Preliminary PREAMBLE

[Act No. 33 of 2019]

[09th August, 2019]

An Act further to amend the Arbitration and Conciliation Act, 1996.

Be it enacted by Parliament in the Seventieth Year of the Republic of India as follows:--

S.1 Short title and commencement

¹[(1) This Act may be called the Arbitration and Conciliation (Amendment) Act, 2019.

(2) Save as otherwise provided in this Act, it shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint and different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.]

In the Arbitration and Conciliation Act, 1996 (26 of 1996) (hereinafter referred to as the principal Act), in section 2,--

(i) in sub-section (1),--

(A) after clause (c), the following clause shall be inserted, namely:--

'(ca) "arbitral institution" means an arbitral institution designated by the Supreme Court or a High Court under this Act;';

In section 11 of the principal Act,--

(i) after sub-section (3), the following sub-section shall be inserted, namely:--

"(3A) The Supreme Court and the High Court shall have the power to designate, arbitral institutions, from time to time, which have been graded by the Council under section 43-I, for the purposes of this Act:

Provided that in respect of those High Court jurisdictions, wher

S.4 Amendment of section 17

¹[In section 17 of the principal Act, in sub-section (1), the words and figures "or at any time after the making of the arbitral award but before it is enforced in accordance with section 36" shall be omitted.]

--------------------------------------

1. W.e.f. 30.08.2019 vide Notification No. SO3154(E) dated 30.08.2019.

S.5 Amendment of section 23

¹[In section 23 of the principal Act, after sub-section (3), the following sub-section shall be inserted, namely:--

"(4) The statement of claim and defence under this section shall be completed within a period of six months from the date the arbitrator or all the arbitrators, as the case may be, received notice, in writing, of their appointment.".]

---------------------------

¹[In section 29A of the principal Act,--

(a) for sub-section (1), the following sub-section shall be substituted, namely:--

"(1) The award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings under sub-section (4) of section 23:

Provided that the award in the ma

Legal Commentary on Section 6 of the Arbitration and Conciliation (Amendment) Act, 2019

Introduction

Section 6 of the Arbitration and Conciliation (Amendment) Act, 2019, pertains to the process of initiating arbitration proceedings and the conditions under which parties can seek to stay or resist arbitration, especially when a dispute arises before the commencement of arbitration. The 2019 amendment aims to streamline arbitration procedures, clarify the scope of judicial intervention, and reinforce the autonomy of arbitration processes under the Act.

What does Section 6 Say

Section 6 primarily deals with the application of the provisions of the Act to pending proceedings, the stay of proceedings, and the circumstances under which courts can refuse or stay arbitration. It emphasizes the parties' right to seek a stay of legal proceedings if an arbitration agreement exists, and it clarifies that the courts shall not entertain proceedings where an arbitration agreement is in place unless certain exceptions apply.

Essential Ingredients

• Presence of an arbitration agreement between parties.
• An application for stay or reference to arbitration filed before or during pending proceedings.
• The court's discretion to stay proceedings if an arbitration agreement exists.
• Conditions under which the court may refuse or allow the stay, including when the matter is not arbitrable or the arbitration agreement is invalid.

Scope of Section

• Applies to pending proceedings where a party seeks to stay litigation in favor of arbitration.
• Reinforces the principle of party autonomy by emphasizing the enforceability of arbitration clauses.
• Limits judicial interference by directing courts to stay proceedings unless specific exceptions apply.
• Clarifies the circumstances under which courts can refuse to stay or refer disputes to arbitration, such as when the dispute is non-arbitrable or the arbitration agreement is invalid.

Punishment for Section

• The section itself does not prescribe specific punishments; however, failure to comply with the provisions may lead to contempt proceedings or adverse judicial orders.
• Non-compliance with court orders regarding arbitration can result in penalties or costs imposed on parties obstructing arbitration.

