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A retrospective amendment in arbitration law

The Arbitration and Conciliation (Amendment) Ordinance, 2020 was promulgated. It amends the Arbitration and Conciliation Act, 1996. The Act contains provisions to deal with domestic and international arbitration and defines the law for conducting conciliation proceedings. Key features of the Ordinance include the following:

Automatic stay on awards: A retrospective Amendment in law

The 1996 Act allowed a party to file an application to set aside an arbitral award (i.e., the order given in an arbitration proceeding). Courts had interpreted this provision to mean that an automatic stay on an arbitral award was granted the moment an application for setting aside an arbitral award was made before a court. In 2015, the Act was amended to state that an arbitral award would not be automatically stayed merely because an application is made to a court to set aside the arbitral award

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

"Provided further that where the Court is satisfied that a prima facie case is made out,-— (a) that 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.

The Ordinance specifies that a stay on arbitral award can be provided (even during the pendency of the setting aside application) if the court is satisfied that:

(i) the relevant arbitration agreement, or

(ii) the making of the award, was induced or effected by fraud or corruption.

This change will be effective from October 23, 2015.

Qualification of arbitrators & deletion of Eighth Schedule

The Act specified certain qualifications, experience and accreditation norms for arbitrators in a separate schedule. The requirements under this schedule included that the arbitrator must be: (i) an advocate under the Advocates Act, 1962 with 10 years of experience, or

(ii) an officer of the Indian Legal Service.

Further, the general norms applicable to arbitrators required them to be familiar with the Constitution of India.

For section 43J of the principal Act, the following section shall be substituted, 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 Ordinance omits the Schedule for arbitrators and states that the qualifications, experience and norms for accreditation of arbitrations will be specified by regulations.

Bijoy P Pulipra

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