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Mediation and Conciliation and Companies Acts, 2013 - NCLT

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Title: Mediation and Conciliation and Companies Acts, 2013 - NCLT


1
Negotiation, Conciliation and Arbitration
Aspects Role of Company Secretary in the said
process
Ms. Kavita Jha, Principal Associate,
Vaish Associates Advocates
Ms. Kavita Jha, Advocate, Vaish
Associates Advocates
https//www.nclt.in/
2
Mediation and Conciliation and Companies Act, 2013
3
COMPANIES ACT, 2013
Section 442
  • The Central Gov. shall maintain a panel of
    experts to be called as Mediation and
    Conciliation Panel for mediation between
    parties during the pendency of any proceedings
    before the Central Govt. or the Tribunal or the
    Appellate Tribunal under the new law.
  • The Panel shall dispose of the matter referred
    to it within a period of 3 months from the date
    of reference.

4
I. ALTERNATIVE DISPUTE RESOLUTION
5
Introduction
  • ADR refers to the other ways that the parties
    can use to settle civil disputes with the help of
    an independent third party and without the need
    for a formal court hearing.
  • The main types of ADRs are
  • Arbitration
  • Negotiations
  • Mediation
  • Conciliation

6
Salem Bar Association v. Union of India
(AIR 2005 SC 3353)
  • If the Court for one reason or the other cannot
    itself effect a
  • compromise, the only option it would have is to
    refer the parties to conciliation etc.
  • In the historic judgement in Salem Bar
    Association v. Union of India, the Supreme Court
    has directed the constitution of a committee to
    frame draft rules for mediation under S. 89(2)(d)
    of the CPC. Consequently, the Committee presided
    over by Mr Justice M. Jagannadha Rao, Chairman
    of the Law Commission of India has prepared a
    comprehensive code for the regulation of ADR
    process initiated under S 89 of CPC. which
    consists of two parts---Part I ADR Rules 2003
    consisting of the procedure to be followed by
    the parties and the Court in the matter of
    choosing the particular method of ADR and Part
    II Mediation Rules, 2003 consisting of draft
    rules of mediation under section 89(2)(d) of the
    Code of Civil Procedure.

7
NEGOTIATION
  • Negotiations occur when two parties set forth
    the type of remedy each desires, and try to
    reach some sort of an agreement that satisfies
    everyone involved. In the best-case scenario,
    negotiations are done between the parties and
    both come to a happy agreement.
  • Once agreement has been reached, the parties
    will create a written statement to reflect the
    terms of the negotiated assets.

8
CONCILIATION
  • Conciliation is limited to encouraging the
    parties to discuss their differences and to help
    them develop their own proposed solutions.
  • It is voluntary, flexible, confidential and
    interest based process. the parties seek to
    reach an amicable dispute settlement with the
    assistance of the conciliator, who acts as a
    neutral third party.

9
CONCILIATION
  • Section related to conciliation
  • Commencement of conciliation proceeding u/s 62
    of the Act.
  • After proceedings S.71 cooperation of parties
    with conciliator.
  • S.76 termination of conciliation proceeding.
  • What cannot be referred to conciliation
  • Matters of Criminal nature
  • Illegal transactions
  • Matrimonial matters like divorce suit etc.
  • What can be referred to conciliation?
  • Matters of Civil Nature
  • Breach of Contract
  • Dispute of Movable or Immovable Property

10
Mediation
  • The term mediation broadly refers to any
    instance in which a third party helps others
    reach agreement. more specifically, mediation
    has a structure, timetable and dynamics that
    ordinary negotiation lacks.
  • The process is private and confidential, possibly
    enforced by law. participation is typically
    voluntary. the mediator acts as a neutral third
    party and facilitates rather than directs the
    process.

