Centre moved bill for stays on fraud-tainted arbitral awards

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law insider official logo news

Sreya Kanugula

A bill was set to be introduced by the Union government to empower the judiciary to give unconditional stays on matters regarding the enforcement of corruption or fraud-tainted arbitration awards.  

The Arbitration and Conciliation (Amendment) Bill 2021 was created to ensure that plenty of opportunities for unconditional stays will be provided for all stakeholders who seek them in concern with enforcing arbitral awards when the agreement or contract was stated to be “induced by fraud or corruption.

This information was given by a senior official from the Centre to Indo-Asian News Service (IANS) anonymously. 

This bill from the Law Ministry will also seek for removal of provisions that determine qualifications as well as accreditation for arbitrators, which in turn had excluded several foreign nationals from being acting arbitrators during Indian arbitrations. 

The new qualifications as per this bill will be specified according to regulations and these regulations notice currently remains pending.

Mr. Ravi Shankar Prasad, the Union Law Minister shall introduce this bill during the business hour of the session as soon as the Lok Sabha will assemble at 4 pm. 

On November 4th 2020, the President of India, Mr. Ram Nath Kovid promulgated the Arbitration and Conciliation (Amendment) Ordinance, 2020 that amended Section 36 that involved enforcement and Section 43-J that involved norms for accreditation, which remain part of the Arbitration and Conciliation Act, 1996.

One of the provisions given in the Ordinance stipulated the provision of unconditional stay on an award by a court if a strong prima facie case had been made while the challenge was pending to be disposed of as stated under the Arbitration Act’s Section 34. 

It also omitted the Arbitration Act’s Eighth Schedule that dealt with qualifications as well as experience of arbitrators. 

This was faced with some criticism that the determined conditions under the law came in the way of the country being given the benefit of enjoying foreign arbitrators. 

A functionary from the Centre stated that “a wrong impression” was created about the issue. They gave the statement to IANS that “the government dropped the 8th Schedule to do away with that impression.”

At present, the regulations for the accreditation of the arbitrations will be eventually framed by the proposed Arbitration Council. 

It will be effective with retrospect from the 23rd of October 2015 as the proposal of the Bill gets moved to the other House, stated another government official.

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