“ANALYSIS OF 2019 AMENDMENT IN ARBITRATION AND

CONCILIATION ACT, 1996”

А Project submitted in pаrtiаl fulfilment of the course ALTERNATIVE

DISPUTE RESOLUTION, 6 SEMESTER during the Аcаdemic Yeаr 2021-
TH

2022

SUBMITTED BY:
MАIRА HUSSАIN
Roll No. – 1935
B.А. LL.B.(Hons.)

SUBMITTED TO:
PROF. HRISHIKESH MANU
FАCULTY OF ALTERNATIVE DISPUTE RESOLUTION

CHАNАKYА NАTIONАL LАW UNIVERSITY, NАYАYА NАGАR,

MEETHАPUR, PАTNА-800001
 DECLАRАTION BY THE CАNDIDАTE

I hereby declаre thаt the work reported in the B.А. LL. B (Hons.) Project Report Entitled

“ANALYSIS OF 2019 AMENDMENT IN ARBITRATION AND CONCILIATION ACT,

1996” submitted аt Chаnаkyа Nаtionаl Lаw University, Pаtnа is аn аuthentic record of my
work cаrried out under the supervision of Prof. Hrishikesh Manu. I hаve not submitted this
work elsewhere for аny other degree or diplomа. I аm fully responsible for the contents of my
Project Report.

(Signаture of the Cаndidаte)

MАIRА HUSSАIN,
Chаnаkyа Nаtionаl Lаw University
 АCKNOWLEDGEMENT

Firstly, I would like to thаnk my fаculty of Alternative Dispute Resolution Prof. Hrishikesh
Manu for providing me аn opportunity to mаke my project on such аn interesting topic which
is аlso а contemporаry issue аs for now.
Secondly, I would like to thаnk аll my colleаgues аnd friends for helping me out in аrrаnging
of the аccumulаted collected study mаteriаl.
Lаstly, speciаl thаnks to my pаrents for guiding me in giving the finаl touch to this project
аnd helping me out throughout this project.
TАBLE OF CONTENTS

Tаble of Contents

1.INTRODUCTION……………………………………………………………………………..5

2.MEANING OF ARBITRATION …………………………………………………………….6-7

3.ARBITRATION AGREEMENT ........................................................................................... 8-10

4.CONCILIATION MEANING…………………………………………………………….11-12

5.EMERGING NEED FOR ARBITRATION……………………………………………...13-14

6 KEY CHANGES BROUGHT BY 2019 AMENDMENT .................................................. 15-23

7.CONCLUSION………………………………………………………………………………..24

8.BIBLIOGRAPHY…………………………………………………………………………….25
 1. INTRODUCTION

Arbitration, Conciliation and Mediation are the Alternative Dispute Resolution for solving civil
nature disputes. These are dispute resolution methods to deal with disputes on a broad and global
scale. Through these methods one can resolve their disputes without access to the regular judicial
system, i.e. judicial courts1. The Article 39A of the Indian Constitution clearly states that The State
shall secure that the operation of the legal system promotes justice, on a basis of equal opportunity,
and shall, in particular, provide free legal aid, by suitable legislation or schemes or in any other
way, to ensure that opportunities for securing justice are not denied to any citizen by reason of
economic or other disabilities.In India, the Arbitration Proceedings are governed by the Arbitration
& Conciliation Act, 1996 which is based on UNCITRAL Model Arbitration Rules,
1976 and UNCITRAL Model Law on International Commercial Arbitration. The UNCITRAL
Model Rules have been amended in order to meet the present-day requirements and resolve
disputes more efficiently.The Indian Arbitration Act also sought to make some changes in order to
modernize it and standardize it with the international laws of arbitration.

Arbitration is like a court procedure because the parties submit evidence similar to a trial where
the third party hear the entire situation and give his decision which is binding upon the parties. The
objective of Arbitration is to settle the dispute which arose between the parties by one or more
arbitrators appointed by them by going through the documents and evidences. According to Kurt
Brenn “The objective of arbitration is not compromise but adjudication through the parties are at
liberty to comprise.” A wise arbitrator would certainly promote such agreement, but as a rule there
is no zest, if there is compromise in arbitral awards. While taking a decision in arbitral matter, the
arbitrator must consider the fact that the decision imparted by him must be in the interest of
principle of natural justice. Conciliation means settling disputes without litigation. It is an informal
process in which conciliator i.e. third party tries to bring the disputants to agreement. He overcomes
the disputable issues by lowering the tension, improvement in communication issues.

