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President Kovind Promulgates Arbitration and Conciliation (Amendment) Ordinance, 2020

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President-Kovind-promulgates-Arbitration-and-Conciliation-(Amendment)-Ordinance,-2020On November 4, 2020, President Ram Nath Kovind in exercise of the powers conferred by clause (1) of article 123 of the Indian Constitution promulgated the Arbitration and Conciliation (Amendment) Ordinance, 2020 to amend the Arbitration and Conciliation Act, 1996. The provision will come into effect retrospectively from October 23, 2015.

  • The amendment will be made in Section 36 (3) of the Arbitration and Conciliation Act retrospectively from October 23, 2015 in order to address concerns raised by stakeholders. It should be noted that Section 36 deals with the enforcement of arbitral awards.
  • Aim: To enable all stakeholder parties to seek an unconditional stay (temporary suspension or halting of a legal process or procedure) on enforcement of arbitral awards where the arbitration agreement is induced by fraud or corruption.

Before heading towards the ordinance let’s understand following two words:

What is Arbitration?

Arbitration is a form of alternative dispute resolution (ADR) where two parties make their arguments to an arbitrator instead of litigating the matter in court. The arbitrator, a lawyer or retired judge, makes a decision following the arbitration hearing. The decision is legally binding and enforceable by the court, unless all parties stipulate that the arbitration process and decision are non-binding.

What is an Arbitration Award?

An arbitration award refers to the decision of an arbitrator. This award can be money one party has to pay to the other party. It can also be a non-financial award, such as stopping a certain business practice or adding an employment incentive.

Now, here are key features of ordinance.

Amendment to Section 36

As per the latest amendment, if the arbitration award is being given on the basis of an agreement based on fraud or corruption, then the court will not impose a condition to stay the award and grant an unconditional stay during the pendency of the appeal if it has been challenged under Section 34 of the arbitration law.

  • Till now, an arbitration award was enforceable even if an appeal was filed against it in the court under Section 36 of the law. But the court could grant a stay on the award on conditions as it deemed fit.
  • This section was also amended in 2015.

Substitution of new section for section 43J:

For section 43J of the principal Act, the section “Norms for accreditation of arbitrators” is substituted. Now, the qualifications based on which arbitrators will be accredited will be prescribed by regulations, which will be framed by a proposed arbitration council.

Omission of Eighth Schedule:

The ordinance has also deleted Eighth Schedule of the Arbitration & Conciliation Act 1996 which enables foreign practitioners to now act as arbitrators in India.

Recent Related News:

  1. President Ram Nath Kovind also gave assent to Jammu and Kashmir Official Languages Bill 2020 under which Kashmiri, Dogri and Hindi also added to the existing Urdu and English, will be the official languages in the union territory (UT) of Jammu and Kashmir.
  2. On September 27, 2020 President Ram Nath Govind approves 3 farm bills passed by Parliament:
  • The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020,
  • The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Service Bill, 2020 and
  • The Essential Commodities (Amendment) Bill, 2020.