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Ordinance to bring in changes to Arbitration and Conciliation Act approved by the Union Cabinet

The Union Cabinet yesterday cleared an ordinance for bringing in amendments to the Arbitration and Conciliation Act, 1996, aimed at attracting international stakeholders for settling commercial disputes in India.

The most significant feature of the ordinance is the nine month time limit for settling of cases by the arbitrator. Non compliance will attract a bar from taking up new cases for a certain period of time. An extension can be sought from the High Court. However, in case of further delays, the High Court will be free to debar the arbitrator for a certain period.

The ordinance also places a cap on the fee of the arbitrator. The arbitrator will have to make it clear if there exists a conflict of interest in the case to the taken up by him.

Previously this month, Attorney General Mukul Rohatgi had advocated the repeal of Arbitration and Conciliation Act 1996, advising a new law with emphasis on timely settlement of business disputes and fixing greater onus on arbitrators against delay.

Rohatgi had also suggested strict penalties such as debarment for a period of three years in case of unnecessary delay. He also recommends a ceiling of fees and expenses of arbitrators and arbitration itself. The fees can be graded into two or three levels depending on the type of dispute settlement they are presiding. Read the LiveLaw story here.

The Arbitration and Conciliation Act, 1996 is based on the UNCITRAL Model Law on International Commercial Arbitration, 1985 and the UNCITRAL Conciliation Rules, 1980. The working of the 1940 Act was also the subject of the 210th Report of the Public Accounts Committee of the Fifth Lok Sabha. The Law Commission of India also examined the working of the 1940 Act in its 76th Report.

The 246th Law Commission of India Report titled, ‘Amendment to the Arbitration and Conciliation Act, 1996’, had earlier in August, suggested some major changes to the Arbitration and Conciliation Act.

According to a Government functionary, “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” Read all the recommendations of the Law Commission of India here.

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