12th January, 2016 (MAINS)


Q1. What are the major changes brought in the Arbitration and Conciliation Act, 1996 through the recent Ordinance promulgated by the President? How far will it improve India’s dispute resolution mechanism? Discuss.

[12.5marks/2015/GS-2] 200 words.

Please write answer in the comments section.

  • DVM

    India is one of the fastest growing economy in the world with the growth rate of around 7% of it’s Gross Domestic Product(GDP) and possess the potential to achieve the growth rate of more than 10% of GDP. Even after being an 7th largest country and with the 2nd largest population in the world the export of India in the world market is meager. below are the some of the reasons for the meager share of India in world export:
    1. Low penetration of manufacturing sector.
    2. Less conducive environment for the Foreign direct investment(FDI) due to Limitation on FDI to invest in different sectors with some stringent policy measures like Defense, Insurance, Nuclear Energy etc.
    3. Complex Tax Regime which dissuades the investors from investing in Indian market.
    4. Unavailability of skilled manpower even after possessing the great demographic dividend due to less focus on skill development and more focus on academic degree.
    5. Rampant corruption due to the multiple window clearances and presence of different conflicting laws on the same subject which creates the window for the corruption which leads to the delay in the project and ultimately to the loss of Interest.
    6. The major hindrance is posed by the various conflicts between the different companies or between the companies and the government or between different departments in the government. because of these conflicts the different projects got struck into the prolonged judicial proceedings.
    As per the Economic survey of 2015 the Infrastructure project worth of 10 lakh crores got struck due to different reasons and conflicts. In order to overcome the problems of strucked projects and long legal battles the government of India in-acted the Arbitration and reconciliation act of 1996 in order to provide the speedy arbitration between the shareholders so that the long drawn process of judicial proceeding can be skipped and will also help in reducing burden on judiciary which was already suffocated with millions of cases. but somehow it doesn’t seems to assuage the different stakeholder who chose to revert to judicial proceedings which reduces the importance of the tribunals and judgment given by them. In order to overcome this problem and to give a legal and acceptable judgement government has promulgated an ordinance in 2015 which has below features:
    1. To deliver the judgement within specific time frame, if not then there will be certain penalty on the Arbitrator after giving a certain grace period, In this ordinance time frame decided is of 1 year.
    2. Create special courts for the process of arbitration whether internal or international.
    3. In the case where stakeholders from different countries are involved then the provision for nomination of Internationally known arbitrator is been provided which will helped in making the decision acceptable to both parties.
    4. It will also gave a power to court to discard the process of arbitration if the parties acquired the requisite contract by the means of fraud or corruption etc.

    In order to Increase the speed development process there is urgent need to speedup the decision making process by building consensus between different parties involved and also need to boost the Infrastructure development which got struck due to various issues related to arbitration and conflicts between stakeholders involved. This will now only help in increasing the GDP of country but will also increase the Investors confidence and will also help in reducing the menace of Unemployment and poverty by providing the employment to people in the country which will ultimately help in achieving the aim of Inclusive and holistic development of Country.

    • http://shashidthakur23.blog.com Shashi Thakur

      Answer is ok. If I read the entire thing I can atleast understand the issue. good try.

  • Surabhi Gupta

    Arbitration question solved:
    Change 1: The Ordinance has inserted a proviso to section 2 of the Act, whereby, sections 9, 27 and clause (a) of subsection (1) and subsection (3) of Section 37 have been made applicable to international commercial arbitrations, even if the place of arbitration is outside India.
    Improvement 1: A party to an arbitration proceeding will be able to approach Courts in India for interim reliefs before the commencement of an arbitration proceeding, even if the seat of such arbitration is not in India.

    Change 2: A new section 9(3) has been inserted.
    Improvement 2: The court cannot involve in an arbitration proceeding unless the Court finds that circumstances exist which may not render the remedy available under section 17 of the Act, efficacious thereby making such proceedings swift and effective.

    Change 3: Arbitral tribunal is empowered to grant interim reliefs.
    Improvement 3: An order passed by an arbitral tribunal under section 17 will now be deemed to be an order of the Court and shall be enforceable under the Code of Civil Procedure, 1908.

    Change 4: An order passed by an arbitral tribunal under section 17 will now be deemed to be an order of the Court and shall be enforceable under the Code of Civil Procedure, 1908.
    Improvement 4: Discouraging litigants who obtain an interim order under section 9 of the Act, but do not commence arbitration proceedings.

    • http://shashidthakur23.blog.com Shashi Thakur

      answer is ok. i think it would have been fine if the clauses would not have been mentioned.

      • Surabhi Gupta

        wanted to be specific..

        • DVM

          Great answer surbhi …only one thing i want to mention is that don’t focus on clauses part because in the mains exam u will be already overloaded with the information where recollecting such factual things become nearly impossible….so just try to remember the crux of the act and it will suffice…