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Published by Enhelion, 2019-11-17 04:04:44





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SU Shah &



3.1. FLEXIBILITY IN THE ARBITRATION c) Flexibility of Language:
The language which shall be used in arbitral
a) Flexibility of Procedure: proceedings can be mutually agreed otherwise, the
Arbitral Tribunal can decide. The tribunal can also
The parties to the arbitration are free to determine direct to submit documentary evidence along with its
the procedural rules subject, however, to certain translation into a language that is agreed by both the
mandatory rules. If the parties disagree to the parties or decided by tribunal. The provisions of
procedure, the procedure will be as determined by Arbitration and Conciliation Act, 1996 shows that the
the arbitral tribunal. Act granted autonomy with maximum freedom to the
parties to agree to decide how to determine when the
Arbitral Tribunal has powers to decide the procedure arbitration has officially commenced.
to be followed, unless parties agree on the procedure
to be followed and conduct the proceeding in a ⚫ Time and Place of Hearing (Section 20):
manner it considers appropriate. The Tribunal can
even decide upon the legitimacy, reasonableness and A time and place should be fixed for hearing and
materiality of evidence. notice should be given to the parties accordingly.

b) Flexibility of Place: Section 20 states that the parties are free to agree on
the place of arbitration.
The Place of arbitration shall be decided by
agreement between the parties. However, if the Failing such agreement, the place is to be determined
parties do not agree to the place, the tribunal shall by the Arbitral Tribunal. In doing so, the Tribunal has
decide the same after having regard to the to give:
circumstances of the case, including the convenience 1. Due consideration to the circumstances of the case
of the parties. and

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2. Also the convenience of the parties. in conducting its proceedings.

Unless otherwise agreed by the parties, the Tribunal 3) Failing any agreement referred to in sub-section
may meet at any appropriate (2), the arbitral tribunal may, subject in this Part,
conduct the proceedings in the manner it considers
Place: appropriate.
1. For mutual consultation,
2. For a hearing witness, experts or other parties or 4) The power of the arbitral tribunal under sub-
3. For inspection of documents, goods or other section (3) includes the power to determine the
parties. admissibility, relevance, materiality, and weight of
any evidence.
⚫ Equal Treatment of Parties:
⚫ Court Assistance (Section 27):
The parties shall be treated with equality and
each party shall be given a full opportunity to The Tribunal may by itself, or any party with the
present his case.i approval of the Tribunal, apply to the court of
assistance in taking evidence. The application has to
This section casts a twofold duty on the arbitral specify the particulars as stated in
a) It must be independent and impartial and must Section 27 –
mete out equal treatment to each party.
1) The arbitral tribunal, or a party with the approval
b) It must give each party a full opportunity to present of the arbitral tribunal, may apply to the court for
its case. assistance in taking evidence.

⚫ Rules of Procedure: 2) The application shall specify:

1) The arbitral tribunal shall not be bound by the A. the name and address of the parties and the
Code of Civil Procedure, 1908 (5 of 1908) or the arbitrators;
Indian Evidence Act, 1872 (1 of 1872).ii
B. the general nature of the claim and the relief
2) Subject to this Part, the parties are free to agree on sought;
the procedure to be followed by the arbitral tribunal
C. the evidence to be obtained, in particular –

