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Govt Introduces Bill to Amend Arbitration Law in Lok Sabha

Representative image.

Representative image.

As per the proposed amendment, if the award is being given on the basis of an agreement based on fraud or corruption, then the court will not impose a condition to stay the award and grant an unconditional stay during the pendency of the appeal if it has been challenged under Section 34 of the arbitration law.

The government on Thursday introduced a bill in Lok Sabha to amend the arbitration law to ensure that all stakeholders get an opportunity to seek unconditional stay on enforcement of arbitral awards where the agreement or contract is "induced by fraud or corruption". Introducing the Arbitration and Conciliation (Amendment) Bill, 2021 amid uproar by Opposition members over the three farm laws, Law Minister Ravi Shankar Prasad said the bill seeks to check fly-by-night operators who take advantage of the law to get favourable award by fraud.

The bill intends to replace an ordinance issued on November 4, 2020. Responding to objections raised by BJD member B Mahtab, Prasad said the government has the legislative competence to amend the law and will go into the merits of the points raised by the member at the time of consideration and passage of the bill.

Mahtab objected to the bill at the introduction stage saying it "lacks logic and reasoning". Among other things, the bill, which amends the Arbitration and Conciliation Act, 1996, seeks to do away with the 8th Schedule of the Act which contained the necessary qualifications for accreditation of arbitrators.

The qualifications for accreditation of arbitrators is proposed to be prescribed by regulations to be framed by an arbitration council to be set up. Till recently, an arbitration award was enforceable even if an appeal was filed against it in the court under Section 36 of the law. But the court could grant a stay on the award on conditions as it deemed fit.

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As per the proposed amendment, if the award is being given on the basis of an agreement based on fraud or corruption, then the court will not impose a condition to stay the award and grant an unconditional stay during the pendency of the appeal if it has been challenged under Section 34 of the arbitration law. The bill, according to the statement of objects and reasons, provides for "unconditional stay of enforcement of arbitral awards, where the underlying arbitration agreement, contracts or arbitral award is induced by fraud or corruption".

first published:February 04, 2021, 19:45 IST