1
“Court” means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise
of its ordinary original civil jurisdiction,
2. MEANING OF ARBITRATION

Arbitration is like a court procedure because the parties submit evidence similar to a trial where
the third party hear the entire situation and give his decision which is binding upon the parties. In
the case of Collins v Collin, the Court held that “An arbitration is a reference to the decision of one
or more persons, either with or without an umpire, of some matter or matters in difference between
the parties.” an arbitrator listens to the evidence which is brought by both parties and makes a
decision which is generally binding upon both parties. Arbitration means getting an arbitral award
on an ongoing conflict, by the arbitrator. In the process of arbitration, the cause is heard and
determined between the parties in a dispute before the person selected by the parties or appointed
under statutory authority i.e., The Arbitration and Conciliation Act, 1996. The objective of
Arbitration is to settle the dispute which arose between the parties by one or more arbitrators
appointed by them by going through the documents and evidences. According to Kurt Brenn “The
objective of arbitration is not compromise but adjudication through the parties are at liberty to
comprise.” A wise arbitrator would certainly promote such agreement, but as a rule there is no zest,
if there is compromise in arbitral awards. While taking a decision in arbitral matter, the arbitrator
must consider the fact that the decision imparted by him must be in the interest of principle of
natural justice.

Arbitration can be done by voluntary or compulsory method. In Voluntary arbitration, if a dispute

arose between the two Parties and they are unable to resolve their differences by themselves,
thereby the parties agreeing to present their Dispute to the fair authority and the decision will be
binding upon both parties. Whereas Compulsory arbitration, is the method where the parties are
required to accept arbitration without any willingness on their part. When one party in any
industrial dispute feels aggrieved by the act of the other party, it may approach the appropriate
government to refer the dispute to any organization of adjudication for the settlement. The
arbitrator or arbitral tribunal2 consists of a neutral person or persons responsible for resolving the
dispute that the parties have submitted before them.

2
Earlier it stood as: “(e) “Court” means the principal Civil Court of original jurisdiction in a district, and includes the
High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming
The number of arbitrators and their appointments are defined in Section 10 and 11 of Arbitration
and Conciliation Act, 1996. The person from any nationality can be appointed as arbitrator, unless
agreed by the parties. The number of arbitrators must be in odd number or there can be a sole
arbitrator. The parties in conflict are free to appoint the arbitrator or they can approach the statutory
authority for the same. In arbitration, if there are three arbitrators then each party will choose one
arbitrator and the two appointed arbitrator will choose one arbitrator who will act as presiding
officer. If the parties failed to appoint an arbitrator within 30 days as requested by the other party
or the appointed arbitrators have failed to come on same page in appointing the arbitrator within
30 days or they have any kind of disagreement, then they can approach the chief justice or the other
person or institution nominated by him regarding the appointment.

The Fifth Schedule to the Act (Annexure-A) are enlisted with the grounds which give rise to
justifiable doubt as to the independence or impartiality of an arbitrator. The Seventh Schedule
(Annexure-B) consists of the grounds which make a person ineligible to be appointed as an
arbitrator.

the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil
court of a grade inferior to such principal Civil Court, or any Court of Small Causes;
3. ARBITRATION AGREEMENT

The arbitration agreement 3is defined as written under Section 2 (a) of the Arbitration Act, 1940 i.e.
written agreement which present current or future dispute of parties to arbitration , irrespective of
the name of the arbitrator in it or not. An arbitration agreement or an arbitration clause in an
agreement is sometimes termed as ‘submission’. Arbitration agreement is also termed as
‘reference’. The arbitration agreement defined by Halsbury, ‘It is an agreement made by two or
more parties between whom some difference has arisen or may hereafter arise whereby they
appoint another person to adjudicate upon such dispute and agree to be bound by his decision.
There are some essentials which needs to follow for a valid arbitration agreement like the
agreement must be in a written form containing minimum terms of arbitration. The important
objective of written agreement is that the parties should agree to resolve the dispute through
arbitration. It must contains the essential elements of a valid contract such as offer and acceptance,
competent parties, consent, lawful consideration etc. The features of arbitration are that it is a
private tribunal chosen by the parties. A person appointed to resolve the differences or disputes is
called an ‘Arbitrator’, the proceeding is termed as ‘Arbitral Proceeding’ and the decision imparted
is termed as ‘Award’. Signing an Arbitration Agreement also leads to giving up important rights.
So, before signing the agreement, one should properly read the terms of agreement and must reject
or negotiate upon the inconvenient terms.

