New arbitration law strengthens NBFCs

Q.  Which of the following statements is/are true?

1) As per the Arbitration and Conciliation (Amendment) Act, 2015, the arbitral tribunal needs to pass the award within one year.
2) There can be no extension in this beyond one year in any case.
- Published on 14 Feb 16

a. Only 1
b. Only 2
c. Both 1 and 2
d. Neither 1 nor 2

ANSWER: Only 1
 
  • The amended Act also provides for a time-frame to pass an award. A new section has been added to ensure that an award is passed within a year. This means that the arbitrators will not be able to grant much time to the parties, and are under an obligation to pass awards within a year.
  • Nevertheless, the Act allows for a six-month extension. This will act as a deterrent against borrowers/guarantors who drag on the proceedings.

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