESIS ........................................................................................................ 5

SOURCES OF DATA ............................................................................................... 5

MODE OF CITATION.............................................................................................. 5

LIMITATIONS ....................................................................................................... 5

1. Introduction ............................................................................................... 6

2. Key Amendments ....................................................................................... 8

3. Critical Analysis of the Amended Provisions. ...................................... 11

4. Impact of the Amendments on Arbitration Regime. ........................... 14

5. Conclusion & Suggestion ....................................................................... 15

BIBLIOGRAPHY ................................................................................................. 16

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RESEARCH METHODOLOGY
The researcher will do a doctrinal type of research in which he will rely on the primary as
well as the secondary sources.

AIM AND OBJECTIVES

 To critically analyse the Arbitration And Conciliation (Amendment) Act, 2015
 To understand the objective behind the Arbitration Amendment 2015.
 To interpret the salient features of the Amendment Act, 2015.

HYPOTHESIS
1. The 2015 amendments will build a new arbitration regime which would be more
effective as well as efficient.
2. The amendment shall also facilitate in making India a major centre for International
Commercial Arbitration.

SOURCES OF DATA
The researcher has relied on both primary and secondary sources to complete the project.

 Primary Sources: Enactments, Cases, Rules, Regulations etc.

 Secondary Sources: Books, websites etc.

MODE OF CITATION
The researcher has followed a uniform mode of citation. The system followed in this research
project is [The Bluebook: A Uniform System of Citation (2015, 20th Ed.)]

LIMITATIONS
The limitations to the present research are the lack of access to library, short time limit and
the research work will contain only doctrinal work. Also the researcher will be relying more
on direct sources from Internet.

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1. INTRODUCTION

Arbitration has been a preferred way of settlement of disputes globally as well as in India.
Provisions relating to the resolution of disputes in the way of arbitration are contained in the
Arbitration and Conciliation Act, 1996. The Arbitration Act was enacted in the year 1996,
with the intention of providing speedy and effective resolution of disputes through arbitration
or conciliation and reduce the burden on courts. Taking note of the criticisms in the earlier
arbitration regime, the Law Commission of India ("Law Commission") had submitted its in
August 2014 ("Law Commission Report") recommending several changes to the Arbitration
Act.
The Amendment Act is most certainly a welcome move and has been hailed for providing the
much needed impetus to the growth of the Indian arbitration regime. It was also the time that
urgent steps be taken to ensure quick enforcement of contracts, easy recovery of money
claims, reduce the pendency of cases in courts and fasten the process of dispute resolution in
the way of arbitration.1

The Arbitration and Conciliation (Amendment) Act, 2015, was passed by both the houses and
received the assent of the President on the 31st of December 2015. The Act was notified in
the Gazette of India and came into force on January 1st, 2016. The Lok Sabha, while
clarifying the Bill clearly stated that it would not affect the pending cases unless the parties
agreed otherwise. The new amendment towards the Act brings about certain clarifications in
the form of Section 26 which was introduced to settle the issue that unless the parties agree
otherwise, the new Amendment Act will not apply to the arbitrations that were initiated
before the commencement of the Act. Section 12 of the Amendment Act states that it shall be
deemed to be applicable from 23rd October 2015.

The Government of India Promulgation of the Arbitration and Conciliation (Amendment)

Ordinance, 2015 amending certain provisions of the Arbitration and Conciliation Act, 1996,
will help and re-filter the dispute resolution mechanism in India, and will create the
confidence across domestic as well as foreign business investor in India.

1
http://www.legallyindia.com/blogs/the-arbitration-and-conciliation-amendment-act-2015 (Accessed on 23-03-
2021 4:30 P: M)

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Objectives of the New Amendment to the Act

There are mainly two objectives behind the amendment of the Arbitration and Conciliation
Act which are as follows:

I. To make arbitration more investor friendly, cost-effective and suitable for

expeditious disposal of cases.
II. To facilitate in making India a major centre for International Commercial
Arbitration.2

The amendment brought to the 1996 Act is a positive step towards making the process of
arbitration cost-effective, expeditious and a „party-friendly‟ process. The new amendment
leads to sort out certain practices leading to wastage of time, money and energy of both
parties as well as to the arbitrators. The new amendment also brings a sense of independence
and impartiality to the arbitrators when compared to the previous practices in the field of
arbitration. It also ensures that the process of arbitration does not go beyond a reasonable
limit of time and checks whether it is within the capacity of the arbitrator to make a possible
solution.