Arbitration is like a court procedure because the parties submit evidence similar to a trial where
the third party hear the entire situation and give his decision which is binding upon the parties. In
the case of Collins v Collin, the Court held that “An arbitration is a reference to the decision of one
or more persons, either with or without an umpire, of some matter or matters in difference between
the parties.” an arbitrator listens to the evidence which is brought by both parties and makes a
decision which is generally binding upon both parties. Arbitration means getting an arbitral award
on an ongoing conflict, by the arbitrator. In the process of arbitration, the cause is heard and
determined between the parties in a dispute before the person selected by the parties or appointed

3
Substituted by the Arbitration & Conciliation (Amendment) Act, 2015 Earlier it stood as: “(1) A judicial authority
before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies
not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.”
under statutory authority i.e., The Arbitration and Conciliation Act, 1996. The objective of
Arbitration is to settle the dispute which arose between the parties by one or more arbitrators
appointed by them by going through the documents and evidences. According to Kurt Brenn “The
objective of arbitration is not compromise but adjudication through the parties are at liberty to
comprise.” A wise arbitrator would certainly promote such agreement, but as a rule there is no zest,
if there is compromise in arbitral awards. While taking a decision in arbitral matter, the arbitrator
must consider the fact that the decision imparted by him must be in the interest of principle of
natural justice.

The number of arbitrators and their appointments are defined in Section 10 and 11 of Arbitration
and Conciliation Act, 1996. The person from any nationality can be appointed as arbitrator, unless
agreed by the parties. The number of arbitrators must be in odd number or there can be a sole
arbitrator. The parties in conflict are free to appoint the arbitrator or they can approach the statutory
authority for the same. In arbitration, if there are three arbitrators then each party will choose one
arbitrator and the two appointed arbitrator will choose one arbitrator4 who will act as presiding
officer. If the parties failed to appoint an arbitrator within 30 days as requested by the other party
or the appointed arbitrators have failed to come on same page in appointing the arbitrator within
30 days or they have any kind of disagreement, then they can approach the chief justice or the other
person or institution nominated by him regarding the appointment.

The Fifth Schedule to the Act (Annexure-A) are enlisted with the grounds which give rise to
justifiable doubt as to the independence or impartiality of an arbitrator. The Seventh Schedule
(Annexure-B) consists of the grounds which make a person ineligible to be appointed as an
arbitrator.

Landmark cases on arbitration

R.V. Solutions Pvt. Ltd. v. Ajay Kumar Dixit & Ors. In this case, The Delhi High Court held that a
non-signatory or third party can only be subjected to arbitration in exceptional cases without its

4
Substituted by the Arbitration & Conciliation (Amendment) Act, 2019
consent. The arbitrator is required to form a direct relationship with the signatory party of the
agreement, or between the parties in the agreement or the equality of the subject or the overall
transaction.

Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engineering Ltd, the court states that
The High Court should stop the instrument which has not imposed stamp duty and hand it over to
the authority which will then decide to implement the payment of stamp duty and penalty (if any)
at the earliest, and preferably a period of 45 days. . Within the date on which the instrument of
authority is received. As soon as the stamp duty is paid on the instrument, either party can bring
the instrument to the notice of the High Court which will then proceed to hear and dispose of the
Section 11 application expeditiously.

BHEL v. Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited. The Supreme Court held that where
the parties do not insist on the exclusive jurisdiction clause in an agreement or raise such objection,
and by their conduct, waive such condition / submit themselves to the jurisdiction of another court
, It cannot be said that exclusive jurisdiction shall be without jurisdiction except in the court in
which it is vested.

