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AMENDMENT 2015

TO
ARBITRATION ACT 1996
ENT

1
Time limit for arbitral award
Section 29A of Arbitration & Conciliation Act :
Section 29A : Time Limit for Arbitral Award
(1) The award shall be made within a period of twelve months from
the date the arbitral tribunal enters upon the reference.
Explanation :
For the purpose of this sub-section, an arbitral tribunal shall be deemed
to have entered upon the reference on the date on which the arbitrator or all
the arbitrators, as the case may be, have received notice, in writing, of their
appointment.
(2) If the award is made within a period of six months from the date
the arbitral tribunal enters upon the reference, the arbitral tribunal
shall be entitled to receive such amount of additional fees as the
parties may agree.
(3) The parties may, by consent, extend the period specified in sub-
section (1) for making award for a further period not exceeding six
months.
Time limit for arbitral award
Section 29A of Arbitration & Conciliation Act :
Section 29A : Time Limit for Arbitral Award
(4) If the award is not made within the period specified in sub-
section arbitrator(s) shall terminate unless the court has, either
prior to or after the expiry of the period so specified, extended
the period.
Provided that while extending the period under this sub- section, if
the Court finds that the proceedings have been delayed for the
reasons attributable to the arbitral tribunal, then, it may order
reduction of fees of arbitrator(s) by not exceeding five per cent, for
each month of such delay.
(5) The extension of period referred to in sub-section (4) may be
on the application of any of the parties and may be granted
only for sufficient cause and on such terms and conditions as
may be imposed by the Court.
Time limit for arbitral award
Section 29A of Arbitration & Conciliation Act :
(6) While extending the period referred to in sub-section (4), it shall
be open to the court to substitute one or all of the arbitrators and if
one or all of the arbitrators are substituted, the arbitral proceedings
shall continue from the stage already reached and on the basis of the
evidence and material already on record and the arbitrator(s)
appointed under this section shall be deemed to have received the
said evidence and material.
(7) In the event of arbitrator(s) being appointed under this section,
the arbitral tribunal thus reconstituted shall be deemed to be in
continuation of the previously appointed arbitral tribunal.
(8) It shall be open to the court to impose actual or exemplary costs
upon any of the parties under this section.
(9) An application filed under sub-section (5) shall be disposed of
by the court as expeditiously as possible and endeavor shall be
made to dispose of the matter within a period of sixty days from the
date of service of notice on the opposite party.
Fast Track Procedure
Section 29B of Arbitration & Conciliation Act :

Section 29B : Fast Track Procedure


(1) Notwithstanding anything contained in this act, the parties to
an arbitration agreement, may, at any stage either before or at the
time of appointment of the arbitral tribunal, agree in writing to have
their dispute resolved by fast track procedure specified in sub-
section
(2) The parties to the arbitration agreement, while agreeing for
resolution of dispute by fast track procedure, may agree that the
arbitral tribunal shall consist of a sole arbitrator who shall be chosen
by the parties.
(3) The arbitral tribunal shall follow the following procedure while
conducting arbitration proceedings under sub-section (1):
Fast Track Procedure
Section 29B of Arbitration & Conciliation Act :

Section 29B : Fast Track Procedure


a) The arbitral tribunal shall decide the dispute on the basis of
written pleadings, documents and submissions filed by the
parties without any oral hearing;
b) The arbitral tribunal shall have power to call for any further
information or clarification from the parties in addition to
the pleadings and documents filed by them;
c) An oral hearing may be held only, if all the parties make a
request or if the arbitral tribunal considers it necessary to
have oral hearing for clarifying certain issues;
d) The arbitral tribunal may dispense with any technical
formalities if an oral hearing is held, and adopt such
procedure as deems appropriate for expeditious disposal of
the case.
Fast Track Procedure
Section 29B of Arbitration & Conciliation Act :