Legal Comments

• Party Autonomy - Section 6 underscores the importance of respecting arbitration agreements, promoting party autonomy and contractual freedom [G. N. Pandian VS S. Vasudevan].
• Judicial Restraint - The section aims to restrict courts from intervening unnecessarily in arbitration proceedings, aligning with the legislative intent to promote arbitration as a speedy alternative to litigation [G. N. Pandian VS S. Vasudevan].
• Pending Proceedings - It clarifies that the Act does not apply to proceedings already pending where the parties have agreed to arbitration, unless the court finds the dispute non-arbitrable [G. N. Pandian VS S. Vasudevan].
• Scope of Stay - Courts are empowered to stay proceedings if an arbitration agreement exists, but the stay can be refused if the dispute is not arbitrable or the agreement is invalid [Pradeepa Construction Company vs Urban Development Department (Udd), Govt. Of Karnataka (gok)].
• Limitations on Court Intervention - The section limits judicial interference, requiring courts to pass orders in favor of arbitration unless exceptional circumstances justify otherwise [DLF Home Developers Ltd. vs Shipra Estates Ltd.].
• Injunctions and Stay - Courts can grant stay of proceedings in cases where the arbitration clause is valid and applicable, reinforcing the principle of kompetenz-competenz [Panipat Jalandhar Nh 1 Tollway Private Limited Formerly Known As M S Soma Isolux Nh 1 Tollway Pvt Ltd. VS National Highways Authority of India].
• Non-Arbitrable Disputes - The section does not bar courts from refusing stay if the dispute is non-arbitrable, such as criminal or non-contractual issues [DLF Home Developers Ltd. vs Shipra Estates Ltd.].
• Arbitration Agreement Validity - The section emphasizes the importance of the arbitration agreement's validity; if invalid, courts may refuse a stay and proceed with litigation [Pradeepa Construction Company vs Urban Development Department (Udd), Govt. Of Karnataka (gok)].
• Legal Doctrine of Kompetenz-Competenz - Section 6 aligns with the doctrine that arbitral tribunals or courts should decide on jurisdiction and validity of arbitration agreements, promoting judicial deference to arbitral authority [Panipat Jalandhar Nh 1 Tollway Private Limited Formerly Known As M S Soma Isolux Nh 1 Tollway Pvt Ltd. VS National Highways Authority of India].
• Judicial Discretion - The section grants courts discretion to refuse or grant stay based on the facts of each case, but within the framework of the Act’s objectives [G. N. Pandian VS S. Vasudevan].
• Procedural Clarity - It provides procedural clarity for courts to handle applications for stay, ensuring uniformity and predictability in arbitration proceedings [G. N. Pandian VS S. Vasudevan].
• Protection of Parties’ Rights - The section balances the rights of parties to seek arbitration with judicial oversight to prevent abuse or frivolous claims [DLF Home Developers Limited VS Rajapura Homes Private Limited].
• Impact of Amendments - The 2019 amendments reinforce the limited scope of judicial intervention, emphasizing that courts should primarily facilitate arbitration rather than obstruct it [India Pistons Limited, Chennai VS Ganapathi Chandrasekar].
• Consistency with Supreme Court Decisions - The provisions are consistent with jurisprudence that advocates minimal judicial interference and respect for arbitration agreements [Dlf Home Developers Ltd. VS Shipra Estates Ltd].
• Enforcement and Compliance - Failure to adhere to Section 6 orders may lead to contempt proceedings or costs, ensuring compliance with arbitration-related orders [Cox and Kings Ltd. VS SAP India Pvt. Ltd. ].

Note: The references are drawn from the provided sources, summarizing key legal principles and interpretations related to Section 6 of the Arbitration and Conciliation (Amendment) Act, 2019.

S.7 Amendment of section 34

¹[In section 34 of the principal Act, in sub-section (2), in clause (a), for the words "furnishes proof that", the words "establishes on the basis of the record of the arbitral tribunal that" shall be substituted.]

------------------------------------------------------

1. W.e.f. 30.08.2019 vide Notification No. SO3154(E) dated 30.08.2019.

S.8 Amendment of section 37

¹[In section 37 of the principal Act, in sub-section (1), for the words "An appeal", the words "Notwithstanding anything contained in any other law for the time being in force, an appeal" shall be substituted.]

