What Is The Arbitration And Conciliation (Amendment) Bill 2021 About?

What Is The Arbitration And Conciliation (Amendment) Bill 2021 About?

The Arbitration and Conciliation (Amendment) Act, 2021 gained parliamentary assent on March 10, 2021, and is deemed to have come into force on November 4, 2020.

The bill was passed in the Lok Sabha in February 2021.

The Arbitration and Conciliation Act, 1996 was enacted in order to consolidate and amend the law relating to domestic arbitration, international commercial arbitration, enforcement of foreign arbitral awards on the law relating to conciliation.

What does the bill aim at?

The Bill replaces an ordinance with similar provisions promulgated on November 4, 2020.

The act seeks to address the issue of corrupt practices in securing contracts or arbitral awards.

Provisions of the bill – Automatic Stay on Awards –

The 1996 act allowed a party to an arbitration to file an application to set aside an arbitral award in the arbitration proceeding. 

This provision was concluded by the courts that an automatic stay on an arbitral award was granted the moment the court received an application for setting aside an arbitral award.

An amendment was made to the act in 2015, which stated that an arbitral award would not automatically stay merely because an application is made to a court to set aside the arbitral award.

The Bill was introduced in the Lok Sabha on 4 February 2021which contains the following –

Bill number.16 of 2021 –

Amendment of section 36 –

In section 36, in subsection (3), after the proviso, in the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the principal Act) the following shall be inserted and shall be deemed to have been inserted with effect from the 23rd day of October 2015, namely –

Where the court is satisfied and assured 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 affected by fraud or corruption, such award shall be stayed by the court unconditionally pending disposal of the challenge under section 34 to the award.

The court further said that the above proviso shall be applicable to all court cases arising out of or in relation to arbitral proceedings, irrespective of whether the arbitral award or court proceedings were commenced before or after the commencement of the Arbitration and Conciliation (Amendment) Act, 2015.

The following section shall be substituted for section 43J of the principal Act, namely –

43J. The qualifications, experience and norms for accreditation of arbitrators shall be such as may be specified by the regulations.

The Eighth Schedule to the principal Act shall be omitted.

the arbitration and conciliation amendment ordinance, 2020 is hereby repealed.

Notwithstanding such repeal, anything done or any action taken under the said ordinance shall be deemed to have been done or taken under this act.

 The act was amended by the arbitration and conciliation amendment act, two 2015, inter alia, to make the arbitration process user friendly and cost-effective and to ensure speedy disposal and neutrality of arbitrators.

 The said amendment is made in order to address the issue of corrupt practices in securing contracts for arbitral awards, so a need was felt to ensure that all the stakeholders are entitled to an opportunity to seek an unconditional stay of enforcement of arbitral awards where the arbitration agreement or contract in question or making of the arbitral award is induced by fraud or corruption.

 The amendment also seeks to promote India as a hub of international commercial arbitration by attracting eminent arbitrators to the country, and so it was necessary to automate the eighth schedule of the act.