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I. the name and address of any person to be heard as ⚫ Seeking the assistance of the court:
witness or expert witness and a statement of
subject-matter of the testimony required; Under Section 27(1), the Arbitral Tribunal, as well as
any part with the approval of the Arbitral Tribunal,
ii. The description of all or any document to be can apply to the court for assistance in taking
produced or property to be inspected evidence. Under Section 43 of the old 1949 Act, only
the arbitrator or umpire could apply and not a party.
3) The court shall within its competence and Orders of Court: The court may order that the
according to its rules on taking evidence and execute evidence be provided directly to the Arbitral
the request by ordering that the evidence be Tribunal. It will issue to the witnesses the same
provided directly to the Arbitral Tribunal. processes as it issues in the suits before it. The
processes that may be issued include:
4) The court may, while making an order under sub-
section (3), issue the same process to witnesses as it a) summons for the examination of witnesses,
may issue in suits tried before it.
b) commissions for the examination of witnesses, and
5) Persons who have failed to attend in accordance to
such rules, or making any other default, or refusing to c) summons for the production of documents.
give their evidence, or guilty of any contempt to the
arbitral tribunal during the conduct of arbitral Disobedience of Orders: Persons who fail to attend
proceedings shall be subject to the like as required, or make any other default; or refuse to
disadvantages, penalties, and punishments by order give evidence; or are guilty of contempt of the
of the Court on the representation of the arbitral Arbitral Tribunal, shall be dealt with by the Court on
tribunal as they would incur for the like offenses in the representation of the Arbitral Tribunal in the
suits tried before the Court. same way as a person who was guilty of like offenses
in suits before the court.
6) In this section, the expression “Processes” includes
summonses and commissions for examination of ⚫ The default of a Party (Section 25):
witnesses and summonses to produce documents
Unless otherwise agreed by the parties,
where, without showing sufficient cause:

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1) The claimant fails to communicate his statement of 2. If the circumstances are such that the
claim in accordance with subsection (1) of Section 23, party accidently fails to appear due to
the arbitral tribunal shall terminate the proceedings: any casual reason, arbitrator can fix
another date of hearing;
2) The respondent fails to communicate his
statement of defense in accordance with 3. If it appears that the party intentionally
defaulted from being present at the
Sub-section (1) of Section 23, the arbitral tribunal hearing, arbitrator should issue a notice
shall continue the proceedings without treating that stating his intention to proceed with the
failure in itself as an admission of the allegations by hearing at a specified time and date and
the claimant; that if the party remains absent, he would
proceed in its absence;
3) A party fails to appear at an oral hearing or to
produce documentary evidence the arbitral tribunal 4. But if after issuing notice, the arbitrator
may continue the proceedings and make the arbitral did not proceed ex parte on the day fixed
award on the evidence before it. but fixed another subsequent date, he
could not proceed ex parte on such
⚫ Principles governing ex parte proceedings: subsequent date unless he issued a
similar notice in respect of the date as
The principles governing the arbitrator’s well; and
right to proceed ex parte are: An advance notice
shall be served to the parties regarding any 5. If a similar notice is issued by the
hearing or meeting of the tribunal that may be arbitrator and the respective party
related to inspection of goods, documents etc. remains absent, an award can be
Any party that furnishes documents to the declared ex parte.
tribunal shall be informed to the other party as
well, and the evidence on which the arbitral But if the notice is not issued by the arbitrator at the
tribunal relies shall also be communicated to the second instance and he proceeds ex parte, that award
parties. would be set aside despite any peremptory notice
issued at an earlier date subject, however, to the
1. It any party cannot appear in one sitting, condition that prejudice was caused to the party
the arbitrator cannot take ex parte against whom the ex parte order was made. The
decision against him in ha sitting;

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action of the Arbitrator should be in conformity to the allow each party to call the evidence which he wishes
principles of natural justice. In case any such violation to call. In all the circumstances of the case, the
occurs, the court has the authority to strike down and arbitrator was not acting unfairly or refusing to
set aside the award of the arbitrator. decide the case submitted to him. An arbitrator may
order for filing of pleadings, or for discovery or
⚫ Power to limit evidence: inspection of documents. Under the preceding 1940
Act, the arbitrator could call upon a party to provide
The arbitrator may restrict the evidence to security for costs unless such power was granted to
the necessities of the case and the court may not him by the party.
interfere in such matters. A contract for the
construction of two office blocks contained an But now by virtue of the provisions in Section 38 of
arbitration clause. Disputes arose as to 81 separate the Arbitration and Conciliation Act, 1996, the
roofs in the two blocks. They were referred to Arbitral Tribunal can call upon the parties to deposit
arbitration. The roofs involved being too many, a sum of money for covering costs. The arbitrator has
attempts were made by the parties to limit the issues. to follow the ordinary rules of evidence. The owner
The parties failed to agree. One of them asked the engaged a building contractor. Disputes arose as to
arbitrator to do so by an order. He accordingly adjustments to be made for certain sums and were
ordered that the issue of liability be determined by referred to arbitration.
reference to a maximum of 25 roofs and then
suspended it to enable the parties to test its validity ⚫ Closure of Hearings:
in a court. He indicated by his letter that the parties
were still free to raise any matter requiring special There is no provision in the 1996 Act
consideration. It was held that in general, the court requiring the arbitrator to give notice of closure
should be slow to interfere with an arbitrator’s of hearing to the parties. But judicial
procedural orders. In this case, the particular pronouncements and fair play require that the
question of law was one which the arbitrator ought parties should be informed of the closure of the
not to have been asked to state. proceedings. The Courts have held that such a
There was no requirement that an arbitrator must notice should be given so as to enable the parties
to lead any additional evidence if they so desire.

