Law Assignment: Analysis On Arbitration & Conciliation (Amendment) Act of 2021
Question : The matter of stay on arbitral awards has been dealt with legislative amendments and judicial discourse from time to time.
Prepare a report on law assignment analysing the second proviso to section 36(3) inserted through the Arbitration and Conciliation (Amendment) Act of 2021, in the light of the objective behind Arbitration as a dispute settlement mechanism.
Analysis of the second proviso if section 36(3)
Arbitration is said to be one of the options for dispute decree instead of seeking help from the court, and this procedure is developed by the unbiased arbitrator, and his award or decision is ultimate and obligatory with the parties. Hence, it is stated herein law assignmentthat the awards of arbitration have restricted privileges of appeal and review. These resolutions of optional disputes are responsive in nature. Thus, it is said to be cost and time-efficient, fair, resilient, autonomous, and confidential. The primary procedure of arbitration regulation in India was performed under the Arbitration Act, 1889, and later it was reviewed in 1940 with several regulations. Hence, with the alteration in the structure of rule and arbitration growth, the Arbitration and Conciliation (Amendment) Bill was approved in 2021 by the Indian Parliament in March 2021. The said Act focuses on the proviso for international and domestic arbitration and the regulations for conciliation procedures. It changes the Act of 2020 (Mahawar, 2021).
The key objective of the 2021 Amendment is to focus on the subject of amendment by adding up a proviso under section 36(3) to make sure that if judges are prima facie contented by the event carried out of either: the award is related to arbitration deal or conformity, or award making that has been affected by corruption or fraud (Dholakia, 2021). Concerning this, it will stay the award categorically imminent removal of the challenge. Since the endorsement of the Arbitration and Conciliation Act, 1996, the awards of arbitral have been statutorily approved the same status as a level of a civil court by a method of a judging fiction under the section of the Arbitration Act. However, section 36(3) of the Act delivers that the court might be subject to such terms as it is able to consider fit and authorized for the execution of an award for several rationales to be documented in writing. Hence, the proviso to Section 36(3) needs the court to have due respect to the provisions of consent for keep on of money verdict while concerning the application for the authority of the continuation in the arbitral award case for compensation.
As per the studies, it has been identified that several parliamentarians argue for disagreement for the long-term that keep on throughout the preamble of the Bill in Lok Sabha. Along with that, professionals also indicate that an unqualified amounts to a stay of the blanket, which will barrier India's concerns for the regime of pro-arbitration. This is mainly as it turns out to be effortless for the failing party to claim bribery and involuntary stay on the enforcement of the arbitral honor.
Hence, it might overcome the incredible objective of an optional dispute system by depicting parties to judgments and creating it investigates to proceedings. Conversely, the main concern with this revision is that the lawmaker does not illustrate either bribery or deception, making a doubtful state of affairs where plaintiff parties might experience the proceedings heat though they are right in their judgments and proceedings (Mishra, 2021). The conservative effect of the amendments may also disclose the litigation floodgate events and overload the courts. However, the 2021 amendment has been made to improve the judgment by the court in a speedy and cost-effective process wherein the public can get a fair judgment for the same and avoid corruption and fraud. A smooth and swift application of awards is incontestably an acceptable matter but can be no practicemany times because the structure of the proceeding in the court which is inclusive of award enforcement. The processes and time required are mostly involved in application proceedings that have drawn considerable criticism over the years. However, these amendments caused doubt interpreting that may apply to proceedings in association with an arbitral award. The 2021 amendments in the Act have resulted in uncertainty and the framework of the Indian legislation, and this has caused major changes in the judgments of the courts. The major reason for amending the Act was due to the judgment passed by the Supreme Court in the case of Hindustan Construction Company Limited & Anr. v. Union of India & Ors. Inthis case,the arbitral award was challenged by the government bodies against the construction company. In this final judgment, the verdict given by the judge stated that the amendment made in 2015 did not put an automatic stay in the arbitral award. Therefore, the ruling was given in favor of the petitioners due to lack ofautomaticstay inarbitral award enforcement(Banerjee, 2021). With the amendment, if the judge finds that the arbitral award was passed by fraud, then the award can stay put.The amendment of 2021 further creates new criteria for the enforcement of the arbitral award, and the amendment represents that retrogression in the Indian pro-arbitration regime. Therefore, the first objective behind the arbitration in the light of arbitration as a dispute settlement mechanism is the automatic stay enforcement of the arbitral award. The 2015 amendment states that the domestic arbitral awards shall be enforced equally as the court's verdicts and judgments, but the Act, does not specify if the award could stat when challenged in the court. In another case, National Aluminium Company Ltd. (NALCO) v. Pressteel & Fabrications (P) Ltd. and Anr. ((2004) 1 SCC 540) ("NALCO"), the judge ruled that domestic arbitral award cannot be executedif it is challenged, and this will continue until the proceedings are dismissed. The courts' decisions were not consistent, which created a significant amount of confusion and misunderstanding about the provision of section 36(3). This created the need for amendment in the provision of the Act to maintain and develop the consistency of the rulings given by the government.
