Impact Of The Arbitration And Conciliation (Amendment) Act, 2021,On Dispute Resolution

ABSTRACT

The Arbitration and Conciliation (Amendment) Act, 2021, significantly enhances India’s arbitration framework by addressing key issues of fraud, corruption, and arbitrator qualifications. The introduction of an automatic stay on awards in cases of suspected fraud or corruption ensures integrity and trust in the arbitration process. By setting clear qualifications for arbitrators and moving these standards to flexible regulations, the amendments align with international best practices and enhance adaptability. These changes collectively improve the efficiency, transparency, and fairness of dispute resolution, making India a more attractive and reliable destination for both domestic and international arbitration.

Introduction

Alternative Dispute Resolution (ADR) mechanisms that include arbitration and conciliation are used for solving conflicts outside of the conventional court litigation system.

Arbitration is a highly private procedure where opposing parties agree that one or more arbitrators may make a decision about their contest after receiving evidence and hearing arguments. This arbitration is usually more formal. The arbitrator’s determination, also called “award,” binds the parties legally and can be enforced by courts. Arbitration mainly deals with commercial and labour disputes.^[1]

Conciliation, however, is an informal process whereby the disputants have to meet separately with a conciliator in order to settle their differences. Here, tensions are reduced; communication improved as well as persuasions for settlement made by the conciliator. Conciliators cannot decide on specific issues nor can they force parties into accepting any available settlement.^[2] Such disputes commonly proceed to adversarial stage such as divorces, labour issues or commercial cases.

The major difference between arbitration and conciliation is, the arbitrator acts in a judicial manner and makes a decision which is binding in nature, while in conciliation, the conciliator acts as a facilitator to guide the parties towards a settlement, which can be either accepted or rejected by the parties.

Automatic Stay on Awards in Cases of Fraud or Corruption

One of the big changes that came with the 2021 update is that now, if it looks like there might be some shady stuff going on with an arbitral award, like fraud or corruption, it gets put on hold without you having to ask for it. Before, you had to go through a whole song and dance to get a stay, which led to a bunch of back-and-forth legal drama.

What this means is:

– Arbitration gets a bit cleaner: It restricts awards from being forced through, so the whole system feels fairer.

– More trust: People can now relax a bit more knowing that the awards they get or argue against are not ambiguous in nature.

– Less waiting around: The process moves faster cause everyone’s focusing on whether there’s fraud or corruption, not just following the rules for the sake of it.^[3]

Qualification of Arbitrators

The 2021 amendment initially introduced specific qualifications, experience, and norms for arbitrators detailed in the Eighth Schedule. However, this schedule was later omitted, and the qualifications are now prescribed by regulations.^[4]

Impact:

Setting clear-cut qualifications makes sure that the folks who are arbitrators are actually good at their jobs and play fair.

Moving the qualifications to regulations rather than sticking to a set schedule means we can change things up more easily to keep up with how arbitration is doing its thing these days providing flexibility.

This change puts India’s arbitration rules closer to what the professionals on the international block are doing, making it a hotter spot for solving big global squabbles.^[5]

Ditching the Eighth Schedule

Taking out the Eighth Schedule from the Act is a big deal because it shows we’re going for a more easy way of dealing with the rules for arbitrators. Instead of being stuck with stuff written in stone, we can now define who’s in and who’s out with regulations that can be updated whenever we need to keep up with the times. This means we can roll with the punches better and stay ahead in the game of international dispute resolution.^[6]

Adaptive Framework: This allows for a more dynamic and responsive arbitration framework that can quickly adapt to changes in the global arbitration landscape.

Regulatory Clarity: It provides clearer and more detailed guidance on the qualifications and standards expected of arbitrators, which can be periodically reviewed and updated.

Consistency with International Practices: Aligning with international standards enhances India’s reputation in the global arbitration community and promotes consistency in arbitration practices.^[7]

Efficiency:

These changes are aiming to cut down on the waiting game and smooth out the whole process so it doesn’t drag on forever.

They’re putting the brakes on the system when someone tries to pull a fast one with fraud or corruption, so bad decisions don’t get through and everyone saves time and energy.

Transparency:

They’re setting the bar higher for who can be an arbitrator, so now you know these professionals are the real deal.

This means you can trust that they know their stuff and they’re abiding by the rules, keeping everything out in the open and above board.

Fairness:

By not letting shady awards slide, they’re making sure that when you go to arbitration, you get a fair shake.

And with a system that’s always open to improving itself, it’s like having a referee that actually cares about calling a good game. It keeps getting better at making sure everyone’s treated right when they’re trying to sort out their differences.

Conclusion

The Arbitration and Conciliation (Amendment) Act, 2021, represents a significant step forward in refining India’s arbitration landscape. By addressing critical issues such as fraud and corruption, setting clear qualifications for arbitrators, and adopting a flexible regulatory approach, the amendments enhance the overall efficiency, transparency, and fairness of the arbitration process. These changes are expected to bolster confidence in India’s arbitration system, making it a more attractive and reliable forum for resolving disputes both domestically and internationally.

Reference

^[1]  “A Small Step Toward Faster Justice: Mandatory Dispute Resolution – Litigation, Mediation & Arbitration – Canada”. 5 September 2018

^[2] Arbitration and Conciliation (Amendment) Act, 2021, No. 3, Acts of Parliament, 2021 (India).

^[3] Schwartz, David S., “Mandatory Arbitration and Fairness.” 84 Notre Dame L. Rev. 1247

^[4] International Institute for Conflict Prevention & Resolution. “Arbitration Appeal Procedure.” “Arbitration Appeal Procedure”

^[5] Menon, S. (2021). The Evolution of Arbitration Law in India: The Impact of the 2021 Amendments. Journal of International Arbitration, 38(3), 243-266.

^[6] Ministry of Law and Justice. (2021). Report on the Arbitration and Conciliation (Amendment) Act, 2021. Government of India.

^[7] Redfern, A., & Hunter, M. (2015). Law and Practice of International Commercial Arbitration. Sweet & Maxwell.