The Legal Industry has witnessed consistent development in the Alternative Dispute Resolution Sector, whether it is Arbitration, Mediation, etc. One such revolutionary change in this Sector has been passed by the Government of India on 4th November 2020 as Arbitration and Conciliation (Amendment) Ordinance, 2020

Section 36 of Arbitration and Conciliation Act, 1996 has been amended by adding a new proviso which says-

Provided further that where the court is satisfied that a prima facie case is made out--

            (a) that the Arbitration agreement or contract which is the basis of the award; or 

            (b)the making of the award, was induced or affected by fraud or corruption,

 it shall stay the award unconditionally pending disposal of the challenge under Section 34 to the award.

After this amendment, the court if finds that the Arbitral Award has been obtained by fraud or corruption, then the court can unconditionally stay the Arbitral Award. Basically, this amendment has given a lot more power in the hands of the Domestic Courts before the enforcement of an Arbitral Award.

In 2019, the Automatic Stay Rule was removed as the immediate consequence of the judgment in Hindustan Construction Case, irrespective of whether the Arbitration proceedings in which an award is issued commenced prior to the effective date. After the removal of the Automatic Stay Rule in Hindustan Construction Company Case, this particular amendment has brought a ground-breaking change in the Arbitration and Conciliation Act, 1996.  It will be now interesting to observe the importance of some major terms mentioned as- ‘prima facie’, ‘fraud’, ‘corruption’, ‘unconditional’ in this amendment.

Also, it has been clarified that this provision shall apply to all court cases arising out of or in relation of Arbitral Proceedings, irrespective of whether the Arbitral or court proceedings were commenced prior to or after the commencement of Arbitration and Conciliation (Amendment) Act, 2015. Therefore, this amendment will have a wide impact on the pending matters and new defense plea can be taken up testing on the case to case basis with rest all parameters having been prima facie satisfied by the parties taking the plea.

Further, in addition to the amendments the ordinance substituted Section 42J which specifies Norms of accreditation of arbitrators which provides that-

42J. The qualifications, experience and norms for accreditation of arbitrators shall be such as may be specified by the regulations.

Also, the Eighth Schedule stands omitted.


Click here to read the full amendment.