Section 29B : Fast Track Procedure


(4) The award under this section shall be made within a period of
six months from the date the arbitral tribunal enters upon the
reference.
(5) If the award is not made within the period specified in sub-
section (4), the provisions of sub-sections (3) to (9) of section 29A
shall apply to the proceedings.
(6) The fees payable to the arbitrator and the manner of payment of
the fees shall be such as may be agreed between the arbitrator
and the parties.
RECOURSE AGAINST ARBITRAL AWARD
Section 34 of Arbitration & Conciliation Act :
Section-34 : Application for setting aside arbitral award :

Arbitral Award

3 months + 30 days
(as per 34.3)
Recourse to a Court against an
arbitral award may be made only by
Sub-section 34.1
an Application for setting aside
arbitral award
In accordance
with Sub-Section
34 (2) & (3)

An arbitral award may be set aside by


the Court if application furnishes
proof with regard to either of seven
Sub-section 34.2
(7) points stipulated in Sub-section
34.2(a) & (b) as follows
RECOURSE AGAINST ARBITRAL AWARD
Section 34 of Arbitration & Conciliation Act :

Sub-section 34.2 (a):


(i) Incapacity of the Party; or
(ii) Invalidity of Arbitration Agreement; or
(iii) Violations of Principles of Natural Justice; or
(iv) Award beyond the Scope of submission; or
(v) Composition of Arbitration tribunal or the arbitral procedure
was not proper; or
Sub-section 34.2 (b):
(vi) Disputes not Arbitrable under Law; or
(vii) Award is in conflict with Public Policy of India;
RECOURSE AGAINST ARBITRAL AWARD
Section 34 of Arbitration & Conciliation Act :

Explanation 1:
For the avoidance of any doubt, it is clarified that an award which is in
conflict with public policy of Indi, only if, -
(i) The making of award was induced or affected by fraud or corruption or was
in violation of section 75 or section 81; or
(ii) It is in contravention with the fundamental policy of Indian law; or
(iii) It is in conflict with the most basic notions of morality or justice
Explanation 2:
For the avoidance of doubt, the test as to whether there is a contravention
with the fundamental policy of Indian law shall not entail a review on the merits
of the dispute
RECOURSE AGAINST ARBITRAL AWARD
Section 34 of Arbitration & Conciliation Act :

Explanation 2A:
An arbitral award arising out of arbitrations other than international
commercial arbitrations, may also be set aside by the Court, if the Court finds
that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an
erroneous application of the law or by reappreciation of evidence
RECOURSE AGAINST ARBITRAL AWARD
Section 34 of Arbitration & Conciliation Act :

Sub-section 34.3:
An application for setting aside may not be made after three months
have elapsed from the date on which the party making the application
had received the arbitral award or, if a request had been made under
section 33, from the date on which that request had been disposed of
by the arbitral tribunal.
Provided that if the Court is satisfied that the applicant was prevented
by sufficient cause from making the application within the said period
of three months it may entertain the application within a further period
of thirty days but not thereafter.
APPEALS
Section 37 of Arbitration & Conciliation Act :

Section-37 : Appealable Orders


Sub-section 37.1 :
An appeal shall lie from the following orders (and from no others) to
the Court authorized by law to hear appeals from original decrees of
the Court passing the order, namely:-
(a) Refusing to refer the parties to arbitration under section 8;
(b) Granting or refusing to grant any measure under section 9;
(c) Setting aside or refusing to set aside an arbitral award under
section 34
APPEALS
Section 37 of Arbitration & Conciliation Act :

