Arbitration and Conciliation Ordinance, 2020

Arbitration and Conciliation Ordinance, 2020

Author: Urfi Ansari, Rizvi Law College

Abstract

With the changing scenario of arbitration processes, the President of India has further enacted the Arbitration and Conciliation (Amendment) Ordinance, 2020 (Ordinance) by adding amends to the Arbitration and Conciliation Act of 1996. This ordinance brings forty that all the stakeholders shall be getting an opportunity to seek unconditional stay of enforcement of arbitral awards where the underlying arbitration agreement or making of the arbitral award is believed to be induced by fraud or corruption. The Ordinance will be beneficial in cases where inherent illegality by fraud or corruption has been ‘prima-facie’ shown in court. However, it will be interesting to see how courts interpret the burden of proving a ‘prima-facie’ case of corruption or fraud.

The idea and objective of the arbitration is to achieve speedy remedy without any complexity of rules and regulations. This alternate dispute resolution marks the way to saving time with speedy remedy, it starts with appointment of arbitrator as per the act laid down with the objective of amicable settle outside court to smoother business transaction. The arbitration and conciliation act have been improved and surpassed previous laws such as The Arbitration Act, 1937, The Arbitration Act 1940, Foreign Award 1961. It can be noted that previously there was no Statute provided or mentioned a term such as conciliation it was first introduced in UNCITRAL rules, the act has roots in UNCITRAL law as it acts as the model law for the commercial arbitration. After various trial and error an act consisting almost every aspect providing coverage in terms of remedy is known as the Act of 1996, it includes domestic arbitration, international arbitration, awards and rules, the Act is the consolidation and covers under one umbrella of every other statutes previously existed separately.

Objective:

At any point of time, courts have always been burdened with different case which cause delay in remedy, the judiciary provides justice for sure but the time it sometimes takes would not be suitable for the businesses who seek remedy in a limited period of time would be benefited. This leads to special measure for providing actual benefit with close gap as early as possible with introduction of Arbitration and conciliation Act several special features came into existence to resolve dispute[1] “the Act classify disputes but claims cannot be classified”. Few basic salient features of the ACT are: Arbitral Tribunals, Appointment of Arbitrator, Out of the Court Settlement, Foreign Award, Enforceable and valid just like the order of the court, Minimizes the burden of court.

Arbitration and Conciliation Act 2019:

The act of 2019 added new provisions settling down sets of provisions towards friendly jurisdiction. The Arbitration Council of India holds the responsibility of reviewing or evaluating the Arbitrator[2] and qualification, norms and experience of arbitrator is also specified in the schedule of the act[3], the schedule defines the qualification and eligibility of certain individual as arbitrator. Even today the international qualified professionals are not eligible to be appointed as arbitrator under the act[4].  It is observed that once the arbitrator is designated or seated in one jurisdiction, that jurisdiction shall be a valid jurisdiction for application to the Court. One of the facets in the new act is publication of award and maintaining confidentiality of proceedings, section 42A of the Act provides for confidentiality of information and disclosure whatsoever to be maintained during the proceedings by the parties to the contract and arbitrator with respect to the agreement as well. It can only be disclosed when it is necessary for the execution or implementation of the award.

Conduct of proceeding as per the new act has been reduced to six months including defense and statement of claim to be completed in that time as per section 23(4). Also include powers of court to seat or designate any arbitral institute.

Ordinance Of 2020:

In 4th of November 2020 promulgated by the president of INDIA in the 75th of the Republic of India, an ordinance towards amendment in Arbitration and Conciliation Act, 1996. The objective of this ordinance to protect the interested parties, the stakeholders as a whole from any wrongful award made by wrongful means by invoking timeless injunction on the said impugned award, till the adjudication of award or actual remedy received.

The Eighth Schedule explains the qualification of the Arbitrator including a set of 9 professional eligible to be appointed as arbitrator has been omitted, henceforth cease to exist yet the ordinance is completely silent with respect to the substitution of the Schedule.

Section 36 provides to stay on any award which is acquired through fraud or any other fabricated means can be prevented by court intervention on such award and imposing stay of such award till the finalization of the dispute. This section might give an interesting twist to the situation as never before such kind of Observation made by the court.

Section 43J includes the qualification, accreditation and experience in accordance with the eighth schedule, but as it can be seen the schedule is omitted thus the explanation shall rely on regulation of the Act.

Ordinance mostly focused on the protection of the stakeholders in respect of any malicious or wrongful award acquired by corrupt methods. The schedule is omitted which formed the inherent part of the section 43J of the Act thus it gives a window to new addition.

Thus, the Arbitration Act is still a long way to become an international seat for the proceeding. Unconditional Stay, use of such strong stance might be a thing to observe in case of judicial Interruption proves to be an unpredictable event.

References:


[1] Shri Chand Construction and Apartments Pvt. Ltd. v. Tata Capital Housing Finance Ltd. March 4, 2020 in CS (OS) 179/2019.

[2] Section 43D(2)

[3] Section 43J, Eighth Schedule

[4] Hindustan Construction Company Ltd. v. NHPC Ltd. & Anr, March 4, 2020 Transfer Petition (C) No. 3053/2019

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: