Arbitration and Conciliation (Amendment) Act, 2021

Introduction: Globalisation has integrated the economies of the world. This integration of the
economies has led to free flow of people, goods and services. The markets are increasing
rapidly, so are the forces controlling market functions. With the increase in the commercial
markets, disputes also started increasing between the parties related to their contracts and
agreements. For solving their disputes often appoint the third party known as “Arbitrator”.
The whole process of submitting a case to the third party to reach out a settlement amicably is
called Arbitration. Conciliation means bringing two opposing sides together to reach a
compromise in order to avoid trial in the court. Arbitration, Conciliation and Mediation all
three falls under the purview of Alternative Dispute Resolution. It is an out of court method
to settle the dispute without going through the whole litigation process.
Arbitration in India
Arbitration in India is guided by the Arbitration and Conciliation Act, 1996. The various acts
which provides for the foundation of Arbitration in India is based on the UNCITRAL (The
United Nations Commission on International Trade Law) Model Law on International
Commercial Arbitration and the UNCITRAL Arbitration Rules 1976. Before the Arbitration
and Conciliation Act, 1996 there were certain regulations regarding the Arbitration. But these
regulations were vague and were not fulfilling the true objective of ADR in India. The object
of the 1996 was to enforce foreign arbitral award, unite domestic arbitration and international
commercial arbitration. There are different types of arbitration processes:
1.Domestic Arbitration: The domestic arbitration is a type of arbitration where the dispute
arising in the subject matter of an agreement or a contract is governed according to domestic
law (Indian law) or when the parties agree to solve the matter according to Indian
jurisdiction. In domestic Arbitration the nationality of the parties should be Indian, a
corporation must be incorporated in India, the government should be of a domestic country.
2.International Arbitration: It is a type of arbitration where one of the parties is resident from
country other than domestic country. It includes a corporate body which not incorporated in
India. The government must be a foreign country. The law for resolving the matter depends
on the parties which may be Indian Law or Foreign Law.
3. Ad hoc Arbitration: Type of arbitration not administered by any institute. Parties have the
discretion on the procedure that has to be followed by solving the matter.
4.Institutinal Arbitration: Parties take the help of established institutions to decide their
matter through arbitration.
With the changing nature of the society and market, changes are ought to be made in the
original act. So far Arbitration and Conciliation act has been amended 3 times in 2009, 2015
and 2021.

Arbitration and Conciliation (Amendment) Act, 2021

The amendment is brought with the expectation of expanding the scope of arbitration in India
and ushering a new era of dispute resolution process. The main aim of this act it to provide
speedy trials to the parties in a way in which both the parties see themselves in a win -win
situation.

 The first Amendment that is done in the act is in the Section 36 of the Arbitration and
Conciliation Act, 1996. A Proviso has been added to Section 36(3) of the Arbitration
and Conciliation Act, 1996. The provision provided the court with the power to put a
stay on the cases where prima facie evidence can be made out by the court. This
prima facie must bring out that the very base of the contract on which award is based
was affected by ‘fraud’ and ‘corruption’ the court shall stay the award
unconditionally pending disposal of the challenge to the award under Section 34.
Earlier under Section 34(2)(a)(ii) provided that the court can set aside an award if
court finds out that the arbitration agreement was invalid by law. Further, Section
34(2)(b)(ii) provides that the award can be called off if it’s against the public policy of
the country. The amendment to Section 36(3), would have retrospective effect and
apply to all cases arising out of or in relation to arbitral proceedings, before and after
the 2015 amendment. The 2021 Amendment now induces the court to regard the
merits of the matter under Section 36 that is in relation to allegations of fraud or
corruption, independent of the legal standards in Section 34 which talks about putting
a stay on the award considering the merits of the award debtor’s plea for interim
relief.

 The second change has been brought up in Eighth Schedule’s omission from the
principal Act, the eight schedule had laid down the regulations, qualifications,
experience, and norms for accreditation of arbitrators. Eight Schedule was an
exhaustive list laying down the qualifications that the arbitrator is needed to possess.

 Further the Amendment has been done to Section 43J which was added by the 2019
Amendment, it stated qualifications, eligibility and norms for accreditation of
arbitrators.

Appraisal

 No clear-cut idea or grounds has been given to prove the fraud or corruption apart
from the record of the tribunal to prove it. This makes establishing prima facie little
difficult for court and satisfy itself that the arbitration agreement or contract for which
the award has been given is induced by fraud.
 The Eight Schedule had provided with an all-encompassing schedule enunciating a
person who would or who would not qualify as an arbitrator and the general rules
pertaining to the post. The schedule was exhaustive in nature and it imposes
restriction on the parties to choose an arbitrator. After this amendment there are no
such barriers whether who can be arbitrator in the case or not. This widened the scope
for parties to choose arbitrator according to their convenience.
 Giving a retrospective effect to the act has its own pros and cons. Taking about the
pros certain pending cases which qualifies the ground for setting off an arbitral award
will get immediate relief from the act. On the other hand, it might lead to overflow of
applications in the court increasing the load of the court.
 The following amendment will attract foreign arbitrators to work in India.