The government on Wednesday brought an ordinance to amend the arbitration law and ensure that stakeholder parties can seek an unconditional stay on enforcement of arbitral awards in cases where the “arbitration agreement or contract is induced by fraud or corruption.”
The ordinance also does away with the 8th Schedule of the Act that contained the necessary qualifications for accreditation of arbitrators. The provision was seen as coming in the way of India getting the benefit of foreign arbitrators.
The Law Ministry ordinance said the amendment was necessary “to address the concerns raised by stakeholders after the enactment of the Arbitration and Conciliation (Amendment) Act, 2019 and to ensure that all the 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.”
Until recently, an arbitration award was enforceable even if an appeal was filed against it in the court under Section 36 of the law. The court, however, could grant a stay on the award on conditions as it deemed fit.
Now, as per the latest amendment, if the award is being given on the basis of a fraudulent agreement or corruption, then 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 has now added a proviso in Section 36 of the Arbitration Act to effect this change and will come into effect retrospectively from October 23, 2015.
