Law panel releases amendments for the 1996 Arbitration Act
6 Aug 2014 6:26 AM IST
As India attempts to turn into a preferred hub for arbitrations, the Law Commission today came out with amendments to 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 Arbitration and Conciliation Act, 1996 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 report of the law panel, submitted to
Law Minister Ravi Shankar Prasad, said.
It said delays are inherent in the arbitration process and costs of arbitration can be tremendous.
Even though courts play a pivotal role in giving finality to certain issues, after and even during an arbitration, there exists a serious threat of arbitration-related litigation getting caught up in the huge list of pending cases before courts.
‘The object of quick alternative disputes resolution frequently stands frustrated,’ it said.
Though arbitration may be conducted ad hoc or under institutional procedures and rules, institutional arbitration provides distinct advantages which are unavailable to parties opting for ad hoc arbitration, it said.
Referring to fee charged by arbitrators, the Commission said one of the main complaints against arbitration in India, especially ad hoc arbitration, is the high costs associated with the same ‘including the arbitrary, unilateral and disproportionate fixation of fees by several arbitrators.’
The Commission said if arbitration is really to become a cost-effective solution to dispute resolution in the domestic context, there should be some mechanism to rationalise the fee structure for arbitrations.
It said even the Supreme Court had made observations in this regard.
The Commission said the Arbitration and Conciliation Act, 1996 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 report of the law panel, submitted to
Law Minister Ravi Shankar Prasad, said.
It said delays are inherent in the arbitration process and costs of arbitration can be tremendous.
Even though courts play a pivotal role in giving finality to certain issues, after and even during an arbitration, there exists a serious threat of arbitration-related litigation getting caught up in the huge list of pending cases before courts.
‘The object of quick alternative disputes resolution frequently stands frustrated,’ it said.
Though arbitration may be conducted ad hoc or under institutional procedures and rules, institutional arbitration provides distinct advantages which are unavailable to parties opting for ad hoc arbitration, it said.
Referring to fee charged by arbitrators, the Commission said one of the main complaints against arbitration in India, especially ad hoc arbitration, is the high costs associated with the same ‘including the arbitrary, unilateral and disproportionate fixation of fees by several arbitrators.’
The Commission said if arbitration is really to become a cost-effective solution to dispute resolution in the domestic context, there should be some mechanism to rationalise the fee structure for arbitrations.
It said even the Supreme Court had made observations in this regard.
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