The Lok Sabha on Friday passed the Arbitration and Conciliation (Amendment) Bill, 2021 which aims to make India a big hub for international and domestic arbitration
By: Priya Kumari, B.A.LL.B., Maharashtra National Law University Aurangabad
On February 4, 2021, Union Law Minister of India, Ravi Shankar Prasad, introduced the Arbitration and Conciliation Amendment Bill in Lok Sabha.
This bill seeks to amend the Arbitration and Conciliation Act, 1996 and it contains provisions to deal with domestic and international arbitration. It defines the law for conducting conciliation proceedings.
It will replace the ordinance issued on 4 November 2020. This amendment provides for the following –
- To grant an unconditional stay of enforcement of arbitral awards, where the underlying arbitration agreement, contract or arbitral award is induced by fraud or corruption;
- To omit the Eighth Schedule of the Act which laid down the qualifications, experience and norms for accreditation of arbitrators; and
- To specify by regulations the qualifications, experience and norms for accreditation of arbitrators and the said amendment is consequential in nature.
In the Parliament, Ravi Shankar Prasad said that India needs a fillip to institutional arbitration. Replying to a discussion on the Bill, he said that India wants to be an excellent hub for arbitration and the Narendra Modi government will make India a big hub for domestic and international arbitration. He said that freedom must be given to the domestic and international arbitrators to make the process easier. This will lead the country to move towards the path of economic development. He asserted that India respects the honest process and the Indian government is committed to bringing transparent mechanisms in every sphere of governance. He said that India welcomes arbitrators of all nationalities and the bill will facilitate speedy appointment of arbitrators through designated arbitral institutions.
As per the bill, the arbitrators must be-
- an advocate under the Advocates Act, 1961 with 10 years of experience, or
- an officer of the Indian Legal Service, among others.
The Bill clarifies that even during the pendency of the setting aside application, a stay on the arbitral award may be granted by the Court if it is prima facie satisfied that the relevant arbitration agreement or contract/ making of the award was induced by fraud or corruption which shall be deemed effective from October 23, 2015.
Most of the members of Parliament supported the Government for proposing the omission of Schedule 8 due to the reason that the 8th schedule will attract eminent international arbitrators to India and additionally achieving the goal of making India a hub of international commercial arbitration.
On the other hand, the proposal of amending Section 36 received a lot of opposition. This section provides an automatic stay of the award.
Pinaki Misra, an MP from the Biju Janata Dal party said that by the proposed amendment to Section 36 of the Act, the government is creating an ‘illogical hierarchy’ in the law.
He pointed out that Explanation 1(1) to S. 34(2)(b) of the Act already covers agreements induced by fraud or corruption and thus, there is no need to make the Act more complicated.The Union Law Minister told the House that the proposed amendment to Section 36 of the Act, despite the use of words Fraud/ corruption in Section 34 was required as the latter does not provide for an “automatic stay” of the award.