The Government has made drastic changes to the Arbitration and Conciliation Act, 1996 by an Ordinance that was approved by Pranab Mukherjee, President of India. The amendment is favorable to the corporate who often resort to arbitration during a dispute. According to the new law, arbitrators will be rewarded for finishing their work on time and others who delay the work unnecessarily shall be imposed with penalty. This is to make sure that the retired judges who are appointed as arbitrators do not mage any delay in the arbitral proceedings. The appropriate court shall provide for an extension of six months in additon to the 12 months fixed for the arbitrators to finish their work in exceptional cases.
The Act further provides that the parties who refer the dispute to arbitrator shall give some reward to him on completion of the work in time. But the arbitrators who did not finish the proceeding in time and pronounce the award after the lapse of specified time with out relevant reason shall be liable to penal consequences. Their fees shall be reduced at the rate of 5% for every delayed month. The Prime Minister has suggested for imposing penalty for non-completion of work.
In December 2014, though similar law was initiated, it was not sent to the President for his assent. In that bill, the time for deciding cases was 9 months. But due to the concerns expressed by the arbitrators, the Government decided to revise the bill. Prior to signifying assent, the hon’ble President clarified some points with Arun Jaitley, Union Finance Minster and D V Sadananda Gowda, Union Law Minister regarding the new bill. The main object behind such a drastic change is to prevent undue delay by the retired judges to complete the arbitral proceedings.
Yet another ordinance that provides for the establishment of commercial courts, Commercial Division and Commercial Appellate Division was also signed by the President. It gives jurisdiction to High Courts to deal with commercial disputes of estimated value. The Commercial Courts will be similar to the District Courts and all the cases that are pending in high courts and civil courts above Rs 1 crore shall be transferred to the new court.
Adv. Jewel Panicker