11
TYPES OF DISPUTE SUITABLE FOR MEDIATION
  • Mediation is suitable for resolving a wide range
    of
  • disputes including
  • Business and Commercial
  • Partnership
  • Family
  • Workplace
  • Personal injury
  • Industrial and Construction

12
COMPANIES ACT, 2013 Need for Mediation
and Conciliation
  • Mediation is assisted negotiation. It is a
    flexible process conducted confidentially in
    which a neutral party i.e. the mediator, manages
    the interaction between disputing parties to
    help them come to a negotiated settlement of the
    dispute. The disputants and not the mediator have
    ultimate control over the decision to settle and
    terms of resolution. The final terms of
    settlement are recorded in the form of a binding
    agreement.
  • The process is time bound and cost effective.
  • Confidentiality of the entire process and all
    concessions made by parties during negotiation
    is maintained. Since the parties mutually agree
    to the settlement terms, probability of
    litigation over settlement is also low.

13
ROLE OF MEDIATOR/ CONCILIATOR UNDER SECTION 442
  • The mediator/conciliator shall attempt to
    facilitate the
  • following
  • voluntary resolution of the dispute(s) by the
    parties,
  • communicate the view of each party to the other,
  • assist them in identifying issues,
  • reducing misunderstandings,
  • clarifying priorities,
  • exploring areas of compromise and generating
    options in
  • an attempt to resolve the dispute(s), emphasizing
    that it is
  • the responsibility of the parties to take
    decision which
  • affect them.
  • He shall not impose any terms of settlement on
    the parties.
  • However, if both the parties consent, he may
    impose such
  • terms and conditions on the parties for early
    settlement of
  • the dispute.

14
An ounce of mediation is worth a pound of
arbitration and a ton of litigation! Joseph
Grynbaum
15
II. ARBITRATION
16
Introduction
  • Arbitration As per Halsbury s Laws of England
  • It means reference of a dispute between not less
    than two parties, for determination, after
    hearing both sides in a judicial manner, by a
    person or persons other than a court of
    competent jurisdiction.
  • Object of Arbitration
  • Settlement of dispute in an expeditious,
    convenient, inexpensive and private manner to
    prevent it fro, becoming a subject of future
    litigation.

17
Types of Arbitration Practice - Institutional
Arbitration and Ad Hoc Arbitration
AD HOC ARBITRATION INSTITUTIONAL ARBITRATION
A. The procedures have to be agreed upon by the
parties and the arbitrator. This requires co-
operation between the parties and involves a lot
of time
A. In institutional arbitration, the procedural
rules are already established by the institution.
The fees are also fixed and regulated under
rules of the institution.
B. Infrastructure facilities for conducting
arbitration pose a problem and parties are often
compelled to resort to hiring facilities of
expensive hotels, which increase the cost of
arbitration. Other problems include getting
trained staff and library facilities for ready
reference.
B. In contrast, the institution will have ready
facilities to conduct arbitration, trained
secretarial/administrative staff, as well as
library facilities.
C. No such panel per se is available here.
C. The arbitral institutions maintain a panel of
arbitrators along with their profile. The parties
can choose the arbitrators from the panel. Such
arbitral institutions also provide for
specialized arbitrators.
Inspite of the numerous advantages of
institutional arbitration over ad hoc
arbitration, there is currently an overwhelming
tendency in India to resort to ad hoc arbitration
mechanisms.
18
Evolution of Arbitration Act
  • The Pre-1996 Position (1940 Act) This Act was
    largely premised on mistrust of the arbitral
    process and afforded multiple opportunities
  • to litigants to approach the court for
    intervention. Coupled with a sluggish judicial
    system, this led to delays rendering arbitrations
    inefficient and unattractive.
  • The 1996 Act The 1996 Arbitration Act based on
    the UNCITRAL on International Commercial
    Arbitration and the Arbitration Rules of the
    United Nations Commission on International Trade
    Law 1976 was enacted.
  • The Statement of Objects and Reasons to the Act
    said that the old Act had become outdated and
    there was need to have an Act more responsive
    to contemporary requirements. Amongst the main
    objectives of the 1996 Act were to minimize the
    supervisory role of courts in the arbitral
    process and to provide that every final
    arbitral award is enforced in the same manner as
    if it were a decree of the Court.