Paschimanchal Vidyut Vitran Nigam Limited v. M/S IL & FS Engineering & Construction
Company Limited O.M.P The question before the Delhi High Court was whether the provisions of
the Fourth Schedule to the Act relating to fees to be paid to arbitrators would apply to domestic ad
hoc arbitration where the parties have not approached the court to constitute an arbitral tribunal.

It was held that the provision in respect of fees contained in Section 11 (14) of the Act is only a
competent provision. The concerned High Court has been given to frame the rules, if it chooses to
do so. Since the parties did not approach the court for the formation of the Arbitral Tribunal, the
Court would have no role in deciding the fees of the Arbitral Tribunal as there is no such power
vested in the Court. Further, the provisions of sub-Section (14) of Section 11 clearly show that the
fee prescribed in the fourth schedule of the Act is only suggestive.
4. CONCILIATION MEANING
Conciliation means settling disputes without litigation. It is an informal process in which
conciliator i.e. third party tries to bring the disputants to agreement. He overcomes the disputable
issues by lowering the tension, improvement in communication, interpreting issues, providing
technical assistance, exploring potential solutions and bringing the negotiated settlement before the
parties. Conciliator adopts his own method to resolve the dispute and the steps taken by him are
not strict and legal. There is no need of agreement like arbitration agreement. The acceptance of
settlement is needed by both of the parties.

Part III of the Arbitration and Conciliation5 Act, 1996 deals with conciliation. it is a voluntary
proceeding where parties in dispute agree to resolve their dispute through conciliation. It is a
flexible process which allows the parties to decide the time and place for conciliation, structure,
content and terms of negotiations. In Conciliation, the conciliators are trained and qualified neutral
person who help the conflicting parties to make them understand the issues in dispute and their
interest to reach mutually accepted agreements. The conciliation process includes the discussion
between the parties which is made with the participation of the conciliator. It covers many disputes
like industrial disputes, marriage disputes, family disputes etc. This allows the parties to control
the output of their dispute. The result is also likely to be satisfactory.

Conciliator

Conciliator is the third party who is involved in settling the dispute of the parties. Generally, there
is one conciliator for the settlement but there can be more than one conciliator, if the parties have
requested for the same. If there is more than one conciliator 6 then they will act jointly in the
matter. Section 64 deals with the appointment of conciliator which states that if there is more than
one conciliator then the third conciliator will act as the Presiding Conciliator.

5
Substituted by the Arbitration & Conciliation (Amendment) Act, 2015
6
Substituted by the Arbitration & Conciliation (Amendment) Act, 2015
Kinds of Conciliation

1. Voluntary Conciliation- In this method parties can voluntarily participate in the process
of conciliation for resolving their dispute.
2. Compulsory Conciliation- If parties do not want to take the opportunity of
voluntary conciliation then they can go for compulsory conciliation. In this method, if
the parties do not want to meet the other party to resolve the dispute then the process is
said to be compulsory. This method is commonly used in labour cases.

Procedure of Conciliation

The objective of the conciliation7 proceedings is to reach upon mutual terms, speedy and cost-
effective settlement of the dispute. Section 62 discuss the initiative of conciliation will start when
one party will send Written Invitation to conciliate upon the matter to the other party. Section
65 explains the submission of the statements of both the parties to the conciliators. Each party
should submit a brief written statement regarding dispute as requested by the conciliator. The
statement should describe the general nature of the dispute and the points of issue. Each party
should send a copy of their statement to the other party. The conciliator can also ask for the
submission of written statements which includes issues of the parties, grounds of settlement etc.
These statements must be supplemented by evidence, documents or visual representation. The copy
of the same statement must be sent to the other party. Conciliator can also request for additional
documents whenever he needs them. According to Section 67(3) and 69(1), the conciliator can set
up meetings for the parties or he can meet parties together or separately. The place of meeting can
be decided by parties or conciliators. He can also communicate with the parties orally or in written
form. He must also consider the party’s expressed wishes like quick settlement of the case which
also depends upon the circumstances of the case.

