New Delhi: A judge presiding over an arbitration in a commercial dispute will have to settle the case in nine months unless a high court grants an extension, else he faces the prospects of being debarred from taking up new cases, according to one of the amendments cleared by government to the arbitration law.
The amendments to the Arbitration and Conciliation Act, 1996, aimed at sending a signal to the international community that settling commercial disputes in India is no more a difficult and costly proposition, were part of an ordinance cleared by the Union Cabinet yesterday.
“Government brought an ordinance as it wanted the amendments, aimed at attracting foreign investments, to come in place at the earliest,” said a senior government functionary.
The President will have to sign the ordinance before it comes into force.
According to the amendments, the presiding officer of a commercial dispute will have to clear the case within a nine-month time frame. He or she will be free to seek an extension from the High Court. But in case of further delays, the High Court will be free to debar the arbitrator for a certain period.
Attorney General Mukul Rohatgi had recently opined that a penalty be imposed on arbitrators who delay matters either because of personal benefit or otherwise. He had said they should be debarred from taking up fresh arbitrations, say for a period of three years, from the time of the default.
Another amendment puts a cap on fee of arbitrator.
The arbitrator will have to also spell out if there is a conflict of interest in the case he or she is taking up.
“Most of the recommendations of the Law Commission have been accepted. While some have been incorporated in the law itself, some of the recommendations will be used while framing rules,” the functionary said.
In August, the Law Commission had come out with its recommendations to amend the Arbitration Act by proposing minimal interference by courts, time limit to complete proceedings and recommending a structural fee schedule for arbitrators.
The Commission said the Act has been in force for almost two decades in the country. But “in this period of time, although arbitration has fast emerged as a frequently chosen alternative to litigation, it has come to be afflicted with various problems including those of high costs and delays, making it no better than either the earlier regime which it was intended to replace or to litigation to which it intends to provide an alternative”.
The Commission has encouraged the culture of institutional arbitration in India which it said will go a long way to redress the institutional and systemic malaise that has seriously affected the growth of arbitration.
It hoped high courts and the Supreme Court, while acting in the exercise of their jurisdiction of the Act, will take steps to encourage the parties to refer their disputes to institutionalised arbitration.