19
Arbitration and Conciliation Act, 1996
  • Part I Domestic Arbitration
  • Part II Enforcement of foreign awards
  • Part III Conciliation Procedures
  • Part IV Supplementary
  • Provisions

20
In spite of Arbitration being an effective tool
of dispute resolution, there were various
shortcomings which were required to be resolved.
21
Issues faced under 1996 Act
  • High costs and delays Thus, making it no better
    than either
  • the earlier regime which it was intended to
    replace.
  • After the award, a challenge under section 34
    makes the award in executable and such petitions
    remain pending for several years.
  • Proceedings in arbitrations are becoming a
    replica of court
  • proceedings.
  • Appointment and independence of Arbitrators.

22
Arbitration and Conciliation
(Amendment) Act, 2015
  • In an attempt to make arbitration a preferred
    mode of
  • settlement of commercial disputes and making
    India a hub of international commercial
    arbitration, the President of India on 23rd
    October 2015 promulgated an Ordinance
    ("Arbitration and Conciliation (Amendment)
    Ordinance, 2015) amending the Arbitration and
    Conciliation Act, 1996.
  • Prior to the amendment of the Indian Arbitration
    and Conciliation Act 1996 (the Act), Indias
    journey towards becoming an international
    commercial hub that could rival Singapore and
    London was hampered by a largely ineffective Act
    and an arbitration regime that was afflicted
    with various problems including those of high
    costs and delays.
  • To address these issues the Arbitration and
    Conciliation Act, 2015 was introduced.

23
Amendments made in 2015
The Law Commission of India had brought out
Report No. 246 in August 2014, recommending
various amendments to the Arbitration
Conciliation Act, 1996, which have been
incorporated vide Arbitration and Conciliation
(Amendment) Act, 2015
24
Issues resolved by Arbitration and Conciliation
(Amendment) Act, 2015
25
1. Appointment of Arbitrator-
administrative power
  • Section 11 of Arbitration and Conciliation Act,
    1996 provided for appointment of Arbitrator by
    Chief Justice or any person or institution
    designated by him. Now, the powers are with High
    Court or Supreme Court. Thus, now, any bench of
    High Court/ Supreme Court can appoint
    Arbitrator.
  • Section 11(6A) has been inserted to provide that
    the Supreme Court or High Court, while
    considering application for appointment of
    arbitrator, shall examine only existence of
    arbitration agreement (and not merits of the
    case).
  • Section 11(6B) has been inserted to clarify that
    appointment of Arbitrator by any person or
    institution nominated by Supreme Court or High
    Court will not be considered as delegation of
    judicial powers.
  • Thus, appointment of Arbitrator is only an
    administrative matter.

26
2. Independence of Arbitrator
  • Neutrality of arbitrators, viz. their
    independence and
  • impartiality, is critical to the entire process.
  • Test for neutrality is set out in section 12(3)
    which provides
  • An arbitrator may be challenged only if (a)
    circumstances exist that give rise to
    justifiable doubts as to his independence or
    impartiality
  • The balance between procedural fairness and
    binding nature of these contracts, appears to
    have been tilted in favour.
  • Large scale amendments were suggested to address
    this fundamental issue of neutrality of
    arbitrators particularly to sections 11, 12 and
    14 of the Act.
  • Further, the Commission had proposed the
    requirement of
  • having specific disclosures by the arbitrator.

27
Independence of Arbitrator
  • Section 12(1) of Arbitration and Conciliation
    Act, 1996 expected Arbitrator to make disclosure
    of his possible connection or interest
  • However, the section did not specify any
    criteria.
  • Now, fifth schedule has been inserted specifying
    grounds to guide on which
  • independence and impartiality of Arbitrator can
    be doubted.
  • Section 12(5) also inserted by Amendment Act,
    2015, which provides that if arbitrator has
    interest ( direct or indirect) as specified in
    schedule seven of the Arbitration and
    Conciliation Act, 1996, he cannot be appointed as
    Arbitrator, unless both parties agree in
    writing, after dispute has arisen.
  • Thus, a mere clause in Arbitration Agreement
    about appointment of
  • arbitrator of choice of one of the parties is not
    sufficient.
  • This is a very good provision. The reason is
    that, at the time of contract, one of the
    parties is usually in dictating position and
    other party has practically no option to sign on
    dotted lines.