In another case of BCCI v. Kochi Cricket Pvt. Ltd., there was a controversy regarding the arbitral award. After a significant amount of controversy, the High Courts passed the judgmentas per the amendment of 2015. This was a time-consuming process, and it took a lot of time for both the petitioner and the respondent. This brings out the second objective of the amendment 2021, and that is to save the time litigation. This is because, in the contemporary world, the time taken for the judgment can prove to be costly for both parties, and the Act was developed to save time. If the provision of the Act did not support this, then the changes are needed in the Act for which amendment 2021 was introduced. With the amendment, the court can set aside arbitral awards only when the party has gone under incapacity, or the arbitration agreement is not valid, or if the application-making party has not made a proper notice(Gupta, 2021). Furthermore, the arbitral award can also be set aside if the dispute is not contemplated adequately. These are the grounds set by the amendment, and only these conditions allow the judge to pass a judgment against the arbitral award. This makes it evident that the time for making a judgment will be shortened significantly as there will be no confusion or misunderstanding in the matter of arbitral award.
In conclusion it can be said that, the judges will have an explicit provision and criteria under which they can give their final verdict and settle the dispute between two parties. The amendment of 2021 states that if the arbitral award was obtained by fraud, then the judge can declare their ruling for theelimination of the arbitral award and settle the dispute between two parties. Therefore, it can be said that the amendment in the Act has made the process of litigation and dispute settlement shorter because the judges are aware of the conditions and the criterion.
Banerjee, S. (2021). Case analysis : Hindustan Construction Company Limited & Anr. v. Union of India & Ors. [online] iPleaders. Available at: https://blog.ipleaders.in/analysing-the-case-of-hindustan-construction-company-limited-anr-vs-union-of-india-ors/ [Accessed 24 Nov. 2021].
Dholakia, A. (2021). India’s Arbitration And Conciliation (Amendment) Act, 2021: A Wolf In Sheep’s Clothing [online] Kluwer Arbitration Blog. Available at: http://arbitrationblog.kluwerarbitration.com/2021/05/23/indias-arbitration-and-conciliation-amendment-act-2021-a-wolf-in-sheeps-clothing/ [Accessed 24 Nov. 2021].
Gupta, M.K. (2021). Jurisprudence of arbitrability of Fraud/Corruption. [online] TaxGuru. Available at: https://taxguru.in/income-tax/jurisprudence-arbitrability-fraud-corruption.html [Accessed 24 Nov. 2021].
Mahawar, S. (2021). Evolutionary review of Arbitration and Conciliation (Amendment) Act, 2021. Law assignment [online] iPleaders. Available at: https://blog.ipleaders.in/evolutionary-review-arbitration-conciliation-amendment-act-2021/ [Accessed 24 Nov. 2021].
Mishra, S.P. (2021). Impact Of The Arbitration And Conciliation (Amendment) Act, 2021 on India’s Pro Arbitration Outlook. [online] Bar and Bench - Indian Legal news. Available at: https://www.barandbench.com/apprentice-lawyer/impact-of-the-arbitration-and-conciliation-amendment-act-2021-on-indias-pro-arbitration-outlook [Accessed 24 Nov. 2021].