------------------------------

1. W.e.f. 30.08.2019 vide Notification No. SO3154(E) dated 30.08.2019.

S.9 Insertion of new sections 42A and 42B

¹[After section 42 of the principal Act, the following sections shall be inserted, namely:--

"42A. Confidentiality of information.

Notwithstanding anything contained in any other law for the time being in force, the arbitrator, the arbitral institution and the parties to the arbitration agreement shall maintain confidentiality of all arbitral proceedings except award where its disclosure is necessary for the purpose of implementa

S.10 Insertion of new Part

After Part I of the principal Act, the following Part shall be inserted, namely:--

'PART IA

Arbitration Council of India

43A. Definitions

In this Part, unless the context otherwise requires,--

(a) "Chairperson" means the Chairperson of the Arbitration Council of India appointed under cl

S.11 Amendment of section 45

¹[In section 45 of the principal Act, for the words "unless it finds", the words "unless it prima facie finds", shall be substituted.]

---------------------------------

1. W.e.f. 30.08.2019 vide Notification No. SO3154(E) dated 30.08.2019.

S.12 Amendment of section 50

¹[In section 50 of the principal Act, in sub-section (1), for the words "An appeal", the words "Notwithstanding anything contained in any other law for the time being in force, an appeal" shall be substituted.]

---------------------------

1. W.e.f. 30.08.2019 vide Notification No. SO3154(E) dated 30.08.2019.

S.13 Insertion of new section 87

¹[After section 86 of the principal Act, the following section shall be inserted and shall be deemed to have been inserted with effect from the 23rd October, 2015, namely:--

"87. Effect of arbitral and related court proceedings commenced prior to 23rd October, 2015.

Unless the parties otherwise agree, the amendments made to this Act by the Arbitration and Conciliation (Amendment) Act, 2015 (3 of 2016) shall--

Legal Commentary on Act: ARBITRATION AND CONCILIATION (AMENDMENT) ACT, 2019 - Section 13

Introduction

Section 13 of the Arbitration and Conciliation (Amendment) Act, 2019, pertains to the procedure for challenging an arbitral tribunal's appointment or mandate. The 2019 Amendment aimed to streamline arbitration proceedings by reducing judicial intervention, especially in the appointment of arbitrators, and to promote India as a hub for arbitration. The section has undergone significant modifications to limit the grounds and scope for challenging arbitrator appointments, aligning with the broader objective of minimizing court interference.

What does Section 13 Say

Section 13 provides the grounds and procedure for a party to challenge the appointment or mandate of an arbitrator. The 2019 Amendment introduced a time limit of 30 days from the date of receipt of the notice of appointment or from the date of becoming aware of the arbitrator's mandate to file such a challenge. It also restricts the grounds for challenge primarily to situations where the arbitrator is biased or otherwise ineligible, and mandates that challenges be disposed of by the arbitral institution within a specified period.

Essential Ingredients

• Time Limit: Challenge must be filed within 30 days of receipt of the appointment notice or becoming aware of the arbitrator's mandate.
• Grounds for Challenge: Bias, lack of qualification, or ineligibility, as specified in the Act.
• Procedure: Challenge is to be disposed of by the arbitral institution, not the courts.
• Disposal Timeline: The arbitral institution must decide within 30 days.
• Restrictions: Limited grounds for challenge, emphasizing finality and efficiency.
• Automatic Stay: The 2019 Amendment restricts automatic stay on arbitral proceedings upon challenge.

Scope of Section

Section 13, post-amendment, primarily aims to:- Limit judicial interference in arbitrator appointment challenges.- Promote expeditious resolution by arbitral institutions.- Reduce delays caused by prolonged court proceedings.- Ensure challenges are based on substantial grounds like bias or ineligibility.- Facilitate the goal of India becoming a preferred arbitration hub by providing a clear, time-bound challenge mechanism.

Punishment for Section

There are no specific punishments prescribed under Section 13 itself. However, failure to adhere to the timelines or grounds may result in the challenge being dismissed, thereby upholding the finality of arbitral appointments. Non-compliance with procedural timelines can also attract costs or adverse orders in arbitration proceedings.