28
3. FEES OF
ARBITRATORS
  • Unilateral and disproportionate fixation of fees
    by several arbitrators.
  • The subject of fees of arbitrators has been the
    subject of the lament of the Supreme Court in
    Union of India v. Singh Builders Syndicate,
    (2009) 4 SCC 523.
  • Commission had recommended a model schedule of
    fees and has empowered the High Court to frame
    appropriate rules for fixation of fees for
    arbitrators and for which purpose it may take
    the said model schedule of fees into account.

29
  • The model fees payable to Arbitrator have been
    specified in Fourth Schedule inserted to
    Arbitration and Conciliation Act, 1996 vide 2015
    amendment. The fee varies between Rs. 45,000 to
    Rs. 30 lakhs depending on the sums in dispute.
  • Section 11(14) inserted by Amendment Act, 2015
    For the purpose of determination of the fees of
    arbitral Tribunal, the High Court may frame such
    rules as may be necessary, after taking into
    consideration the rates specified in the Fourth
    Schedule.

30
4. CONDUCT OF ARBITRAL
PROCEEDINGS
  • Commission had proposed addition of the second
    proviso to section 24 (1) to the Act, which is
    intended to discourage the practice of frequent
    and baseless adjournments, and to ensure
    continuous sittings of the arbitral tribunal for
    the purposes of recording evidence and for
    argument.
  • Proviso to section 24(1) of Arbitration and
    Conciliation Act,
  • 1996 inserted by Amendment act, 2015.
  • Hearing of Arbitrator Tribunal should be on day
    to day basis
  • without adjournment.
  • If any party seeks adjournment without sufficient
    cause, costs including exemplary costs can be
    imposed on him - - proviso to section 24(1) of
    Arbitration and Conciliation Act, 1996 inserted
    by Amendment act, 2015.

31
5. Time Limit for making awards
  • Section 29A inserted by Amendment Act, 2015.
  • The Arbitral tribunal shall make Arbitration
    Award
  • within 12 months from date of reference.
  • The period can be extended by the parties upto
    six months by mutual consent.
  • Fees payable to Tribunal can be reduced upto 5
    for
  • each month of delay.
  • If award is not made within that period, the
    mandate of arbitrator terminates.
  • However, court can further extend the mandate on
  • suitable terms and conditions.
  • In fact, now Arbitrator, while giving declaration
    under section 12(1) of the Act has to state
    whether he has sufficient time to complete
    assignment within 12 months.

32
6. Fast track procedure for arbitral award
  • If both parties agree in writing, the arbitral
  • tribunal can follow fast track procedure.
  • Decision will be on basis of written pleadings,
  • documents and submissions.
  • Oral hearing will be only to clarify certain
    points. Technical formalities for oral hearing
    may be dispensed with by arbitral tribunal.
  • Award shall be made within six months section
    29B of Arbitration and Conciliation Act, 1996
    inserted by Amendment Act, 2015.

33
7. JUDICIARY AND ARBITRATION
  • It is thought in some quarters that judicial
    intervention is anathema to arbitration, and
    this view is not alien to a section of the
    arbitration community even in India. The
    Commission however, does not subscribe to this
    view. The Commission recognizes that the
    judicial machinery provides essential support
    for the arbitral process. The paradox of
    arbitration, as noted by a leading academic on
    the subject, is that it seeks the co-operation
    of the very public authorities from which it
    wants to free itself.
  • The Commission has strived to adopt a middle path
    to find an appropriate balance between judicial
    intervention and judicial restraint.

34
Judicial intervention in arbitration proceedings
  • Judicial intervention in arbitration proceedings
    adds significantly to the delays in the
    arbitration process and ultimately negates the
    benefits of arbitration
  • Dedicated benches for arbitration related cases
    eg. Delhi High
  • Court has a separate bench.
  • Amendment in section 11 Delegate the power of
    appointment (being a non-judicial act) to
    specialized, external persons or institutions.
  • Amendment to section 11 (7) made providing that
    decisions of the High Court/ Supreme Court
    (regarding existence/nullity of the arbitration
    agreement) are final where an arbitrator has
    been appointed, and as such are non-appealable.