7
Inserted by the Arbitration & Conciliation (Amendment) Act, 2019
5. EMERGING NEED FOR ARBITRATION
As a result of Globalization, the scope of the business has widened and extended across the globe,
ensuing many international trade and business, however, in such transactions resolving disputes
has become an issue, due to complex legal systems in various countries. To avoid the prolonged
Judicial System and expedite the settlement between the parties to the dispute. United Nations
Commission on International Trade Law (UNCITRAL), subsidiary of U.N., has framed rules
commonly called as ‘Model Law’ to harmonize and modernize the International trade and
commerce, it also provided a comprehensive framework and procedure which the parties may be
adopted for redressal of the disputes in cross-border transactions. Today most of the international
trade agreements appeal to arbitration for dispute resolution. In India, The Arbitration and
Conciliation Act, 1996 is framed in line with Model law.Traditionally a dispute is resolved by
referring to the jurisdictional court, however, this led to clogging of several cases in court across
India and the resulting in prolonged litigation for resolving a minor conflict. Parties to the dispute
have to wait for an unusually long time and due to which some of their financial interest is
unresolved & blocked for several years. This situation is wrecked in case of cross border trade &
commerce, also indicated laws have been a challenge to the parties. Also, on the introduction of
Model law, many international players have pre-determined to refer disputes to arbitration form
for a speedy, economical, and flexible procedure where the parties have the freedom to elect their
arbitrator or judge who has experience in the relevant field. However, any conflict within the scope
of the agreement can be referred to arbitration subject to the dispute resolution clause.

Why was the 20198 amendment required?

After the amendment of UNCITRAL Model Law in 2006, the UN General Assembly suggested all
countries shape their laws relating to ADR accordingly, in order to achieve uniformity of arbitral
procedures.

8
Inserted by the Arbitration & Conciliation (Amendment) Act, 2019
 • To make the process uniform

With the amendment, the government seeks to standardize the procedure of International
Commercial Arbitration to make it at par with the international arbitration procedures.

Also, the process of domestic arbitration would become standardized for more efficiency.

• To Promote Alternate Dispute Resolution

The Government of India is the biggest litigator9 in the country and it needed to promote a more cost-
effective and faster way to resolve disputes.

The latest amendments seek to promote ADR and have formed a council that has been vested with the
responsibility to do so.

With this amendment, we strive to make India a hub of domestic and international arbitration such as
Singapore.

• To reduce the burden of the courts

Courtroom litigation is still the most popular way people seek to resolve their disputes.

Even when people go for arbitration but cannot find an arbitrator, they approach a High Court or
the Supreme Court for the appointment of Arbitrators.

The burden of the courts will be lifted to some extent with the presence of an Arbitration Council
for the appointment of arbitrators..

9
Inserted by the Arbitration & Conciliation (Amendment) Act, 2019
Inserted by the Arbitration & Conciliation (Amendment) Act, 2019
6. KEY CHANGES BROUGHT BY THE AMENDMENT OF 2019

Definition of Arbitral Institution

Section 11 of the Arbitration and Conciliation prescribes the procedure for appointing arbitrators.

Prior to the amendment:

• Parties were free to choose arbitrators on their own.

• The number of arbitrators to be appointed could have been mentioned in the contract
under the arbitral clause.
• A sole arbitrator could have been appointed by one party or together by both parties, or
• Each party could appoint one arbitrator each, and
• The appointed arbitrators shall appoint the third arbitrator.

After the amendment:

• Arbitral Institutions 10 have been introduced for appointing arbitrators for cases
excluding international commercial arbitrations.
• It has been defined in Section 2 of the Amendment Act of 2019 as an arbitral institution
designated by the Supreme Court or a High Court as the case may be.
• In international commercial cases of arbitration, the arbitral institution designated by
the Supreme Court will appoint arbitrators.
• In domestic arbitration, the same will be done by an arbitral institution designated by
the concerned High Court.
• If any arbitral institution is not available, the Chief Justice of a High Court has to make
a panel of arbitrators to work as an arbitral institution.

1010
Omitted by the Arbitration & Conciliation (Amendment) Act, 2019 Earlier it stood as: “The Supreme Court or, as
the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-
section (6), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the
existence of an arbitration agreement.” 3 Inserted by the Arbitration & Conciliation (Amendment) Act, 2015
 • The process of appointing arbitrators should be completed within a maximum of 30
days.

Eligibility of Arbitrators

An arbitrator is the most important person in an arbitration proceeding. He is like a judge who
hears both parties and reaches a solution for settling the dispute between the parties.

The act had no eligibility criteria for an arbitrator prior to the amendment.

