Parliament passes Arbitration Amendment Bill to protect taxpayer money

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Sushree Mohanty

The Parliament has assented to a Bill proposed for amending of the arbitration law which would guarantee that all stakeholders get an opportunity to look for an unrestricted stay on authorization of arbitral awards where an agreement or contract is “initiated by fraud or corruption”.

The Arbitration and Conciliation (Amendment) Bill, 2021, was passed by voice vote in the Rajya Sabha. The said bill was passed in the Lok Sabha on February 12.

The new bill is set to replace an Ordinance which was passed on November 4, 2020.

Responding to questions on the Bill in the Upper House, Minister of Law and Justice Ravi Shankar Prasad said the adjustments in the Bill would maintain a strategic plan to avoid paying the taxpayer’s money as arbitral awards in situations where the arrangement or agreement is “initiated by misrepresentation or corruption”.

He said, “Section 36 of the Act provides that the arbitration award would be saved in the event that it is against the public arrangement. The agreements or arrangements initiated with fraud and corruption would be considered ‘against public policy’.”

As per the arrangement under Sector 36 of the Act, that there would not be immediate stay on the arbitral awards since someone would require to challenge the grant of the award in order to pass a stay order.

But in the recent change, the provision allows the stay on the award if a challenge is moved against it proving that the awards are induced with misrepresentation and corruption.

The Minister added, “I don’t comprehend why they get agitated by the mention of corruption. Should such (arbitral) awards be given in India which are initiated with debasement and where CBI investigations are underway? