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On March 11, Minister of Law and Justice, Shri Ravi Shankar Prasad emphasized on how Arbitration and Conciliation (Amendment) Bill, 2021 will curb practices of enforcing awards contrary to public policy.

“An Arbitration Award will be set aside if an Award is against Public policy. What will be considered to be against public policy? The Award which is rid with corruption and fraud,” said the Law Minister.

While highlighting the proposed amendment in terms of Section 36 of the Act, he stated that the the Court shall be empowered to stay the award unconditionally if it is prima facie satisfied that the same is induced or effected by arbitration.

Amended Section 36 would read as;

“Provided further that where the Court is satisfied that a prima facie case is made out that

(a) The arbitration agreement or contract which is the basis of the award, OR

 (b) The making of the award,

was induced or effected by fraud or corruption, it shall stay the award unconditionally pending disposal of the challenge under section 34 to the award.

Explanation: For the removal of doubts, it is hereby clarified that the above proviso shall apply to all court cases arising out of or in relation to arbitral proceedings, irrespective of whether the arbitral or court proceedings were commenced prior to or after the commencement of the Arbitration and Conciliation (Amendment) Act, 2015.”

The bill seeks to replace the Arbitration and Conciliation (Amendment) Ordinance, promulgated by the President on November 4^th 2020 and aims at the following stipulations:

(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

(iii) To specify by regulations the qualifications, experience and norms for accreditation of arbitrators and the said amendment is consequential in nature.

The Statement of Objects and Reasons of the Amendment Bill says, “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.”

This change will be applicable retrospectively from October 23, 2015.

Under Arbitration and Conciliation Act, 1996, an automatic stay was granted on the Award when an application for set aside under Section 34 was moved.

By 2015 Amendment Act, Court clarified that no automatic stay shall be granted.

By the present Amendment Bill, Court shall stay the award unconditionally pending disposal of the challenge under Section 34 of the Act, where the Court finds it vitiated by fraud or corruption.

Access Copy of the Arbitration & Conciliation (Amendment) Bill, 2021 Here