The document discusses key amendments made to the Arbitration and Conciliation Act through the Arbitration and Conciliation (Amendment) Act, 2015. Some of the key changes include: expediting the settlement of disputes by imposing timelines for arbitrator appointments and awards; empowering arbitrators to grant interim measures of protection; introducing provisions around arbitrator independence and impartiality; removing the automatic stay on enforcement of arbitral awards; and introducing a model fee structure for arbitrators. The amendments aim to make arbitration in India more party-friendly, reduce court interference, and promote India as a hub for international commercial arbitration.

1. THE ARBITRATION AND
CONCILIATION (AMENDMENT) ACT, 2015
Mahesh Kumar Gupta
Executive Director/Engineering Projects (I) Ltd.
B-4, Sector-44, Noida-201301
mob: 9899300900, e-mail: mkg_irse83@yahoo.co.in
WELCOME TO INTERACTIVE SESSION

2. CONTENTS
1. Arresting flight of Arbitration cases abroad
2. Independence/Impartiality of arbitrators
3. Expediting settlement of disputes
4. Minimum interference by the Courts in Arbitration
5. Empowering Arbitrators for interim measures
6. Cost of arbitration & Model fee structure
7. Counter statement within scope of reference

3. CONTENTS
8. Scope of setting aside of award
9. Removal of automatic stay of award
10. Interest on award
11. Applicability of amendment (prospectively)
12. Link for the Presentation & Amendment Act
END

4. 1 (1). Arresting the flight of Arbitration cases abroad
• Lack of Trust was the main reason.
• Employees, Advisors, Advocates, Consultants as
Arbitrators. (No more as per Vth/VIIth Schedule.)
• Delay in appointment of arbitrators.
• No Time bound arbitration.
• Frequent challenge & setting aside of award due to
vague term of public policy.
• Difficult to enforce the award if place in India.

5. 1 (2). Arresting the flight of Arbitration cases abroad
• Difficult to enforce the interim measures by Court.
• Extg. 2(2) Part I to apply where the place of arbitration is
in India. The said provision preempted the powers of
Indian Courts in respect of Interim measures, assistance
in taking evidence etc. e.g. prohibition of sale of assets
etc.
• According to new provisio to Sec 2(2), subject to an
agreement to the contrary, the provisions of sec. 9, 27,
37(1)(a) shall also apply to international arbitration, even
if the place of arbitration is outside India.

6. 2(1). Independence/Impartiality of arbitrators
• Extg. Sec. 11(8) (b) other considerations as are likely to
secure the appointment of an independent and impartial
arbitrator. It did not specify justifiable doubts as to the
independence & impartiality of an arbitrator.
• Builders made their advocate, Clients made their
employees as arbitrator, being against the PNJ.
• As per new sec. 12(1) (a) Arbitrator when approached,
shall disclose his relationship likely to give rise to
justifiable doubts as to his independence or impartiality
in writing i.e.

7. 2(2). Independence/Impartiality of arbitrators
• i.e. direct or indirect, any past or present relationship or
interest in any of the parties or in relation to the subject
matter in dispute, whether financial, business,
professional or other kind.
• Grounds in Vth Schedule are guiding factors.
• Even if an agt. Provide for appointment of certain
categories, the same shall not withstand if the agreed
arbitrators come under the categories specified in
Seventh Schedule.
• The above provisions are introduced as per IBA
Guidelines

8. 2(3). Independence/Impartiality of arbitrators
• Grounds for justifiable doubts:
• Employee, Consultant, Advisor, past or present business
relationship,
• Currently advises party or its affiliate, represents law
firm acting as counsel of the party, lawyer in firm
representing party,
• Significant financial interest in one of the parties,
• Manager, Director or part of Management, commercial
relationship, regular advisor, family relationship,
• Given legal advice on the dispute, close family member
holding interest in the company etc.

9. 2(4). Independence/Impartiality of arbitrators
• Appointed arbitrator on two or more occasions, acted as
a counsel for or against the party in last 3 years.
• Arbitrators are lawyers in the same firm
• However, the parties may, subsequent to disputes having
arisen between them, waive the applicability of this sub-
section by express agreement in writing.
• Mandatory to make a disclosure by the Arbitrator as
regard to Number of on-going arbitrations, past or
present relationship or interest likely to give rise to
justifiable doubts as to independence or impartiality.