The Arbitration Act of 1940 had a provision under Section 28 where the courts only could
enlarge the time for making awards unless the arbitration agreement is provided with the
consent of both the parties. At times, the parties request for a time extension, and it‟s mostly
during the last hours of the time of expiry of such an award. This results in uncertainties,
delays, and additional costs. The amendment of Section 29A mandates that court alone can
extend the time. The courts have also been empowered to make certain additional directions
while extending the time including the substitution of an arbitrator without annulling previous
proceedings. This is an area where there is an increase in the court‟s intervention in arbitral
proceedings.3

Such steps will provide self-discipline as well as a control on the case amongst the arbitrators.
It must also be stated that the current amendment has travelled a lot more distance by
reducing the excessive interference of the court in arbitral proceedings that has been a
consistent effort by the legislature since the passing of the 1996 Act.

2
http://byjus.com/free-ias-prep/arbitration-and-conciliation-bill (Accessed on 23-03-2021 6:30 P: M)
3
Supra Note 1.

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2. KEY AMENDMENTS

The Amendment Act has brought some of the major changes to the principal Act. A brief
summary of the amendment are as follows:

a) Amendment to section 2(e): Definition of the term „court’ is amended to provide

certain provisions of the Part I of the Act such as interim relief (Section 9), court
assistance in taking evidence (Section 27) and appeal to interim relief under Section 9
(Section 37) shall also apply to International Commercial Arbitration, even if the place of
arbitration is outside India, subject to an agreement to the contrary between the parties to
the dispute. In such cases, the High Court will act as the „court‟ in relief to such disputes.
b) Amendment to Section 7: An arbitration agreement in the way of electronic means will
also be considered as an arbitration agreement in writing.
c) Amendment to Section 8: If the judiciary finds that prima facie no valid arbitration
agreement exists; the judicial authority may refer the parties to the arbitration on the
action brought by the party to arbitration agreement on the person claiming through or
under him. If the party is not having original or certified copy of arbitration agreement or
is retained by the other party, the party can make an application to the court to call upon
the other party to produce the said documents before the court.
d) Amendment to Section 9: The arbitral proceedings shall commence within a period of
ninety days from the date of order. Once the arbitration tribunal is constituted, the court
shall not entertain an application for interim measures unless it finds circumstances that
may render remedy provided under Section 17 ineffective.
e) Amendment to Section 11: Appointment of an Arbitrator shall be made by the Supreme
Court of India or the High Court instead of a Chief Justice of India or Chief Justice of
High Court. The High Court is empowered to frame rules for the determination of fees
according to the Fourth Schedule of the Act.
f) Amendment to Section 12: Ensuring neutrality of arbitrators, when a person is
approached for an appointment as an arbitrator, he must disclose any information to
prove his neutrality. A person having any such relationships as mentioned in the Seventh
Schedule of the Act is not eligible for appointment as an arbitrator.
g) Amendment to Section 14: Termination of an arbitrator as well as the substitution of
another arbitrator.

