Pradeep K Khatana
STATEMENT OF OBJECTS AND REASONS
1. The Arbitration and Conciliation Act, 1996 (the Act) was enacted with a view to consolidate and amend the law relating to domestic arbitration, international commercial arbitration, enforcement of foreign arbitral awards and the law relating to conciliation.
2. The Act was amended by the Arbitration and Conciliation (Amendment) Act, 2015 (2015 Act), inter-alia, to make arbitration process user friendly, cost effective and ensure speedy disposal and neutrality of arbitrators.
3. Subsequently, to address the practical difficulties arising in implementing the amendments carried out through 2015 Act, and to promote institutional arbitration in the country, the Act was again amended by the Arbitration and Conciliation (Amendment) Act, 2019.
4. In order to address the issue of corrupt practices in securing contracts or arbitral awards, a need was felt to ensure that all the stakeholder parties get an opportunity to seek unconditional stay of enforcement of arbitral awards, where the underlying arbitration agreement or contract or making of the arbitral award is induced by fraud or corruption. Also to promote India as a hub of international commercial arbitration by attracting eminent arbitrators to the country, it was also felt necessary to omit the Eighth Schedule of the Act.
5. In the light of above circumstances, it has become necessary further to amend the Arbitration and Conciliation Act, 1996. However, as Parliament was not in session and immediate steps were required to make further amendments in the Act, the Arbitration and Conciliation (Amendment) Ordinance, 2020 (Ord. 14 of 2020) was promulgated by the President on 4th November, 2020 under clause (1) of Article 123 of the Constitution.
6. The Arbitration and Conciliation (Amendment) Bill, 2021 which seeks to replace the aforesaid Ordinance, inter-alia, provides for the following, namely:--
(i) to grant unconditional stay of enforcement of arbitral awards, where the underlying arbitration agreement, contracts or arbitral award is induced by fraud or corruption;
(ii) to omit Eighth Schedule of the Act which laid down the qualifications, experience and norms for accreditation of arbitrators; and
(iii) to specify by regulations the qualifications, experience and norms for accreditation of arbitrators and the said amendment is consequential in nature.
7. The Bill seeks to replace the aforesaid Ordinance.