Section-37 : Appealable Orders


Sub-section 37.2 :
An appeal shall also lie to a Court from an order granting of the
arbitral tribunal :-
(a) Accepting the plea referred in sub-section (2) or sub-section- (3)
of section 16; or
(b) Granting or refusing to grant an interim measure under section 17.
Sub-section 37.3 :
No second appeal shall lie from an order passed in appeal under this
section, but nothing in this section shall affect or take away any right
to appeal to the Supreme Court.
NITI AAYOG GUIDELINES
Standard Operating Procedure (SOP)
• Pursuant to the decisions taken by the Cabinet Committee on
Economic Affairs {CCEA) for revival of the Construction Sector,
the NITI Aayog issued OM No. 14070/14/ 2016- PPPAU dated 5th
September 2016 titled "Measures to revive the Construction
Sector " containing the decisions for implementation by all the
concerned Ministries / Departments / PSUs.
• Cases where the Arbitration Tribunals have passed orders in
favour of the Contractors/ Concessionaires in arbitral proceedings
and such awards/ orders have been further challenged by the
Government agencies in courts of law, all the works executing
agencies are required to pay an amount equal to 75% of the total
pay-out (i.e. Arbitral Award amount including the interest payable
as per such Award, if any) should be released to the Contractors/
Concessionaires against a Bank Guarantee without prejudice
to the rights and stand of the Agency and subject to the final
order of the court in the matter under challenge.
NITI AAYOG GUIDELINES
Standard Operating Procedure (SOP)

• The OM further stipulates that in case the matter under legal


challenge is decided in favour of the works executing agency (the
Departments/ PSUs are referred to as the 'Agency' throughout
the SOP), it would be entitled to recover the said amount along with
appropriate interest.
• The process has been laid down through a Standard Operating
Procedure (SOP).
• Each of the Ministries/ Departments/ PSUs is free to evolve its own
SOP for smooth implementation of the decision taken by the CCEA
• A suggested framework of the SOP is also provided, which may be
used by the Ministries/ Departments/ PSUs with or without any
amendments therein.
NITI AAYOG GUIDELINES
Standard Operating Procedure (SOP)
Steps required for release of 75% of the total eligible Payout amount :
Communication to the eligible Contractor/ Concessionaire informing about the details of the
total payout obligation and requiring him to open an Escrow account and furnish Bank
Guarantee for the purpose with in a period specified in such communication.

(1) Arbitral Award Escrow Account:


A separate designated Escrow Account shall be opened and established by the
Concessionaire/Contractor. Arbitral Award Escrow Account Agreement shall include 4 (four}
parties viz. (a) the Concessionaire / Contractor, (b) the Authority, (c) Arbitral Award Escrow
Bank and (d) Lenders' Representative.

(2) Bank Guarantee:


The Authority is liable to pay 75% of 'Payout Amount' against the Bank Guarantee of the
equivalent amount. The Authority shall require the Contractor/ Concessionaire to furnish the
Bank Guarantee for the 75% of the Payout Amount and appropriate interest amount on such
amount for a period of one year. The Authority shall release and credit an amount equivalent
to 75% of the Payout Amount to the designated Arbitral Award Escrow Account opened by the
Contractor/ Concessionaire against the Bank Guarantee furnished by the Concessionaire/
Contractor;
NITI AAYOG GUIDELINES
Standard Operating Procedure (SOP)
Steps required for release of 75% of the total eligible Payout amount :

(3) Deposition and withdrawal of funds from Escrow Account:


After opening of the designated 'Arbitral Award Escrow Account’ and receipt of the Bank
Guarantee, the Authority shall deposit 75% of the Payout Amount in the Arbitral Award Escrow
Account within a period of not more than 7 working days. The Arbitral Award Escrow Bank
shall withdraw and appropriate the amounts from the Arbitral Award Escrow Account strictly in
accordance with the instructions issued by the Authority to the Concessionaire / Contractor, as
mutually agreed/ decided by the Authority, Lenders' Representative and the Concessionaire /
Contractor; provided that such amounts shall be appropriated in the following order:
– Debt service payments;
– All payments relating to construction/completion of the Project 
– All payments relating to construction of other projects of the Authority under execution
by the Concessionaire/ Contractor; and
– Balance, if any, in accordance with the instructions of the Concessionaire/ Contractor
after receiving the prior written approval of the Lenders' Representative and the
Authority.

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