Section 11 stated the process of appointing arbitrators but did not mention any qualifications that
may be required.

It was briefly mentioned in Section 11(8) that if any specific qualification is required for the
arbitrator, then the party could make an agreement for the same before appointing one.

In order to maintain the quality of arbitrators, some qualifications and experience have been laid
down in the 8th Schedule that the arbitrators are required to have.

The 8th Schedule states that in order to be an arbitrator11, a person should be either:

• An advocate who has at least 10 years of experience in practising as an advocate; or

• A chartered accountant who has at least 10 years of experience; or
• A cost accountant with at least 10 years of experience; or
• A company secretary having at least 10 years of experience; or
• A former officer of the Indian Legal Service; or
• A law degree holder who has at least 10 years of experience in legal matters with the
government, or public or private sector; or

11
Omitted by the Arbitration & Conciliation (Amendment) Act, 2019 Earlier it stood as: “The Supreme Court or, as
the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-
section (6), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the
existence of an arbitration agreement.”
 • An engineering degree holder who has at least 10 years of experience as an engineer; or
• A former senior-level officer of the central or state government;
• A college graduate degree holder with at least 10 years of experience in specialized
areas in the government, such as – telecom, information technology, intellectual
property rights.etc.
• On reading the list, it is clear that no foreign lawyer or any equally qualified foreigner can
be appointed as an arbitrator.
• The amendment was made to promote international and domestic arbitration and make the
process easier, fairer and more reliable.
• But, the exclusion of foreigners is in opposition to the intent behind the amendment.
• In matters of international arbitration, the foreign parties will not have the arbitrator of their
choice because of his nationality. This might discourage them to opt for Arbitration
proceedings in India.
• This defeats the purpose of the amendment as the purpose of the amendment was to promote
arbitration in India and make India a hub of Arbitration.

Arbitration Council

Establishment of the Arbitration Council of India

Tied in with the introduction of arbitral institutions 12 is the creation of the Arbitration
Council of India which, in terms of the provisions of the 2019 Amendment, has been modelled
as a premier arbitration regulator/overseer performing various functions for promoting,
reforming and advancing the practice of arbitration in the country.

The new amendment has introduced a new independent body, known as the Arbitral Council of
India. The council has been assigned a number of functions including promoting ADR 13 and
framing policies to make the Arbitration procedures more efficient.

12
3 Inserted by the Arbitration & Conciliation (Amendment) Act, 2015
13
Inserted by the Arbitration & Conciliation (Amendment) Act, 2019
Section 43C of the amendment act of 2019 14 says that the council will be headed by
a Chairperson who will be either:

• A former Judge of the Supreme Court, or

• A former Chief Justice of a High Court, or
• A former Judge of a High Court.

The chairperson is required to have specialized in the field of arbitration and must be experienced
in the conduct or administration of arbitration.

The council also includes other members who are:

• An eminent practitioner of arbitration who is knowledgeable and experienced in

domestic as well as international arbitration.
• An eminent academician who specializes and professes ADR laws.
• The Minister of Law and Justice, or Secretary in the department of legal affairs.
• Secretary in the Department of Expenditure or in the Ministry of Finance.
• A representative of a government recognized body of commerce & industry, who will
be on a rotational basis.
• Chief Executive Officer or a Secretary ex officio.

• Duties and Powers of Arbitration Council

The main duties of the Arbitration Council15 are:

1. To frame policies for grading Arbitral Institutions and authorizing arbitrators.

2. Frame norms to maintain a good quality level of ADR.
3. Promote institutional arbitration by strengthening arbitral institutions.
4. Keeping records of arbitral awards granted in India and Abroad.

14
Inserted by the Arbitration & Conciliation (Amendment) Act, 2019
15
Inserted by the Arbitration & Conciliation (Amendment) Act, 2019
 5. And other duties that will be decided by the Government.

• Grading of Arbitrators and Arbitral Institutions16

The Arbitration Council of India has been assigned with the duty to grade Arbitrators and the
Arbitral Institutions. Grading will be done on the basis of:

• Quality and capability of arbitrators;

• Performance;
• Infrastructure;
• Meeting the time limits for disposal of domestic or international arbitral proceedings.