35
Judicial intervention in arbitration proceedings
(contd..)
  • section 11 (13) was inserted, which requires the
    Court to make an endeavor to dispose of the
    matter within sixty days from the service of
    notice on the opposite party.
  • Sections 34 (6) inserted which requires that an
    application under those sections shall be
    disposed off expeditiously and in any event
    within a period of one year from the date of
    service of notice
  • New sub-clause (2A) inserted to section 23 of the
    Act in order to ensure that counter claims and
    set off can be adjudicated upon by an arbitrator
    without seeking a separate/new reference by the
    respondent, provided that the same falls within
    the scope of the arbitration agreement

36
9. SCOPE AND NATURE OF PRE- ARBITRAL JUDICIAL
INTERVENTION
  • The Act recognizes situations where the
    intervention of the Court
  • is envisaged at the pre-arbitral stage, i.e.
    prior to the constitution of the arbitral
    tribunal, which includes sections 8, 9, 11 in the
    case of Part I arbitrations and section 45 in
    the case of Part II arbitrations.
  • Supreme Court in Shin Etsu Chemicals Co. Ltd. v
    Aksh Optifibre, (2005) 7 SCC 234, (in the
    context of section 45 of the Act) ruled in
    favour of looking at the issues/controversy only
    prima facie.
  • Sections 8 and 11 has been amended restricting
    the scope of the judicial intervention only to
    situations where the Court/Judicial Authority
    finds that prima facie no valid arbitration
    agreement exists.

37
10. SETTING ASIDE OF DOMESTIC AWARDS AND
RECOGNITION/ENFORCEMENT OF
  • FOREIGN AWARDS
  • Section 34 of the Act deals with setting aside a
    domestic award and a domestic award resulting
    from an international commercial arbitration
    whereas section 48 deals with conditions for
    enforcement of foreign awards. The Act, as it is
    presently drafted, treats all three types of
    awards as same.
  • The legitimacy of judicial intervention in the
    case of a purely domestic award is far more than
    in case of other awards.
  • Therefore, Section 34 (2A) was added, to deal
    with purely domestic awards, which may also be
    set aside by the Court if the Court finds that
    such award is vitiated by patent illegality
    appearing on the face of the award.
  • In order to provide a balance and to avoid
    excessive intervention, it is clarified in the
    proposed proviso to the proposed section 34 (2A)
    that such an award shall not be set aside
    merely on the ground of an erroneous application
    of the law or by re-appreciating evidence.

38
Public Policy- Section 34
  • Object of the Act Ensure speedy disposal with
    minimum court intervention.
  • Section 34(2)(b)(ii) provides that court can set
    aside an arbitral award if the court finds that
    the arbitral award is in conflict with the
    public policy of India. Similarly, section
    48(2)(b) provides same in case of foreign
    arbitral awards.
  • Challenge The term public policy is not
    defined and under UNCITRAL Model (from where
    sec. 34 is derived), the courts were supposed to
    act as Courts of Review and not Courts of
    Appeal.
  • However, over the period a very wide
    interpretation has been given to the above term.

39
Public Policy- Judicial Interpretation
  • Supreme Court in Renusagar Power Co. Ltd. vs.
    General Electric Co. (1994 SCC supp. (1) 644
    gave narrow interpretation to term public
    policy.
  • Subsequently, SC in ONGC Ltd. vs. Saw Pipes Ltd.
    (2003 5 SCC 705) expanded its definition to
    include cases of patent illegality.
  • Criticism Eminent jurist/ Advocate Fali Nariman
    adversely commented on above judgment.
  • International view Enforcement of foreign awards
    is regulated by New York Convention (article
    V(2)(b) and same was incorporated in section 48
    of the Act and so Act should be interpreted in
    consonance with the objectives of NYC that is
    that the term public policy must be
    construed narrowly.

