The Lok Sabha recently passed the Arbitration and Conciliation (Amendment) Bill, 2021. This piece of legislation is aimed at mitigating misuse by unscrupulous individuals who exploit the law to procure favourable awards through fraudulent means. The bill serves as a replacement for the Arbitration and Conciliation (Amendment) ordinance that was issued in November 2020.
Features of the Arbitration and Conciliation (Amendment) Bill
One of the key aspects of the bill involves amending the qualifications for arbitrators under the 8th schedule of the Arbitration and Conciliation Act, 1996. Previously, an arbitrator had to either be an advocate under the Advocates Act, 1961 with a decade of experience or an officer from the Indian Legal Service. Now, the qualifications for accreditation will be determined via regulations established by an arbitration council.
Another notable feature of this bill involves granting courts the ability to place an unconditional stay on awards in instances where the agreement was based on corruption or fraud. This stay can be applied while an appeal under section 34 of the arbitration law is pending.
Benefits and Potential Drawbacks of the New Legislation
This bill aims to create parity among all stakeholders involved in the arbitration process. It offers each stakeholder the chance to request an unconditional stay on the enforcement of arbitral awards if it is revealed that the agreement or contract was induced by corrupt or fraudulent practices. This provision also intends to protect taxpayers by holding accountable those who unlawfully siphon off funds.
However, critics argue that India currently lags in enforcing international contracts and agreements. There are concerns that this bill might potentially hinder the “Make in India” initiative and negatively impact the country’s ranking on the Ease of Doing Business Index. These legislative changes could also result in a lengthier resolution process for commercial disputes.
The Arbitration Council of India (ACI)
The Arbitration and Conciliation (Amendment) Act, 2019 proposed the establishment of the ACI as an independent body aimed at promoting arbitration, mediation, conciliation, and other dispute resolution mechanisms.
Arbitration refers to the process of resolving disputes by appointing an impartial third party known as an arbitrator, who listens to both sides before settling the dispute. On the other hand, conciliation involves appointing a conciliator to help disputing parties reach a mutually agreeable resolution.
The ACI is composed of a Chairperson and other members including an eminent arbitration practitioner, an academician with arbitration experience, and government appointees. The Chairperson can either be a Judge of the Supreme Court; a Judge of a High Court; Chief Justice of a High Court; or an eminent person with expert knowledge in conducting arbitration.
Appointment of Arbitrators
Under the Act, the Supreme Court and High Courts can designate arbitral institutions. These institutions are responsible for the appointment of arbitrators. In situations where there are no available arbitral institutions, the Chief Justice of the concerned High Court may maintain a panel of arbitrators. Any application for the appointment of an arbitrator must be resolved within a period of 30 days.