Manner of demonstrating circumstance(s) that would justify interference with an

award in a petition under Section 34

• An interesting modification brought about by the 2019 Amendment is in relation to the

manner of ‘proving’ the pre-requisites for interference with an award under Section 34

Time-limit for completing proceedings

Section 23 of the Act talks about Statements of claim and defence. Prior to the amendment,
the time limit for statements of claim and defence could have been:

• Agreed upon by the parties; or

• Could have been decided by the arbitral tribunal.

After the amendment of 2019, a new subsection – Section 23(4) has been added to the section.

The new Section states that the statement of claim and defence should be completed within 6
months from the day when the arbitrator or all the arbitrators have been appointed.

16
Inserted by the Arbitration & Conciliation (Amendment) Act, 2019
Section 29(1) has been added which states that:

• The arbitral award must be given within 12 months from the date of completion of
proceedings as prescribed under Section 23(4).

The proviso to the Section states that in cases of International Commercial Arbitration:

• The arbitral award must be given as quickly as possible;

• The arbitrators must try as hard as possible to give the award within 12 months from the
date of completion of Arbitral Proceedings.

The intent behind this amendment of time limitation was to provide a faster remedy and save the
parties their time and money.

RETROSPECTIVE EFFECT

In the case of BCCI v. Kochi Cricket Pvt. Ltd the parties had initiated arbitration proceedings in
2011 and two arbitral17 awards were given in 2015 after the aforementioned Section 87 came into
force by way of 2015 amendment.

The respondents went for getting their awards enforced while the applicants filed a petition
challenging the awards.

The respondents were not allowed to get their orders enforced due to the pendency of a petition
before the court. Even though the concept of automatic stay did not exist when the cause of action
arose and the parties went to settle their dispute.

17
“Court” means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise
of its ordinary original civil jurisdiction,
Section 87 18was introduced much after the proceedings had initiated. A single-judge bench in
Bombay High Court said that automatic stay would apply in this situation. Giving the amendment
act a retrospective effect.

However, when the case went to the Supreme Court, it was held that the act will not have a
retrospective effect and automatic stay shall not be applicable in cases where the proceedings began
prior to when the amendment came into force.

In the 2019 amendment, a new Section 87 has been inserted in the Act. The section states that:

• The amendment of 2019 will be applicable to proceedings that were initiated after the
amendment of 2015 came into force.
• It shall not apply to court proceedings that arose out of arbitral proceedings that have
been initiated before or after the amendment of 2015.

This newly inserted section is contrary to the judicial ruling in the BCCI case. It gives the
amendment a retrospective effect for up to 2015. This section needs judicial interpretation, or
should be repealed.

Powers of the Court to refer matters

Under Section 45 of the Act, the courts have been vested with the power to refer any matter to the
arbitration clause if:

• There there is an arbitration 19clause in the agreement,

• One of the parties or any claimant requests for arbitration.

The court would reject the request if the court finds the agreement to be null and void.

18
“Court” means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise
of its ordinary original civil jurisdiction,
19
Inserted by the Arbitration & Conciliation (Amendment) Act, 2019
This section has been amended to replace the words “unless it finds” to “unless it prima
facie finds”.

Prima facie is a legal maxim which translates to ‘on the face of it’. Meaning, at first glance.

Prior to the amendment, a court proceeding would take place in order to find that the agreement is
null and void. The parties would argue and establish their case.

Post amendment, if the court can see that the agreement is null and void, the request can be rejected
without any proceeding on that matter.

Confidentiality Clause20

Any proceeding of arbitration and conciliation must be confidential in order to protect any
information of the parties being leaked.

Section 75 of the act states that:

• Any conciliation proceeding is to be kept confidential notwithstanding anything

contained in any other law.
• The settlement agreement shall remain confidential unless they need to be disclosed for
purposes of implementation and enforcement of awards.

While the statute mandated a conciliation proceeding to be kept confidential, there was no such
statute regarding an arbitration proceeding.

Keeping that in mind, a new Section 42A has been inserted in the act – that says:

• The arbitrator, arbitral institution and all the parties should keep the proceedings
confidential.

20
Inserted by the Arbitration & Conciliation (Amendment) Act, 2019
 • The information anyhow needs to be disclosed if needed for the purpose of
implementation and enforcement of the award.
• This was a much-required change brought upon by the new amendment.