40
Public Policy- Judicial Interpretation (contd..)
  • This international view was reflected in Delhi HC
    decision in Glencore Grain Rotterdam BV vs.
    Shivnath Rai Harnarain (India) Co. 2008 94 ARB
    LR 497 (Delhi).
  • However, SC in Phulchand exports Ltd. v OOO
    Patriot (2011 11 SCALE 475) followed the Saw
    Pipes view of expanded interpretation.
  • Thereafter, SC overruled above decision in Sgri
    Lal Mahal Ltd. vs. Progetto Grano Spa (2014) 2
    SCC 433 following the narrow interpretation in
    Renusagar decision.
  • Accordingly, 246th report provided for the same
    narrow approach by inserting an explanation to
    section 23((2)(b)(ii) and inserting new
    provision section 34(2A).

41
Public Policy- The Problem
  • SC in ONGC Ltd. vs. Western Geco International
    Ltd. (2014) 9 SCC 263 in para 39 construed the
    term fundamental policy of
  • India very widely incorporating the Wednesbury
    principle of
  • reasonableness.
  • Same was followed in Associates Builder vs. DDA
    (2014) 4 ARBLR 307 SC.
  • Such power of review of award on merits is
    against the international practice and the
    Statement of object of 1996 Act which says
    minimization of judicial intervention.
  • This would lead to disastrous effect as
  • Erosion of faith in arbitration proceedings
  • Reduction of popularity of India as arbitration
  • destination
  • Increase in judicial backlog iv.Increased
    Investor concern

42
Public Policy Solution- 2015
Amendment
  • Practically, the Court had become appellate
    authority over
  • the arbitral tribunal.
  • This was not the intention of Arbitration and
    Conciliation act, 1996 at all.
  • Hence, explanations have been added by Amendment
    act, 2015 to section 34(2)(b) of Arbitration and
    Conciliation act, 1996 restricting the scope of
    public policy.
  • Thus, now, Courts cannot go into merits of the
    arbitral
  • award.

43
Public Policy Solution- 2015 Amendment
  • 34(2)(b)(ii) The arbitral award is in conflict
    with public policy of India.
  • Explanation 1 For the avoidance of any doubt, it
    is clarified that an award is in conflict with
    the public policy of India only if
  • making of award was induced or affected by fraud
    or corruption or was in violation of section 75
    or 81
  • It is in contravention with the fundamental
    policy of Indian Law or c.It is in conflict
    with most basic notions of morality or justice.
  • Explanation 2 For 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 merits of dispute.

44
Public Policy Solution- 2015
Amendment
  • Further, following sub-clause was inserted
  • Section 34(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 law or re-appreciation of evidence.

45
11. Enforcement of arbitral awards
  • Under Section 1996 Act, pendency of a section 34
    petition
  • renders an arbitral award unenforceable i.e.
    automatic stay of enforcement of the award upon
    admission of challenge.
  • The Supreme Court, National Aluminum Co. Ltd. v.
    Pressteel Fabrications, (2004) 1 SCC 540 had
    criticized this.
  • In order to rectify this mischief, certain
    amendments have been suggested by the Commission
    to section 36 of the Act, which provide that the
    award will not become unenforceable merely upon
    the making of an application under section 34.

46
Enforcement of arbitral awards
  • Section 36 of arbitration and Conciliation act,
    1996, as amended by the Amendment Act, 2015
    specifically provides that the award can be
    enforced even if one of the parties has
    approached Court for setting aside the arbitral
    award, unless specific stay has been granted by
    the competent court.
  • Thus, mere application to Court for setting aside
    the arbitral award would not result in stay for
    enforcement of the arbitral award. This is a
    very good provision to avoid delay in
    enforcement of arbitral award.

