Arbitration cases to be disposed of within 12 months: Cabinet approves amendment
Updated: Aug 27, 2015 05:07:31pm
New Delhi, Aug 27 (KNN) The Union Cabinet on Wednesday cleared a proposal to amend the Arbitration and Conciliation Bill, 2015, which seeks to make a provision under which the Arbitrators will be required to dispose of the cases within 12 months, failing which the fees of the arbitrators could be cut off by as much as 5 per cent.
The amendment proposes, “Insertion of a new provision that the Arbitral Tribunal shall make its award within a period of 12 months. Parties may extend such period up to six months. Thereafter, it can only be extended by the Court, on sufficient cause.”
The Court while extending the period may also order reduction of fees of arbitrator(s) not exceeding five percent for each month of delay, if the court finds that the proceedings have been delayed for reasons attributable to the arbitral tribunal.
If the award is made within a period of six months, arbitrator may get additional fees if the parties may agree.
Further, the Cabinet also proposed to insert a provision for fast track procedure for conducting arbitration. Parties to the dispute may agree that their dispute be resolved through fast track procedure. Award in such cases shall be given in six months period.
The Arbitrator’s fee (for each arbitrator) is fixed separately with regard to the amount in dispute including determined interest in each case.
For example: If the amount in dispute is up to Rs 5 lakh, the Arbitrator’s fee could be Rs 30,000. The fees of the Arbitrator could even be as high as Rs 3,15,00 plus Rs 12,000 per crore or part thereof in case the amount in dispute is over Rs 10 crore.
A Senior Lawyer with the Supreme Court told KNN that the fees of the Arbitrators is so high and it drags for so long that now the parties don’t want to go to the Arbitral Tribunals. If the proposal to reduce the fees by as much as 5% gets included then, it might make a difference.
He said that currently, the arbitrators deter to resolve issues too quickly because fees are based on the number of sittings. If a format of a fixed fee can be formulated, it would push the arbitrators to resolve faster.
Another Senior Lawyer with the High Court said that the entire purpose of setting up the Arbitral Tribunal was for early disposal of the disputes but it takes so much time that the parties are resisting from approaching them. (KNN Bureau)
The amendment proposes, “Insertion of a new provision that the Arbitral Tribunal shall make its award within a period of 12 months. Parties may extend such period up to six months. Thereafter, it can only be extended by the Court, on sufficient cause.”
The Court while extending the period may also order reduction of fees of arbitrator(s) not exceeding five percent for each month of delay, if the court finds that the proceedings have been delayed for reasons attributable to the arbitral tribunal.
If the award is made within a period of six months, arbitrator may get additional fees if the parties may agree.
Further, the Cabinet also proposed to insert a provision for fast track procedure for conducting arbitration. Parties to the dispute may agree that their dispute be resolved through fast track procedure. Award in such cases shall be given in six months period.
The Arbitrator’s fee (for each arbitrator) is fixed separately with regard to the amount in dispute including determined interest in each case.
For example: If the amount in dispute is up to Rs 5 lakh, the Arbitrator’s fee could be Rs 30,000. The fees of the Arbitrator could even be as high as Rs 3,15,00 plus Rs 12,000 per crore or part thereof in case the amount in dispute is over Rs 10 crore.
A Senior Lawyer with the Supreme Court told KNN that the fees of the Arbitrators is so high and it drags for so long that now the parties don’t want to go to the Arbitral Tribunals. If the proposal to reduce the fees by as much as 5% gets included then, it might make a difference.
He said that currently, the arbitrators deter to resolve issues too quickly because fees are based on the number of sittings. If a format of a fixed fee can be formulated, it would push the arbitrators to resolve faster.
Another Senior Lawyer with the High Court said that the entire purpose of setting up the Arbitral Tribunal was for early disposal of the disputes but it takes so much time that the parties are resisting from approaching them. (KNN Bureau)
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