Legal Comments

• Streamlining Procedure - Section 13 now mandates a 30-day time frame for challenging arbitrator appointments, promoting swift resolution and reducing judicial delays [Hindustan Construction Company Limited VS Union of India].
• Limited Grounds for Challenge - The section restricts challenges to bias, lack of qualification, or ineligibility, aligning with the objective of finality in arbitration [Hindustan Construction Company Limited VS Union of India].
• Institutional Discretion - Challenges are to be disposed of by the arbitral institution, not courts, emphasizing arbitration autonomy [Hindustan Construction Company Limited VS Union of India].
• Time-bound Disposition - The arbitral institution must decide on challenges within 30 days, ensuring expeditious proceedings [Hindustan Construction Company Limited VS Union of India].
• Restriction on Court Intervention - The 2019 Amendment limits courts from intervening in challenges under Section 13, aligning with the policy to minimize judicial interference [Hindustan Construction Company Limited VS Union of India].
• Impact on Judicial Review - The amendment reduces the scope for courts to review arbitrator challenges, fostering finality but raising concerns about potential arbitrariness [Hindustan Construction Company Limited VS Union of India].
• Promotion of Arbitration - The amendments aim to make India a more arbitration-friendly jurisdiction by providing clear, time-bound challenge procedures [Hindustan Construction Company Limited VS Union of India].
• Consistency with International Practices - The 30-day challenge period aligns with international arbitration standards, enhancing India's global arbitration reputation [Hindustan Construction Company Limited VS Union of India].
• Potential for Arbitrator Bias Claims - The limited grounds may restrict parties from challenging arbitrators on other substantive issues, emphasizing the importance of selecting qualified arbitrators initially [Hindustan Construction Company Limited VS Union of India].
• Legal Certainty - The strict timelines and grounds contribute to legal certainty and reduce protracted disputes [Hindustan Construction Company Limited VS Union of India].
• No Automatic Stay - The section clarifies that challenges do not automatically stay arbitral proceedings, ensuring continuity [Hindustan Construction Company Limited VS Union of India].
• Alignment with Policy Goals - The section supports the government's aim to reduce court interference and promote arbitration as a preferred dispute resolution mechanism [Hindustan Construction Company Limited VS Union of India].
• Challenges to Appointment - The section provides a structured, time-limited process for challenging arbitrator appointments, reducing frivolous or dilatory challenges [Hindustan Construction Company Limited VS Union of India].
• Enforcement of Finality - The amendments reinforce the finality of arbitral awards and appointments, fostering confidence in arbitration proceedings [Hindustan Construction Company Limited VS Union of India].
• Legal Certainty for Arbitrators - Arbitrators are protected from indefinite challenges, encouraging qualified professionals to serve [Hindustan Construction Company Limited VS Union of India].
• Dispute Resolution Efficiency - Overall, Section 13 as amended enhances the efficiency and effectiveness of arbitration in India [Hindustan Construction Company Limited VS Union of India].

Note: The references are based on the provided sources, primarily from the detailed analysis in "Hindustan Construction Company Limited VS Union of India" and related excerpts.

S.14 Insertion of new Schedule

After the Seventh Schedule to the principal Act, the following Schedule shall be inserted, namely:--

"THE EIGHTH SCHEDULE

(See section 43J)

Qualifications and Experience of Arbitrator

A person shall not be qualified to be an arbitrator unless he--

(i) is an advocate within the meaning o

S.15 Amendment to Act 3 of 2016

¹[Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015 shall be omitted and shall be deemed to have been omitted with effect from the 23rd October, 2015.]

-----------------------------------

1. W.e.f. 30.08.2019 vide Notification No. SO3154(E) dated 30.08.2019.

S.16 Amendment to Fourth Schedule

In the Fourth Schedule to the principal Act, for the brackets, words and figures "[See section 11 (14)]", the brackets, words, figures and letter "[See section 11 (3A)]" shall be substituted.