47
12. JUDICIAL INTERVENTIONS IN
FOREIGN SEATED ARBITRATIONS
  • Section 2(2) of the Arbitration and Conciliation
    Act, 1996 (the Act), contained in Part I of
    the Act, states that This Part shall apply where
    the place of arbitration is in India.
  • Article 1(2) of the UNCITRAL Model Law provides
    The provisions of this Law, except articles 8,
    9, 35 and 36, apply only if the place of
    arbitration is in the territory of this State
  • Supreme Court in Bhatia International vs.
    Interbulk Trading SA, (2002) 4 SCC 105, and
    before the five-judge Bench in Bharat Aluminum
    and Co. vs. Kaiser Aluminium and Co., (2012) 9
    SCC 552 (hereinafter called BALCO) was whether
    the exclusion of the word only from the Indian
    statute gave rise to the implication that Part I
    of the Act would apply even in some situations
    where the arbitration was conducted outside
    India.
  • The Supreme Court in BALCO decided that Parts I
    and II of the Act are mutually exclusive of each
    other.

48
JUDICIAL INTERVENTIONS IN FOREIGN
SEATED ARBITRATIONS (contd.)
  • The above issues have been addressed by way of
  • adding a proviso to sections 2(2) of the Act
  • Provided that subject to an agreement to the
    contrary, the provisions of sections 9, 27, and
    37(3)(1)(a) shall also apply to international
    commercial arbitration, even if the place of
    arbitration is outside India, and an arbitral
    award made or to be made in such place is
    enforceable and recognize under the provisions of
    Part II of this Act.

49
13. POWERS OF TRIBUNAL TO ORDER
INTERIM MEASURES
  • Under section 17, the arbitral tribunal has the
    power to order interim measures of protection,
    unless the parties have excluded such power by
    agreement.
  • However, its efficacy is seriously compromised
    given the lack of any suitable statutory
    mechanism for the enforcement of such interim
    orders of the arbitral tribunal.
  • Delhi High Court attempted to find a suitable
    legislative basis for enforcing the orders of
    the arbitral tribunal under section 17 in the
    case of Sri Krishan v. Anand, (2009) 3 Arb LR 447
    (Del).
  • However, above is not suffice and therefore the
    Commission has recommended amendments to section
    17 of the Act which would give teeth to the
    orders of the Arbitral Tribunal and the same
    would be statutorily enforceable in the same
    manner as the Orders of a Court.

50
14. Other Amendments
  • Arbitration agreement through emails
  • Section 7 has been amended to make specific
    provision that arbitration agreement can be made
    through electronic communications.
  • Interim measures by Court
  • Section 9 has been amended to provide that if
    Court grants interim relief, Arbitration should
    commence within 90 days.
  • Further, once arbitration tribunal has been
    constituted, the Court shall grant interim
    relief only if the Arbitral Tribunal itself
    cannot grant relief under section 17 of
    Arbitration and Conciliation Act, 1996.
  • Section 17 of Arbitration and Conciliation Act,
    1996 as amended by Amendment Act, 2015 gives
    wide powers to Arbitral tribunal to grant
    interim reliefs.
  • Thus, normally, it may not be necessary to
    approach Court for interim reliefs and such
    orders are enforceable under CPC.

51
Other Amendments
  • Interest on amount payable under arbitration
    award
  • Interest at the rate of 2 higher than the
    current rate of interest prevalent on the date
    of award, from the date of award to the date of
    payment. The expression current rate of
    interest shall have the same meaning as
    assigned to it under section 2(b) of the Interest
    Act, 1978. The earlier provision was for payment
    of interest _at_18.
  • Cost of Arbitration
  • Section 31A of Arbitration and Conciliation Act,
    1996 as inserted by Amendment Act, 2015 contains
    detailed guidelines on determination and award
    of costs to the successful parties.
  • As per provisions of section 31A(5), an agreement
    to pay whole or part of costs of arbitration in
    any even shall be valid only if such agreement
    is made after dispute has arisen.
  • Thus, a mere clause in Arbitration Agreement
    about payment of cost
  • by one of the parties is not sufficient.
  • This is a very good provision. The reason is
    that, at the time of contract, one of the
    parties is usually in dictating position and
    other party has practically no option to sign on
    dotted lines.