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h) Amendment to Section 17: The Arbitral Tribunal has all the powers to grant interim
measures which the court is empowered to have under Section 9 of the Act. Any order
issued by the Tribunal will be deemed to be an order of the court for all purposes and
shall be enforceable under the Code of Civil Procedures, 1908.
i) Amendment to Section 23: The respondent, in support of his case, may submit a
counterclaim or a set-off, within the scope of the arbitration agreement.
j) Amendment to Section 24: The Tribunal shall hold an oral hearing for the presentation
of evidence on day to day basis and shall not grant any adjournments without sufficient
cause.
k) Amendment to Section 25: The right of the respondent to file the statement of defence
have been forfeited, if he fails to communicate such a statement within the timeline
agreed by the parties or the Tribunal without reasonable cause.
l) Amendment to Section 28: The Arbitral Tribunal while deciding and making an award,
shall take into account the terms of the contract and trade usages applicable to the
transaction.
m) Insertion of new provision – section 29A – The Tribunal shall ensure speedy
completion of arbitration proceedings within a period of twelve months from the date of
reference. However, the parties may extend the time not exceeding six months. If the
award is made within six months, the Tribunal is entitled to receive additional fees as
parties agree. The mandate of the arbitrator may be terminated if the award is not being
made within the term of six months unless the court extends the time.
n) Section 29B: The new provision provides for fast-track procedures for conducting
arbitral proceedings if the parties agree to such proceedings. In such cases, the award
must be made within six months from the date of reference.
o) Amendment to Section 31: A sum directed to be paid by an arbitral award shall, unless
the award otherwise directs, carry interest at the rate of two percent higher than the
current rate, and shall be payable from the date of award to the date of payment.
p) Insertion of new subsection 2(A) in section 34: It provides an additional ground of
patent illegality to challenge an arbitral award other than International Commercial
Arbitrations.
q) Insertion of new subsection (5) in Section 34: An application for setting aside of an
award is to be filed after issuing a prior notice to the other party.
r) Insertion of new subsection (6) in Section 34: A period of one year has been prescribed
for disposal of an application for setting aside an arbitral award.
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s) Amendment to Section 36: Mere filing of an application for setting aside an arbitral
would not render that award unenforceable unless the court orders to stay on the
operation of the said award on a separate application made for that purpose.4

While looking into various judgments held by the Supreme Court of

India, it will be clear that the judgments were much effective in implementing the said
provisions of the Act. One such case was the Bharat Aluminium and Co. v. Kaiser
Aluminium and Co. (BALCO), wherein the Court held that Part I of the Act was
mandatorily applicable to all arbitrations held in India. Also, Part I applied to arbitration
conducted outside India unless it was expressly or impliedly excluded.5

This provision was applied in many cases till BALCO case‟s judgment. In this case, the
Court decided that Part I and Part II of the Act are exclusive of each other, and the
Parliament intended that the Act must be territorial in nature, and section 9 and 34 will
be applicable only when the seat of arbitration is in India. Even though this judgment
was favourable for reducing judicial interference but it also led to some unwanted results.
A foreign party would obtain an award in its favour only to realize that the other party or
company has stripped its assets and converted themselves into a shell company. Parties
to arbitration proceedings outside India will be able to approach Indian courts for interim
measures even before the commencement of arbitration proceedings.

4
The Arbitration and Conciliation (Amendment) Act, 2015.
5
Bharat Aluminium and co. v. Kaiser Aluminium and co. (BALCO) (2012) 9 SCC 552.

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3. CRITICAL ANALYSIS OF THE AMENDED PROVISIONS.

The Amendment has been accepted and passed by the both houses including assent of
president and ordinance promulgated and being effective. It will help and re-filter the dispute
resolution mechanism in India, and will create the confidence across domestic as well as
foreign business investor in India; followings are the key amendment of the Act which is
highlighted below.

I. Acceptance of electronic means agreement

It is permitted and allowed and widely accepted legally, an arbitration agreement contained in
the form of communication through electronic means is now to be treated as a valid
arbitration agreement. This brings the Act in compatibility with the UNCITRAL Model Law.

II. Status of court in international arbitration

Part-I of the Act applies to arbitrations where seat is in India and Court assistance in taking
evidence and appeals from order granting or refusing interim measures by Courts will also be
applicable to a foreign seated arbitration, Pursuant to Act, In Case of International
Commercial Arbitration, means the High Court in Exercise of its ordinary original civil
jurisdiction and in courts where ordinary original civil jurisdiction is not present, High Court
having jurisdiction to hear appeals from subordinate Courts

III. Appointment of arbitrator

In Case of International commercial arbitration, the power to appoint an arbitrator is now
with the Hon‟ble supreme court of India. In this amending act, It is an endeavour to dispose
of the matter within a period of sixty days from the date of service of notice to the opposite
party and an application for appointment of arbitrator is to be disposed of as fast as can, it
may help to resolve a long pending concern with respect to appointment of arbitrator which
currently takes very much time.

