Mirza & Associates, Advocates & Attorneys

This ordinance has come into force from 4^th November 2020 and shall amend the Arbitration and Conciliation (Amendment) Act, 2019 (Principal Act) which was notified on 30^th August 2019 and Arbitration and Conciliation (Amendment) Act 2019 came in to force.

The ordinance:

This ordinance shall incorporate the following additional proviso in the Principal Act:

i.        The Ordinance amends Section 36 of the Principal Act by incorporating an additional proviso which shall be deemed to have been inserted with retrospectively effect i.e. from 23^rd October 2015. New Proviso to the Section 36 holds that in all cases where the Court is satisfied that a prima facie case is made out that the arbitration agreement or contract which is the basis for the arbitral award or the making of the award itself is vitiated by fraud or corruption, the enforcement of the arbitral award shall be stayed unconditionally pending disposal of the challenge under Section 34 of the award.

ii.       Section 43J of the Principal Act shall be substituted with the new arrangement for in respect of the qualification of the Arbitrator and states that the qualifications, experience and norms for accreditation of arbitrators shall be such as may be specified by the regulations and not in accordance with the 8^th Schedule.

iii.      The Eighth Schedule to the principal Act shall be omitted.

Practical aspect of the Arbitration & Conciliation (Amendment) Ordinance, 2020

I think this amendment ordinance is further strengthening the discretionary power of the Court while they are considering the grounds of staying the operation of Arbitral Award.

This amendment ordinance would be a kind of check on the untenable arbitral awards if the award is being given on the basis of a fraudulent agreement or corruption. Further the Court will not impose a condition to stay the award and grant an unconditional stay as long as an appeal under Section 34 of the arbitration law is pending.

The ordinance also does away with the 8th Schedule of the Principal Act which contained the necessary qualifications for accreditation of arbitrators. Now, the qualifications based on which arbitrators will be accredited will be prescribed by regulations, which will be framed by a proposed arbitration council. It would relevant to discuss here that new section 43J is covered under Part-IA of the Principal Act which was introduced by the Arbitration and Conciliation (Amendment) Act, 2019 but has still not come into force. Therefore Section 43J still lacks teeth and the provision seems promising and will hopefully yield a more effective application of the Principal Act.