9 July, 2015
The proposed amendments to India's Arbitration Act appear to have run into some rough weather. The amendments were formulated to effect reforms to Indian arbitration law in order to curb judicial interventionism and promote India as a venue for international arbitration.
The amendment bill was drafted following the publication of the 246th report (August 2014) of the Law Commission of India which recommended key changes to the Act. In early 2015 it was reported that the government would seek to effect amendments to the Act by ordinance rather than primary legislation. It later emerged that the government had decided against the ordinance route, and it was announced that the amendment bill would be tabled in Parliament in the Budget session (which runs from February to May). However, this has not materialised on account of certain developments in the interim.
First, following a recent Supreme Court judgment that expansively interpreted the scope for the review of arbitral awards under section 34 of the Act on 'public policy' grounds, the Law Commission published a supplementary report to the 246th report in February 2015, recommending an amendment to section 34 in order to counter the impact of the judgment, which was felt to be irreconcilable with the government's professed pro-arbitration stance.
Further, some of the proposed amendments to the Act have attracted sharp criticism from eminent commentators and in particular, Justice AP Shah, under whose chairmanship the Law Commission's 246th report was formulated. Criticism has particularly been directed at a provision which seeks to impose a strict limit of 9 months for the arbitrators to arrive at a decision in commercial matters and another that seeks to cap the maximum fees that arbitrators may charge. The government has reportedly indicated that it will hold wider consultations in order to address the concerns that have been expressed. Therefore it remains unclear when the much awaited reforms to Indian arbitration law will be effected.
For further information, please contact:
Nicholas Peacock, Partner, Herbert Smith Freehills
nicholas.peacock@hsf.com
Alastair Henderson, Partner, Herbert Smith Freehills
alastair.henderson@hsf.com
Donny Surtani, Herbert Smith Freehills
donny.surtani@hsf.com