IV. Interim measures by the court

Whenever, any order for interim measures has been passed by court under the Act prior to the
commencement of the arbitration proceeding, the arbitration proceedings to be started within
a period of ninety days from the date of such order or such further time as court may deem fit.
Once the arbitral tribunal constituted within law, court may not entertain an application for

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 interim measure unless the remedy provided may not be effective and surely it will reduce the
judicial interference.

V. Scope of intervention by judicial authority

Authority may require referring the parties to arbitration unless it finds that no valid
arbitration agreement exits. If the original or certified copy is not available with party for
applying for arbitration, either party may call upon the other party to produce the same by
filling an application, moreover, an order refusing to the refer the parties to arbitration is now
appealable under Act.

VI. Enforceability of interim measures by the arbitral tribunal

Now, the Arbitral tribunal has power under the Act to grant interim measures, such order may
be granted by the tribunal doing the arbitral proceeding or at any time before enforcing
arbitral award under this Act. The Interim order passed by arbitral tribunal would be
enforceable under the Code of Civil Procedure,1908,

Pursuant to this act, now scope of arbitral tribunal has widened and may take following
interim measures:

 Appointment of a guardian for a minor or person of unsound mind;

 Measures protecting goods or amount of money, or property which is subject matter
of the dispute;
 Interim injunction or appointment of receiver.
 Resolve issues and confusion on the arbitrator‟s powers to grant interim reliefs.

VII. Applicability of the act to arbitral proceedings

This Act is to govern and regulate to all arbitral proceeding commenced on or after the
effectiveness of Act, thus, applicability of the Act shall be limited to arbitral proceeding and
shall limit if the award is passed before the commencement of this, meaning thereby Act is
not applicable to post arbitral proceeding and separate application needs to be filed so as to
enforcement of awards could be challenged.

VIII. Claim by respondent under the act

A new provision has been inserted in the Act, By virtue of this new provision respondent is
allowed and permitted to in support of his case, can submit a counterclaim. A very new
features which is widely appreciated by the international and domestic association.

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IX. Time bound arbitrations and fast track procedure
The arbitral tribunal is to make the award within twelve months from the date the arbitral
tribunal received notice in writing of its appointment. The parties may, by consent, extend the
aforesaid period by six months. Arbitral tribunal has power to hold the hearing and arguments
and although cannot grant adjournment within sufficient cause. It may work as very speedy
manner. If the awards is not made within the said period of eighteen months, then arbitrator
will get terminate and new arbitrator may appoint. Besides, in case of termination of the
arbitrator by court, the arbitral tribunal shall reconstituted and proceeding may conduct from
the stage already reached by the earlier arbitrator, no requirement to start new proceeding,

X. Rate of interest and cost under the act

If the amount awarded by the arbitral tribunal, may carry interest at 2% P.A, from the date of
award to the date of payment and cost to be awarded to the parties under the act are too
includes counter claim and settlement amount, it will give benefit to aggrieved party and
entire arbitral proceeding.

XI. No automatic stay on enforcement of award

Party may seek stay, an award given by arbitral tribunal, is required to file application for the
same, an award may challenge within three months after party get copy of awards and it may
extended to more thirty days with sufficient cause, if the awards is not challenged by either
party then it will be enforceable. Court may direct to party to furnish security while
considering the application for grant of stay in case of arbitral award as court may deem fit
under the CPC.6

6
https://www.indianbarassociation.org/an-analysis-of-the-arbitration-and-conciliation-amendment-act2015/
(Accessed on 24-03-2021 3:30 P: M)

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4. IMPACT OF THE AMENDMENTS ON ARBITRATION
REGIME.
Arbitrations in India have historically been lengthy and complex affairs. The arbitral process
was also largely dependent on individual arbitrators due to a lack of formal rules and the fact
that most arbitrations were conducted on an ad hoc basis rather than by arbitration
institutions. Arbitrations were also plagued with uncertainty because of various judicial
decisions which expanded the scope of challenges to awards and judicial interference in the
arbitral process. This uncertainty led to lengthy court proceedings arising from arbitrations
and further ambiguity regarding the means by which final awards could be executed. The
position was similar when awards in foreign-seated arbitrations were either challenged before
Indian courts or were sought to be executed in India. These drawbacks hindered arbitration as
an effective means of dispute resolution. In order to rectify these issues, Parliament passed
the Arbitration and Conciliation (Amendment) Act on December 17 2015, which received the
president's assent on December 31 2015. With this, substantial changes to the Arbitration and
Conciliation Act 1996 came into force on October 23 2015.7