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3.2. HEARING AND WRITTEN PROCEEDINGS speeding up the process of commercial dispute
resolution. One significant provision introduced
(1) Subject to any contrary agreement by the parties, through this amendment act was the fast track
the arbitral tribunal shall decide whether to hold oral procedure for arbitration through Section 29B in the
hearings for the presentation of evidence or for oral 1996 Act.
argument, or whether the proceedings shall be
conducted on the basis of documents and other This section deals with the concept of fast track
materials. However, unless the parties have agreed arbitration introduced to accelerate the process of
that no hearings shall be held, the arbitral tribunal arbitration wherein the award has to be given by the
shall hold such hearings at an appropriate stage of the arbitral tribunal within a period of 6 months from the
proceedings, if so requested by a party.iii date of reference of dispute. Also it is advisable for
the tribunal to decide the dispute on the basis of
(2) The parties shall be given sufficient advance written pleadings, documents that are submitted by
notice of any hearing and of any meeting of the the parties without any oral hearing, unless there is a
arbitral tribunal for the purposes of inspection of contrary request from the parties or tribunal deems
goods, other property or documents. it necessary to clarify the issues relating to
arbitration process.
(3) All statements, documents or other information
supplied to the arbitral tribunal by one party shall be 3.3.2. Highlights of the Fast Track procedure for
communicated to the other party. Also any expert arbitration
report or evidentiary document on which the arbitral
tribunal may rely in making its decision shall be I. Fast track arbitration by agreement:
communicated to the parties.
The new section provides the parties to a dispute
3.3. FAST TRACK PROCEDURE with an option to choose fast-track procedure, even if
3.3.1. Introduction they do not wish to subject their arbitration to any
institutional rules. The parties can agree to fast-track
The Arbitration and Conciliation (Amendment) Act, procedure at the time of entering into arbitration
2015 came into effect from 23rd October 2015. It has agreement or at any stage either before or at the time
introduced some important changes in the already of the appointment of the arbitral tribunal. It is also
existing law and has also been considered as a noteworthy that the enabling provision in Sec 26 of
landmark step towards ease of doing business and

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the amendment Act provides for fast track months. Also, if the award has not been made within
arbitration to be applied to the existing disputes if the extended time period, it will be the mandate of the
parties mutually agree to apply this procedure. tribunal to automatically terminate and any
additional extension can only be granted by the court
II. Sole arbitrator for fast track arbitration: on sufficient cause being shown and on such terms
The parties to a dispute, while agreeing to the and conditions as may be imposed.
resolution of a dispute by fast-track procedure, may
choose a sole arbitrator to act as an arbitration V. Arbitrator’s fees to be agreed by the parties
tribunal.iv Though the amendment Act under Sec. 11(14) has
prescribed the fees of arbitrators in the Fourth
III. Arbitration tribunal may decide on the basis of Schedule, in the case of fast-track arbitration, the
pleading, etc. fees and the manner of payment of fees shall be as
agreed by the parties.
The fast track arbitration procedure does away with
the need for oral hearing since the dispute is settled VI. Fast Track Procedure in Institutional Arbitration
on the basis of written pleadings, documents, and The fast track procedure has been there in the
submissions filed by the respective parties. But the international arbitration since long. Their worth has
need of oral pleadings is not completely eliminated in been realized in cases where a minor dispute has
fast-track proceedings since it may be held at the cropped up or where parties don’t want the process
request of the parties or if it is considered necessary to be very long. Rule 9A of the LCIA Arbitration Rules
by the tribunal to deal with certain issues. It is 2014 and Rule 5 of the SIAC Rules, 2016 provide for
completely at the discretion of the tribunal to an expedited procedure of Arbitration in order to
dispense any further technical formalities and adopt resolve the dispute. v
any such procedure that is suitable for the
expeditious disposal of the dispute. 3.4. SETTLEMENT DURING ARBITRATION
IV. Arbitration award to be made within six months
It has been stated that the arbitration award shall be 1) It is not incompatible for an arbitral tribunal to
made in 6 months. In case, the tribunal fails to make encourage settlement of the dispute and, subject to
an award within six months, the parties can exceed the agreement between the parties, the arbitral
the time period mutually to an additional period of 6 tribunal may use mediation, conciliation or other