10. 3(1). Expediting settlement of disputes
• The Court to expeditiously dispose the application for
appointment of arbitrator under new sec. 11(13) with
endeavor to dispose within 60 days from the service of
notice on opposite party.
• To reduce the time in appointment of arbitral tribunal, as
per new sub sec. (6A), the court shall, notwithstanding
any judgement, decree or order of any court, confine to
the examination of the existence of an arbitration
agreement.
• 1940 Act, sec 28 gave power to court only to enlarge
time for making award except with the consent of the
parties.
• 1996 Act did not limit the time for the arbitrators so far.

11. 3(2). Expediting settlement of disputes
• As per new sec. 12(1)(b), arbitrator to disclose his ability
to devote sufficient time to complete the entire
arbitration within a period of 12 months.
• As per new section 29A, the award shall be made within
12 months from the date of entering upon the reference
i.e. appointment of arbitral tribunal.
• Incentive of entitlement of additional fees if award made
within 6 months.

12. 3(3). Expediting settlement of disputes
• The parties may extend period not exceeding 6 months
by consent.
• The mandate of the arbitrator shall terminate if award
not made in time unless the Court extends the same.
• Extension by court on sufficient grounds only & on terms
i.e. costs etc.
• Court may also reduce the fees of the arbitrators for the
delay
• Court may substitute one or all the arbitrators.
• Court will endeavour to dispose the matter of
extension/termination of arbitrators within 6 months.

13. 3(4). Expediting settlement of disputes
INTRODUCTION OF FAST TRACK PROCEDURE
• The parties may at any stage agree for fast track
procedure consisting of sole arbitrator.
• The dispute to be decided by written pleadings without
any oral hearings except for clarifying certain issues or
any further information.
• The award shall be made within a period of 6 months.
• The fees shall be as agreed between the arbitrator and
the parties.

14. 3(5). Expediting settlement of disputes
• The fee of arbitration fixed on claim amount instead of
per hearing fees incentivizing the arbitrators to expedite
the arbitration proceedings and publication of award.
• The provision of imposing costs for frequent and
unnecessary adjournments.
• Application for setting aside award to be disposed off
expeditiously and in any event within one year.

15. 4 (1). Minimum interference by the Courts in
Arbitration
• Appointment of arbitrator as administrative powers of
Court
• Appointment: No appointment only if the arbitration
agreement does not exist or is null and void/no valid
arbitration agreement. {Sec.8(1) & 11 (6A)}
• Test: prima facie satisfaction regarding the existence of
an arbitration agreement & bound to refer the parties to
arbitration
• Final decision of existence of the arbitration agreement:
Impliedly lies with the arbitral tribunal in accordance
with section 16, as a preliminary issue. If arbitration
rejected, the decision of the Court would be final &
conclusive.

16. 4 (2). Minimum interference by the Courts in
Arbitration
• New sub section 11.(6B): The designation of any person
…… shall not be regarded as a delegation of judicial
power by Supreme Court or the High Court.
• Since not regarded as judicial power, the decision would
be final and no appeal.
• Remedy would be before the arbitral tribunal.
• Deviation from SBP Company vs. Patel Engineering case,
beforehand the Limitation, Accord & satisfaction,
excepted matters were not in jurisdiction of the tribunal
if the tribunal was appointed by the Court.
• Henceforth, the Arbitral Tribunal will be vested with
powers to adjudicate the questions of limitation, accord
& satisfaction, excepted matters etc. in all cases.

17. 5 (1). Empowering Arbitrators for interim measures
• Extg. Sec. 17. Unless otherwise agreed by the parties, the
arbitral tribunal may, at the request of a party, order a
party to take any interim measure of protection.
• Substituted sec. 17(1). A party may, (even if agreed, party
can apply now) any time before arbitral award is
enforced, apply for an interim measure of protection in
respect of namely:—
• (i) appointment of guardian.
• (ii)(a) the preservation, interim custody or sale of any
goods which are the subject-matter
• (b) securing the amount in dispute in the arbitration;
• (c) detention, preservation, inspection of property/thing
which is the subject-matter, or as to which any question
may arise therein and authorising for any of the aforesaid

18. 5 (2). Empowering Arbitrators for interim measures
purposes any person to enter upon any land or building
in the possession of any party or authorising any samples
to be taken or any observation to be made, or
experiment to be tried, which may be necessary or
expedient for the purpose of obtaining full information
or evidence;
• (d) interim injunction or the appointment of a receiver;
• (e) such other interim measure of protection as may
appear to the Arbitral Tribunal to be just and convenient,
and the arbitral tribunal shall have the same power for
making orders as the Court has for the purpose of, and in
relation to, any proceedings before it.
• (2) Orders of the arbitral tribunal as the orders of the
Court & enforceable under CPC, 1908.

