Recent Developments in Arbitration and Conciliation Act 1996

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Alternative Dispute Resolution (ADR) is defined as a wide range of dispute resolution processes that act as a means for disputing parties to come to an amicable agreement i.e. settle their disputes with a third party's help. The following are the different types of alternative dispute processes:
1. Arbitration
2. Conciliation
3. Mediation
4. Mini Trial
5. Negotiation etc.

The Arbitration and Conciliation Act, 1996 (the Act) was introduced to settle disputes between parties in an easy and convenient way without the interference of courts. This Act is useful for people who want to avoid lengthy court proceedings which take years to reach the verdict and amicably settle their disputes. There have been various amendments in the Act to be at par with modern technology, the recent one being done in 2021 namely Arbitration and Conciliation (Amendment) Act, 2021 (Amendment Act, 2021 Amendment). This Amendment Act was introduced on 10th March and was deemed to be effective from 4th November 2020. 

Before the 2021 Amendment, Section 34(2)(b)(ii) stated that the court may set aside the arbitral award if it finds out that such award is induced by fraud or corruption. The parties to the arbitration had to file an application challenging the arbitral award before the court as per the grounds under Section 34. Section 36(2) stated that the application filed will not automatically render an award unenforceable and the court had the power to grant a stay of the award.

This Amendment Act has made the following changes:
1. Introduced a proviso to Section 36(3)which states that if the Court has a reason to believe that the arbitration agreement or the making of the award was induced by fraud or corruption, it will stay the award during the pendency of the disposal of challenge under Section 34 of the Act. The amended Section 36(3) is retrospective and deemed to be effective from 23rd October 2015.

2. Section 43J of the Act has been replaced stating that the qualifications, experience, and norms of accreditation of arbitrators will be specified by the regulations. 

3. The Eighth Schedule of the Act has been omitted. This Schedule contained a very long list of qualifications for an arbitrator which restricted the parties to choose their own arbitrators who did not essentially care for such qualifications. Due to these complications, the Amendment Act deleted the Eighth Schedule.

The 2021 amendment related to Section 36(3) is like a double-edged sword having its own share of pros and cons. To overcome such confusion, the lawmakers should be of a broader perspective and provide a one-stop solution instead of continuous amendments. It is sincerely hoped that one day the Act will become so perfect that there will be no need for further amendments.

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