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procedures at any time during the arbitral reproduced an agreement come to between the
proceedings to encourage settlement. parties, applies only where the consent of the
parties is regarded by the arbitrator as evidence
2) If during arbitral proceedings, the parties settle the of the fact that the settlement proposed is fair to
dispute, can terminate the proceedings and if it has all. If the existence of the compromise is
been requested by the parties and not objected to by disputed, the arbitrator can go into that question
the arbitral tribunal the settlement can be recorded and if he finds the compromise to be valid, he can
in the form of an arbitral award. be given his award in terms of the same. This
section gives this position to the arbitral tribunal
3) An arbitral award on agreed terms shall be made in that to the extent possible it should encourage
accordance with Section 31 and shall state that it is an the parties to come to a voluntary settlement
arbitral award. and for this purpose to use mediation,
conciliation, and other procedures. Sub-section
4) An arbitral award on agreed terms shall have the (2) provides that if the parties settle the dispute
same status and effect as any other arbitral award on the Tribunal may terminate the proceedings and
the substance of the dispute. if the parties so desire to record the settlement
in the form of an award on agreed terms. Sub-
⚫ Settlement through Alternative Dispute section (3) requires that an award on settled
Resolution (ADR): terms should state that it is an award and it has
to be made in accordance with the requirements
Though there was no specific provision of Section 31. Sub-section (4) gives an agreed
corresponding to this section in the repealed award of the same status and force as if it were
Arbitration Act, 1940, the law was the same. An an arbitral award.
award which merely embodied a compromise of
the parties themselves as a valid award. 3.5. LAW OF LIMITATION APPLICABLE
Accepting a compromise is an adjudication of the
case as is a decree of the court founded on a i. The Limitation Act, 1963, is applicable to the
compromise. An award remains an award even arbitration proceedings in the same manner
though it approved an arrangement put forward as it is applicable to normal proceedings.
by the parties and was in accordance with their
wishes. The rule that all award is not open to ii. As far as this section is concerned and also
objection on the sole basis that it merely

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the Limitation Act, 1963, proceedings shall be costs awarded, as per the Amendment Act
deemed as per Section 21. shall, unless directed under the arbitral
iii. Where the agreement mentions about award, which shall be two percent more than
settlement of future disputes, the agreement the present interest rate prevalent on the
if applies to any claim shall be barred until date of award given by the tribunal.
some measure is taken within a fixed time to
start the proceedings and the dispute has ➢ Regime for Costs (Introduced by the
arisen in which the court thinks that undue Amendment Act)
hardship if caused can consider such terms Cost of arbitration means reasonable cost
and expand the time for such period. relating to fees and expenses of Arbitrators
iv. In a situation where the tribunal orders to set and witnesses, legal fees and expenses,
aside the award, the period between the administration fees of the institution
commencement of the arbitration and the supervising the arbitration and other
date of the order of the court shall be expenses in connection with arbitral
excluded in computing the time prescribed by proceedings. The tribunal can decide the cost
the Limitation Act, 1963, for the and share of each If the parties refuse
commencement of the proceedings (including to pay the costs, the Arbitral Tribunal may
arbitration) with respect to the dispute so refuse to deliver its award. In such case, any
submitted. party can approach the court. The court will
ask for a deposit from the parties and on such
3.6. INTEREST AND COST OF APPLICATION deposit, the award will be delivered by the
tribunal. Then court will decide the cost of
The interest rate payable on damages and costs arbitration and shall pay the same to
awarded, unless the arbitral award otherwise directs, Arbitrators. Balance, if any, will be refunded
shall be 18 percent per annum, calculated from the to the party.vii
date of the award to the date of payment as stated
under Section 31(7)(b) of the Arbitration and The regime for costs has been established
Conciliation Act. which has applicability to both arbitration
proceedings as well as the litigations arising
➢ Applicability of Amendment Act out of arbitration.
The interest rate payable on damages and