19. 6 (1). Cost of arbitration & Model Fee Structure
• Although claim of reduction of fees, but instead increase
the cost of arbitration as per model fees structure.
• Model fee structure introduced and the ceiling of Rs.
30.0 lakhs fixed. (not mandatory, shown in next slide)
• Regime for costs introduced to discourage frivolous
claims i.e. “costs follow the event” i.e. generally
unsuccessful party to pay the costs, reasons to be stated
for different order, frivolous counter claims leading to
delay, denial of reasonable offer to settle, frequent
adjournments to be taken into account.
• Advisable to finalise the fees with arbitral tribunal before
their appointment.

20. 6 (2). Cost of arbitration & Model Fee Structure
• Existing Sec. 31(8) Unless otherwise agreed by the
parties,(a) the costs of an arbitration shall be fixed by the
arbitral tribunal has been removed due to hurry.
• As per substituted 31(8), the Costs shall be fixed as per Sec.
31 A.
• Costs would include the fees of arbitrators, courts,
witnesses, legal fees & expenses, any other expenses
incurred in connection with the arbitral proceedings.
• As per 31A.(1), the Court or arbitral tribunal shall have the
discretion to determine the above costs.
• Seems to be a hurried drafting as parties not entitled to fix
the fees of arbitrators.

21. 6 (3). Cost of arbitration & Model Fee Structure
• Any agreement as to the fees before dispute would not be
valid.
• Discretion to whom costs are payable, amount of such
costs, when the costs to be paid.
• Agreement that parties have to share the costs in some
proportion shall be valid only if made after the arising of
the dispute.

22. 6 (4).Model fee structure
Sum in Dispute (Rs.) Model Fees (Indicative)
Upto Rs. 5,00,000/- Rs. 45,000/-
Above Rs. 5,00,000/- & upto Rs.
20,00,000/-
Rs. 45,000/+ 3.5% of the claim amt. over Rs. 5,00,000/-
Above Rs. 20,00,000/- & upto Rs.
1,00,00,000/-
Rs. 97,500/+ 3% of the claim amt. over Rs. 20,00,000/-
Above Rs. 1,00,00,000/- & upto Rs.
10,00,00,000/-
Rs. 3,37,500/+ 1% of the claim amt.overRs. 1,00,00,000/-
Above Rs. 10,00,00,000/- & upto Rs.
20,00,00,000/-
Rs. 12,37,500/+.75% of the claim amt.overRs.1,00,00,000/
Above Rs. 20,00,00,000/- Rs. 19,87,500/- + 0. 5% of the claim amount over & above
Rs. 20,00,00,000/- with a ceiling of Rs. 30,00,000/-
For Sole Arbitrator, an additional amount of 25% of the above.

23. 7. Counter statement within scope of reference
• Submission of Counter Claims: No separate reference
required to be given to arbitral tribunal either by
appointing authority or the Court. {Sec. 23(2A)}
• Respondent may also submit a counter claim/set off
within the scope of the arbitration agreement.
• Counter claim to be treated as being within the scope of
reference.
• Condition: to fall within the scope of the arbitration agt.
to avoid a separate/new reference by the respondent.
• In order to ensure final settlement of disputes between
parties and prevent multiplicity of litigation.
• The Law of Limitation would however be attracted for
counter claims.

24. 8 (1). Scope of setting aside the award
EXISTING GROUNDS FOR SETTING ASIDE THE AWARD
• a party under some incapacity
• Arb. Agt. not valid under the subject law
• no proper notice of the appointment of an arbitrator or of the
arbitral proceedings
• unable to present the case
• disputes not contemplated by or not falling within the terms
of arbitration agreement.
• decisions on matter beyond the scope of arbitration
• tribunal or procedure not as per the agreement of the parties
• the subject-matter not capable of settlement by arbitration
under the law
• The award against the public policy of India, (unsafe &
treacherous ground for legal decision) i.e.
• (a) induced or affected by fraud or corruption

25. 8 (2). Scope of setting aside the award
• (b) violation of section 75 or section 81
• Public policy further explained to include the following.
• (c) is in contravention with the fundamental policy of Indian
law (won’t include review on the merits of the dispute.
• (d) in conflict with the most basic notions of morality or
justice.
• (e) if patently illegal (in other than ICA) but not on the ground
of erroneous application of law or reappreciation of evidence.
• Old. Sec. 28(3) In all cases, the arbitral tribunal shall decide in
accordance with the terms of the contract and shall take into
account the usages of the trade applicable to the transactions.
• Substituted: While deciding and making an award, the arbitral
tribunal shall, in all cases, take into account the terms of the
contract and trade usages applicable to the transactions.

