Lok Sabha passes Arbitration and Conciliation (Amend.) Bill ’21
New Delhi, Feb 12 (UNI) Lok Sabha on Friday passed the Arbitration and Conciliation (Amendment) Bill, 2021 which aims to make India a big hub for international and domestic arbitration.
The Bill seeks to ensure that all stakeholder parties get an opportunity to seek an unconditional stay of enforcement of arbitral awards where the underlying arbitration agreement or contract or making of the arbitral award are induced by fraud or corruption. It will replace an ordinance issued on November 4 last year.
Replying to the debate on the Bill, Union Law Minister Ravi Shankar Prasad said that India needs a fillip to institutional arbitration. “We will make India a big hub for international and domestic arbitration. We welcome arbitrators of any nationality.’
Explaining the need of bringing the amendment, Mr Prasad said, ‘After an arbitral award is given, if it is found that fraud has been committed then this gives the option of stay by a court. If an award is given against the Union government or a State government and is given by fraud and an investor wants to enforce it, is it fair that thousands of crore of tax payers’ money.’
“Today I take the freedom of this House to appeal to the judiciary to exercise their discretion in picking up the genuine PILs – issues like compensation of labourers, etc. Independence of judiciary is part of the basic structure of the Constitution,” he said.
“But there is also another basic structure that is separation of power. That governance should be left to the people who are elected members and are accountable to this House,’ he further said.
He said that India’s rank has improved from 186 rank in 2015 to 163 in terms of enforcing contracts, adding that the country has improved in the ease of doing business.
Earlier, speaking about the Bill, before the discussion commenced, Law Minister Ravi Shankar Prasad said there is a provision that if an arbitration is awarded, an application under Section 34 can be given for setting it aside on certain grounds. He said there is also a provision for stay on Section 36 on filing of an application.
`’But there was no provision to stay the arbitration award even if it is beset by fraud or corruption,’ the Minister further said.
‘We have done a very limited modification that if the court is prima facie satisfied that the agreement and award is vitiated by fraud/ corruption, the court can stay it till the conclusion of the proceedings,’ he said.
The Arbitration and Conciliation (Amendment) Bill, 2021 was introduced in the Lok Sabha by Mr Prasad on February 4 in the Lok Sabha.
According to the Statement of Objectives and Reasons, ‘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.’
Earlier participating in the discussion on the Bill, members from the TDP, BSP, among others, argued that India has a poor track record of enforcing contracts. NCP MP Supriya Sule said the Centre should bring in progressive legislations instead of retrospective legislations for the ease of business. She said that the “Parliament and courts are having constant tussle.’
BSP member Ritesh Pandey favoured making the bill more broad-based while BJD MP Pinaki Misra said the drafting of the bill was convoluted.