52
Other Amendments
  • Appeal if Court refuses to refer parties to
    arbitration
  • Section 37(1)(a) of Arbitration and Conciliation
    Act, 1996 as inserted by the Amendment Act, 2015
    now provides that appeal can be filed before
    appellate Court if the Court refuses to refer
    parties to arbitration.
  • There was no parallel provision earlier.
  • Enforcement of foreign awards and Geneva
    convention awards
  • Explanation to Section 47 inserted by the
    Amendment Act, 2015 now provides that only High
    Court can be approached for enforcement of
    foreign award.
  • Explanation to Section 48(2)(b) inserted by the
    Amendment Act, 2015 now provides that
    enforcement of foreign awards can be refused if
    it is contrary to public policy (restricted as in
    part I) and therefore debars the court from
    going into merits of the case.

53
III. Company Secretary ADR
54
ROLE OF A COMPANY SECRETARY
  • The Companies Act, 2013 has considerably enhanced
    the role and responsibilities of company
    secretaries both in employment and in practice.
  • Company secretary is a key managerial person in a
    company,

responsible to ensure the effective and efficient
  • administration of the company and certifying the
    companys compliance with the provision of the
    Act.
  • Section 205 has also been added in the Companies
    Act, 2013. According to Section 205 of the
    Companies Act, 2013 the Company Secretary shall
    discharge following functions and duties, this
    is the first time that the duties of the company
    secretary have been specified in
    the company law.

55
New Horizons for CS in Practice under
The Companies Act, 2013
  • Corporate Restructuring Insolvency
  • Company Liquidators Professional assistance to
    them Sec.275 Sec.291
  • Appointment as an Administrator Sec.259
  • Technical member of NCLT Sec.409
  • E- Filing
  • Voting through electronic means Sec.108
  • Adjudication of penalties Sec.454
  • Mediation conciliation Panel Sec.442

56
Role Of a Company Secretary As a
Mediator or Conciliator
  • The Central Government is to maintain a panel of
    experts to be called as Mediation and
    Conciliation Panel for mediation between
    parties during the

pendency of any proceedings before the Central
Government or the Tribunal or the Appellate
Tribunal under the new law.
  • Rules in respect of Section 442 provide for
  • qualifications for being appointed in the
    Mediation and Conciliation Panel and states-
  • Rule 28.1(g) Professionals with at least fifteen
    years of continuous practice as Chartered
    Accountant or Cost Accountant or Company
    Secretary can be

appointed in the panel.
57
Role Of a Company Secretary As a
Mediator or Conciliator
  • The Company Secretaries are authorized to advise
    on arbitration, negotiation and conciliation in
    commercial disputes between the parties.
  • A Company Secretary is trained to Act as
    arbitrator / conciliator in domestic and
    international commercial disputes.
  • Company Secretaries are also qualified to Draft
  • arbitration / conciliation agreement/ clause.

58
Advantages of a Company Secretary
in the Arbitration process
  • Company secretaries are not only corporate legal
    experts but due to the very nature of profession,
    their knowledge is far superior in respect of
    commercial understanding. They have an edge in
    the sense that they understand the underlying
    commercial transaction or the legal framework in
    a more effective manner.
  • Since they are exposed to various facets of law
    and the management, they can formulate a better
    strategy in arbitral proceedings while advising
    to the client. Thus company secretaries in
    practice can act as strategist and authorized
    representative in arbitral proceedings.

59
CONCLUSION
Thus, CS can act as arbitrators and the society
can get the benefit of their knowledge and
expertise in commercial and legal matters. The
Institute can also make representations to the
Government through proper channels so as to
encourage appointment of company secretaries as
arbitrators. This is possible only after an
awareness is created among the society about
this new role of company secretaries. Apart from
the Institute, even the company secretaries in
practice can help in creating this awareness in
the society. If this happens, the day is not far
when even the Chief Justices of the various High
Courts will appoint company secretaries as
arbitrators under the powers vested in them under
the Act.
60
THANK YOU
  • For more updates associated with
  • Mediation Conciliation And Companies Act 2013
  • NCLT - New Corporate Laws Treatise

https//www.nclt.in/
/nclt.in/
/NCLTnews
/in/nclt-in-069130119
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