26. 8 (3). Scope of setting aside the award
• The awards were so far set aside if against any of the
provisions of the contract even if unconscionable and against
the trade practices e.g. no interest would be payable etc.
• [review based on the patent illegality std. set in ONGC Ltd.v.
Saw Pipes Ltd. The proviso creates exceptions for erroneous
application of the law and re-appreciation of evidence, which
cannot be the basis for setting aside awards.]
• Application to be filed only after notice to other party.
• Application to be disposed of within a period of one year from
the date of notice to the other party.

27. 9. Removal of automatic stay of award
• Existing provision under sec.36 for enforcement:
• The award shall be final subject to time for making an application to set aside
the arbitral award has expired, or the application has been refused.
• Amended Sec. 36(1) time for making an application to set aside the arbitral
award has expired, then subject to-
• Sec. 36(2) Where an application to set aside award has been filed, the filing of
such an application shall not by itself render the award unenforceable, unless a
separate application made for that purpose & the Court grants stay of award in
accordance with the provisions of sub-section(3)
• Sec. 36(3). Upon filing of the separate application under sub-section (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.
• Court shall have due regard to the provisions for grant of stay of a money decree
under the provisions of the Code of Civil Procedure.
• As per CPC, if the decree is one for payment of money, the Court shall, if it
grants stay without requiring security, record its reasons for so doing.

28. 10. Interest on award
• Before amendment, As per Sec. 31(7) (a) the arbitral tribunal may
include in the sum for which the award is made interest, at such rate,
over any part, for any period from cause of action to date of award
• (b) unless the award otherwise directs, carry interest @ 18% p. a. from
date of the award to the date of payment.
• Amended interest instead of 18% to interest at 2% p. a. higher than the
current rate of interest from the date of award to date of payment.
• Expl.: “current rate of interest” shall have the meaning as per Cl (b) sec.2
of the Interest Act, 1978.
• NOTE: “sum” includes interest awarded in section 31(7)(a).
• (as per decision of SC in Hyder Consulting (U.K.) v. Governor of Orissa
• “current rate of interest” means the highest of the maximum rates at
which interest paid on different classes of deposits by different classes of
scheduled banks in accordance RBI Banking Regulation Act

29. 11 (1). Applicability of amendment (prospectively)
• New clause 26 introduced in the Act is as follows:
• "26. Nothing contained in this Act shall apply to the arbitral
proceedings commenced, in accordance with the provisions of
section 21 of the principal Act, before the commencement of
this Act unless the parties otherwise agree but this Act shall
apply in relation to arbitral proceedings commenced on or
after the date of commencement of this Act.”
• Section 21 of the Act: Commencement of arbitral proceedings-
Unless otherwise agreed by the parties, the arbitral
proceedings in respect of a particular dispute commence on
the date on which a request for that dispute to be referred to
arbitration is received by the respondent.

30. 11 (2). Applicability of amendment (prospectively)
• The ongoing cases will have no time limit while the new cases
will have to be completed in 12 months.
• However, the time limit for the arbitral award would start
when all the arbitrators receive the notice, in writing, of their
appointment.
• The conflict would arise when a subsequent dispute in an
ongoing arbitration case is submitted to the respondent for
adjudication which is closely connected with the ongoing
arbitration case.

31. 12. Link for the Presentation & Amendment Act.
• Presentation of Arbitration Act after Amendment
http://www.slideshare.net/MaheshGupta19/a-c-1996-amdt-
ordinance-56522055
• THE ARBITRATION AND CONCILIATION (AMENDMENT) ACT,
2015 NO. 3 OF 2016 [31st December, 2015.]
http://taxguru.in/wp-content/uploads/2016/01/Arbitration.pdf

32. THE ARBITRATION AND
CONCILIATION (AMENDMENT) ACT, 2015
Mahesh Kumar Gupta
Executive Director (Railway)
Engineering Projects (India) Limited
mkg_irse83@yahoo.co.in
THANKS