FEATURES OF AMENDMENT TO A/C, 1996

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.

A. DEFINITION OF COURT
An important amendment introduced in an ordinance pertaining to the definition of the term "Court"
in relation to arbitration.
⁃ The amendment distinguishes between domestic arbitration and international commercial
arbitration.
⁃ For domestic arbitration, the definition of "Court" remains the same as in the 1996 Act.
However, for international commercial arbitration, the definition of "Court" now exclusively
refers to the High Court of competent jurisdiction.
As a result, in international commercial arbitration cases, the district court will no longer have
jurisdiction. This amendment aims to facilitate faster and more effective resolution of issues by
allowing them to be directly addressed by the High Court. The High Court is considered better
equipped to handle commercial disputes, ensuring a more efficient process for parties involved in
international commercial arbitration.

B. SECTION 8
An amendment regarding the reference of parties to arbitration.
⁃ The amendment states that any judicial authority, regardless of any judgment, decree, or order
from the Supreme Court or any other court, must refer the parties to arbitration if the subject
matter of the action is covered by an arbitration agreement.
⁃ The amendment specifies that the judicial authority should make this reference unless it
determines prima facie (based on initial evidence) that there is no valid arbitration agreement
in place.
⁃ Furthermore, the amendment introduces a provision that allows the party requesting the
reference to arbitration to apply to the court for the production of the arbitration agreement or
a certified copy if they do not possess the agreement and the opposing party does.
Overall, this amendment strengthens the mandatory referral of parties to arbitration when there is an
arbitration agreement, subject to the exception of prima facie finding of no valid agreement, and
provides a means for obtaining the arbitration agreement if needed.

C. SECTION 9
Amendment made to Section 9 of a legal provision concerning interim measures in arbitration.
⁃ According to the amendment, if a court issues an interim measure of protection before the
commencement of arbitral proceedings, the arbitral proceedings must begin within 90 days
from the date of that order or within a time determined by the court.
⁃ Additionally, the court will not entertain any application under Section 9 unless it finds that
circumstances exist that render the remedy under Section 17 (which deals with interim
measures by arbitral tribunals) ineffective.
These amendments to Section 9 aim to ensure that parties ultimately resort to the arbitration process
and settle their disputes on their merits through arbitration. The exercise of power under Section 9
after the tribunal has been constituted is now more stringent and can only be done in situations
where the remedy under Section 17 is deemed ineffective by the court.

 D. SECTION 11
The new law mandates that the Supreme Court, the High Court, or a person designated by them
must decide on applications for the appointment of arbitrators within 60 days from the date of
service of notice on the opposite party.
⁃ The previous provision referring to the "Chief Justice of India" and "Chief Justice of High
Court" has been replaced with "Supreme Court" or "High Court," respectively.
⁃ Under the new Act, the decision made by the Supreme Court, the High Court, or the
designated person is considered final.
⁃ The only appeal that can be made is to the Supreme Court through a Special Leave Petition
specifically challenging the order for the appointment of an arbitrator.
⁃ The amendment also aims to establish limits on the fee payable to the arbitrator. It empowers
the High Court to create rules necessary for this purpose, taking into consideration the rates
specified in the Fourth Schedule.

E. SECTION 12
Section 12 of a legal provision concerning the independence and impartiality of arbitrators. The
new law imposes a more stringent requirement for arbitrators to declare their independence and
impartiality.
⁃ A Fifth Schedule has been inserted, which provides an exhaustive list of grounds that may
give rise to justifiable doubt about the arbitrator's independence and impartiality. If a person
does not fall under any of the grounds mentioned in the Fifth Schedule, they are considered
likely to be independent and impartial.
⁃ Additionally, a Seventh Schedule has been added, stating that regardless of any prior
agreement between the parties, if the arbitrator's relationship with the parties, counsel, or the
subject matter of the dispute falls into any category listed in the Seventh Schedule, it will
render the arbitrator ineligible to act. However, the parties can waive the applicability of this
provision by expressly entering into a written agreement after the disputes have arisen.
As a result, government bodies will not be able to appoint their employees or consultants as
arbitrators in arbitrations involving those government bodies, unless there is a specific written
agreement to waive this provision.

The amendments aim to make the arbitration process more efficient, effective, and cost-friendly.
They address practices that lead to unnecessary delays and excessive costs, seeking to streamline
and expedite the arbitration process. The amendments also improve the declaration of independence
and impartiality by arbitrators, making it more meaningful and realistic compared to a mere
formality. Holding arbitrators responsible for delays attributable to them ensures that they only take
on cases within their capacities. This approach promotes self-discipline and control among
arbitrators.

Overall, these amendments represent an effort by the legislature to reduce court interference in
arbitration proceedings, which has been a consistent goal since the enactment of the 1996 Act. The
amendments go the extra mile in achieving this objective and contribute to a more effective and
efficient arbitration system.