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The explanation defining the term ‘costs’ for arbitration agreement;
the purpose of this sub-section has been v. the award has been set aside or suspended by a
added. The circumstances which have to be
taken into account while determining the competent authority of the country in which it
costs have been laid down in the sub-section was made;viii
(3) of the freshly added section (Section 31 A). vi. The subject matter of dispute cannot be settled
In a nutshell this provision is added to by arbitration under Indian law; or
determine the costs incurred during the vii. The enforcement of the award would be contrary
proceedings including the ones mentioned to Indian public policy.
under Section 31(8) of the Act.
Only in exceptional circumstances, a court can be
The grounds for challenging the arbitral award are approached under the Act. The aggrieved party can
provided under Section 34 of the act. It can be approach the court only after arbitral award is made
challenged within 3 months from the date of receipt or in case of an order passed under Section 17 of the
of arbitral award (and an extended period of 30 days Act, after the order is passed. Appeal to court is now
if reasons are shown for condonation of delay). After permissible only on certain restricted grounds. Under
the expiration of this period, the award holder can Section 37(1) of Arbitration and Conciliation Act
apply for its execution as any other decree of court. 1996, an appeal lies from the following orders and
But if this period has not ended, award cannot be from no others to the court authorized by law to hear
enforced. Section 34 provides for the following appeals from original decrees of the court passing the
grounds of challenge of award: order, namely:-

i. the parties to the agreement are under some i. Granting or refusing to grant any measure
incapacity; under Section 9;

ii. the agreement is void; ii. Setting aside or refusing to set aside an
iii. the award contains decisions on matters beyond Arbitral Award under Section 34

the scope of the arbitration agreement; 3.9. APPLICABILITY OF AMENDMENT ACT
iv. the composition of the arbitral authority or the
The Amendment Act has widened the ambit of appeal
arbitral procedure was not in accordance with the by including the order refusing to refer the parties to

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arbitration under Section 8 of the Act. Under Section When the period for filing objections has expired or
37(2) an appeal shall also lie to a court from an order objections have been rejected, the award can be
of the Arbitral Tribunal- enforced under the CPC in the same manner as if it
were a decree passed by the court of law.x
i. Accepting the plea referred to in sub-section
(2) or sub-section (3) of Section 16; or An ex parte award passed by an Arbitral Tribunal
under Section 28 of the Act is also enforceable under
ii. Granting or refusing to grant an interim Section 36. Even a settlement reached by the parties
measure under Section 17. under Section 30 of the Act can be enforced under
Section 36 of the Act as if it were a decree of the
Section 37(3) also states that no second appeal shall court.
lie from an order passed in appeal under this Section
but nothing in Section 37 shall affect or take away any A. The institution of Execution Petition
right to appeal to the Supreme Court.
The procedure mentioned in Order XXI of CPC has to
However, a three judge Bench of the Supreme Court be adhered to for the execution of an arbitral award
has recently held in Centro trade Minerals & Metal v. and the order contains a detailed procedure for the
Hindustan Copperix that parties may provide for an enforcement of award. Also it must be noted that this
appeal to lie from the award to an appellate arbitral Order is the longest order in the schedule which
tribunal. Such a clause was held not to be contrary to comprises 106 Rules.
the laws of the country and thus enforceable. It
appears that the scope of appeal in such cases is far The legal position as to the objections is explicit when
wider than an appeal to a court. the award is sought to be enforced under Order XXI
CPC and at this phase of execution, the validity also
3.10. ENFORCEMENT AND EXECUTION OF THE cannot be challenged.
The court executing the decree cannot go beyond the
According to Section 35 of the Act, an arbitral award decree and between the parties or their
shall be final and binding on the parties and persons representatives. It ought to take the decree
claiming under them. Thus an arbitral award becomes according to its tenor and cannot entertain any
immediately enforceable unless challenged under objection that the decree was incorrect in law or in
Section 34 of the Act. facts. All proceedings in execution are commenced by