The amendment seeks to:

 make arbitration in India a quicker and more streamlined process;

 reduce interference by the courts;
 make India a more attractive destination for foreign investors; and
 Improve the ease of doing business in India.8

The amendment brought to the 1996 Act is certainly a positive step towards making
arbitration expeditious, efficacious and a cost effective remedy. The new amendments seek to
curb the practices leading to wastage of time and making the arbitration process prohibitively
a costly affair. The new law also makes the declaration by the arbitrator about his
independence and impartiality more realistic as compared to a bare formality under the
previous regime. It can be said that the present amendments certainly travel an extra mile
towards reducing the interference of the Court in arbitration proceedings that has been a
consistent effort of the legislature since passing of the 1996 Act.

7
Supra Note 4.
8
https://www.mondaq.com/india/arbitration-dispute-resolution/494184/critical-analysis-of-the-arbitration
(Accessed on 25-03-2021 2:30 P: M)

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5. CONCLUSION & SUGGESTION

In an attempt to make arbitration a preferred mode of settlement of commercial disputes and

making India a hub of international commercial arbitration, the President of India on 23rd
October 2015 promulgated an Ordinance (“Arbitration and Conciliation (Amendment)
Ordinance, 2015) amending the Arbitration and Conciliation Act, 1996. It will help and re-
filter the dispute resolution mechanism in India.

The Arbitration Amendment is a significant step forward in overcoming the systemic malaise
of delays, high costs and ineffective resolution of disputes, which had plagued the arbitration
regime in India. Most of these amendments are welcome, since many would agree that the
earlier arbitration regime was a failure, and did not result in cultivating the culture of
arbitration in India. These amendments will also have to withstand the scrutiny of Indian
courts that have often been criticised for their interventionist approach. The recent judgments
of Indian courts which have had an occasion to interpret the provisions of the Amendment
Act, is an early indication that these amendments will be subject to further judicial scrutiny. It
will be interesting to see how the courts interpret the new amendments in future.

The amendment should come as a welcome relief to most international entities/individuals

that are parties to foreign-seated international commercial arbitration. The confusion of
whether Part I of the act applied to foreign-seated arbitrations has largely been laid to rest. In
addition, foreign parties now have the advantage of approaching courts in India for interim
relief against Indian parties, as regards their assets located in India. Further, the parties to
international commercial arbitration can directly approach the high courts under Section 9 for
interim protection, which will no doubt provide foreign parties with some relief.

Further amendments are needed to iron out the flaws in the Amendment Act to make it more
effective. The new arbitration regime promises to herald a new era for resolution of disputes
in India.

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BIBLIOGRAPHY

 BOOKS

1. DR. C. TRIPATHI , “ARBITRATION & CONCILIATION ACT , 1996”, 8TH ED. (REP.),
CENTRAL LAW PUBLICATIONS, 2019.

 STATUTE

1. THE ARBITRATION AND CONCILIATION (AMENDMENT) ACT, 2015.

 CASES

1. Bharat Aluminium and co. v. Kaiser Aluminium and co. (BALCO) (2012) 9 SCC 552.

 INTERNET SOURCES

1. http://www.legallyindia.com/blogs/the-arbitration-and-conciliation-amendment-act-
2015 (Accessed on 23-03-2021 4:30 P: M)
2. http://byjus.com/free-ias-prep/arbitration-and-conciliation-bill (Accessed on 23-03-
2021 6:30 P: M)
3. https://www.indianbarassociation.org/an-analysis-of-the-arbitration-and-conciliation-
amendment-act2015/ (Accessed on 24-03-2021 3:30 P: M)
4. https://www.mondaq.com/india/arbitration-dispute-resolution/494184/critical-analysis-
of-the-arbitration (Accessed on 25-03-2021 2:30 P: M)

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