Excision of Power of Arbitrators to make orders under Section 17 in the Post-Award stage

The 2015 Amendment 21 had permitted the parties to obtain interim measures from an arbitral
tribunal under Section 17 of the 1996 Act during the pendency of the arbitration proceedings or at
any time after the making of the award, but before it was enforced in accordance with Section 36.
This period for which the arbitral tribunal can order interim relief has now been reduced in the
2019 Amendment, by the removal of the said power after the making of the arbitral award.

Protection for Arbitrators

The 2019 Amendment also puts in place an express safety-net for arbitrators and clarifies
that no suit or other legal proceedings shall lie against an arbitrator(s) for anything done in
good faith or intended to be done under the 1996 Act.

Prima Facie finding enough for refusal to refer parties to Arbitration under Section 45

The 2019 Amendment has sought to bring about textual equivalence between Section 45 and
Section 8 of the 1996 Act as regards the nature of the determination required to be made by a
Court.

Formal recognition of Arbitral Institutions and delegation of crucial functions

The 2019 Amendment brings to practical fruition the normative push initiated by the 2015
Amendment towards setting up and establishing arbitral institutions in the country. To this
end, the 2019 Amendment specifically empowers the Supreme Court and the High Courts to
designate arbitral institutions for performing crucial functions, including appointment of
arbitrators.

Applicability of the Fee Provisions enshrined in the Fourth Schedule

The 2019 Amendment postulates, through some very convoluted language, that in the absence of
a designated arbitral institution, the High Court is required to maintain a panel of arbitrators and if
a party were to appoint an arbitrator from such a panel then the fee as stipulated in the Fourth
Schedule shall be applicable to the arbitrator so appointed.

21
Inserted by the Arbitration & Conciliation (Amendment) Act, 2015
7.CONCLUSION

The intent behind the amendments might have been good but the execution is not flawless.The
process regarding the grading of the arbitrators is not very clear. The exclusion of foreign
arbitrators discourages foreign parties who wish to commence arbitration in India.The amendment
is a step in the right direction and with some more amendments, India may be able to become a
Hub for Arbitration.The 2019 amendment acts clearly aims at removing the difficulties
which were being faced during the conduct of arbitration proceedings and the court
proceedings arising therefrom. With separate time frame for completion of pleading,
arbitral tribunal will have full period of one year for conducting the trail and passing
the award. With increase in role of arbitral institutions, institutional arbitrations as
against ad hoc arbitration is likely to get a boost. Clarification with respect of
applicability of 2015 with prospective effect will go a long way in eliminating
confusion. It is, however, felt that legislature needs to consider providing upper age
limit for any person to be appointed as arbitrator. Even the fee provided in the Fourth
Schedule could be made binding in the absence of any agreement to the contrary
between the parties. It is evident that changes are taking place gradually on all fronts. Indian
Courts have refrained themselves from interfering in arbitral proceedings where the parties chose
to settle their dispute through the process of Arbitration. On the other end, the amendments
introduced by the Amendment Act of 2019 have received mixed reactions. The delegation of
courts’ power to appoint arbitrators, the express provision of confidentiality (Section 42A), proof
of incapacity or fraud for setting aside an award and continuation of an arbitrator’s mandate
pending application for extension of the arbitration timeline are changes which are progressive and
thrive towards making India an arbitration-friendly jurisdiction. However, the amendment
regarding the removal of a mandatory timeline for international commercial arbitrations in India is
one which negatively impacts India as a seat for arbitration. To end it all, the effectiveness and
success of these changing trends in the Arbitration Act will depend on time and how the same is
interpreted by our judiciary. 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.
 8. BIBLIOGRAPHY

BOOKS
* LAW OF ARBITRATION BY AVTAR
SINGH.
* ALTERNATIVE DISPUTE
RESOLUTION BY DR. S.C. TRIPATHI
* ARBITRATION AND CONCILIATION
BY MADHUSUDHAN SAHARAY
* LAW OF ARBITRATION
CONCILIATION AND NEGOTIATION
BY DR. ASHOK. K. JAIN

WEBSITES
* http://www.mediate.com
* http://adrr.com/
* www.onlinemediators.com/
* http://www.un.or.at.uncitral

MAGAZINES

* IIAM MAGAZINE
* IIADRA MAGAZINE