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an application for execution.xi The execution of a from transferring or charging the property in any way
decree against the property of the judgment debtor and prohibiting all other persons from taking any
can be effected in two ways – benefit from such a transfer or charge. The order
must be proclaimed at some place on or adjacent to
i. Attachment of property; and the property and a copy of the order is to be affixed
ii. Sale of property of the judgment debtor on a conspicuous part of the property and upon a
conspicuous part of the courthouse as stated under
The courts have been granted discretion to impose Order 21 Rule 54 of CPC. Section 64 of CPC also
conditions prior to granting a stay, including a states that where an attachment has been made, any
direction for deposit. The amended section also private transfer of property attached, whether it be
states that where the time for making an application movable or immovable, is void as against all claims
under section 34 has expired, then subject to the enforceable under the attachment. If during the
provisions of the CPC, the award can be enforced.xii pendency of the attachment, the judgment debtor
Also, the mere fact that an application for setting satisfies the decree through the court the attachment
aside an arbitral award has been filed in the court will be deemed to be withdrawn.xiv Otherwise, the
does not itself render the award unenforceable court will order the property to be sold.xv
unless the court grants a stay in accordance with the
provisions of subsection 3, in a separate application. • Sale of attached property
It is the discretion of the court to impose such
conditions as it deems fit while deciding the stay Order XXI lays down a detailed procedure for sale of
application.xiii attached property whether movable or immovable. If
the property attached is a moveable property, which
• Attachment of Property is subject to speedy and natural decay, it may be sold
at once under Rule. Every sale in execution of a
‘Attachable property’ belonging to a judgment debtor decree should be conducted by an officer of the court
may be divided into two classes: except where the property to be sold is a negotiable
instrument or a share in a corporation which the
i. Moveable property and court may order to be sold through a broker.xvi
ii. Immovable property.
If the property is immovable, the attachment is to be
made by an order prohibiting the judgment debtor

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i Section 18, Arbitration Act,1940, from one party to this effect; and relegation has to happen
ii Section 19, Arbitration and Conciliation Act, 1996 before the arbitral award passed by the same arbitral tribunal
iii Section 24, Arbitration and Conciliation Act 1996. is set aside by the court. Once the award is set aside, the
iv Arbitration and conciliation Act, Section 29B (2) dispute cannot be remanded back to the arbitral tribunal. (AIR
v Fast Track procedure for arbitration introduced by the 2017 SC 2785)
Arbitration and Conciliation Act, 2015, ( Dec 2, 2016), ix 2016 (12) SCALE 1015.
for-arbitration-introduced-by-the-arbitration-and- x N. Poongodi v. Tata Finance Ltd., 2005 (3) ARBLR 423
conciliation-amendment-act-2015/. (Madras).

vi Section 31(8) of Arbitration and Conciliation Act. xiRule 10, CPC.
vii Section 39 of Arbitration and Conciliation Act.
viii The Supreme Court in Kinnari Mullick v. Ghanshyam Das xii Section 36(1), Arbitration and Conciliation Act.
Damani has held that a court can relegate the parties to the
arbitral tribunal, only if there is a specific written application xiii Proviso to Section 36(3), Arbitration and conciliation
xiv C.P.C, O.XXI R. 55.

xv C.P.C, O.21 R. 64.

xvi C.P.C, O.XXI R.76.

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