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This pandemic has brought changes in everyone’s life from a migrant worker to any MP sitting in the parliament. 25th March 2020 is the day when the nationwide lockdown was announced and has undoubtedly changed the course of Arbitration in India. Thus in the beginning of the pandemic when every office is under lockdown, the virtual medium of became the source of arbitration. The government of India is constantly promoting domestic and international arbitration;, by way of amending the principal act of Arbitration and Conciliation Act, 1996. Throughout, the decade’s Alternate Dispute Resolution (ADR); has become one of the principal methods of solving any legal discord between the parties. Now when the ADR is becoming popular in the country therefore government is adopting every possible measure to promote it. And parliament is the place to promote anything by introducing any ordinance or bill.
For the above reasons, on February 04, 2021, a bill was introduced in the Lok Sabha by the law minister Ravi Shankar Prasad. Before presenting the bill on the table he advocated about the promotion of arbitration to international level. Although an ordinance was passed on November 04, 2020 is in force.
These are some highlighting changes made in the act:
Automatic stay on the awards
Presently, if a party wants to set aside an arbitral award then it can apply to the court under Section 34 of the Arbitration and Conciliation Act, 1996. Albeit an automatic stay would be awarded on the execution of the award by just applying under Section 34 of the act to set aside the award.
“Provided further that where the Court is satisfied that a prima facie case is made out that, –
(a) the arbitration agreement or contract which is the basis of the award; or
(b) the making of the award, was induced or effected by fraud or corruption, it shall stay the award unconditionally pending disposal of the challenge under section 34 to the award.
Explanation.––For the removal of doubts, it is hereby clarified that the above proviso shall apply to all court cases arising out of ;or in relation to arbitral proceedings, irrespective of whether the arbitral or court proceedings were commenced prior to or after the commencement of the Arbitration and Conciliation (Amendment) Act, 2015.”.
Now under the new amendment act, if the award is being given based on a fraudulent agreement or by way of corruption, then the court may grant an unconditional stay on the arbitral award as long as the appeal to set aside the award under section 34 is pending before the court.
Qualifications of Arbitrators
According to the Schedule VIII of the principal act certain conditions such as; qualifications, experience and accreditation norms for the arbitrators would be considered before the appointment. The requirement an arbitrator must have is;
- (An advocate under the advocates act 1961 with 10 years of experience, or
- An officer of the Indian League Service.
Now the new bill seeks to omit the VIII Schedule and states that the qualifications, experience and accreditation norms of the arbitrators shall be decided by the set of regulations framed by the arbitration council.
Criticism of the Bill
Most of the members in the parliament (including opposition) welcomed the new bill which seeks to amend the Arbitration and Conciliation Act, 1996. Some members of the parliament praised the government for the amendment and; said that it will create new opportunities in the arbitration in India. The decision of the government to omit the Schedule VIII of the act is praised and it was hoped that; it will attract eminent international arbitrators in India making India an arbitration hub.
However, the amendment to Section 36 faced quite a good criticism from the opposition in the Lok Sabha. Professor Ray from the AITC contended that it becomes very easy for the losing party to assert corruption and get an automatic stay on the award. Subsequently, the parties have to wait for the implementation till the final pronouncement by the court. Some other members alleged the government for making the act too complicated highlighting that proposed amendment is already present in the explanation 1(1) of section 34(2)(b) in the act. One member raised concerns on the ease of doing business & enforceability of the contracts. A member said that the present government lack legislative wisdom.
Even after considerable amount of criticism the amendment got passed in Lok Sabha with the clear majority and law minister Ravi Shankar Prasad expected that this will bring revolution of international arbitration in India.
The lack of arbitration institutions in India is a debatable issue amongst the members of arbitration community. But this has been improved in the recent years. Hence, if we see development of arbitration as a method of solving discord then we will notice the exponential growth of the arbitration law. In India, eastern states like Bihar, Chhattisgarh, etc do not have access to arbitration or we can say there is no such thing called arbitration institution. Now the new amendments will surely connect India to the world and promote international arbitration but implementation of the same matters the most. It will help the stakeholders to take an unconditional stay on the arbitral awards; where the agreement or contract is coaxed by fraud or corruption. This will save money of the taxpayers and bring out those in fault. The vision of law minister Ravi Shankar Prasad to make India a hub of arbitration looks delusory with the shrinking economy but surely looks good on paper. The real test of the authorities will be in implementation of the provisions.
This article analysing the Arbitration and Conciliation Act is written by Anubhav Yadav, Campus Ambassador at Legal Thirst.
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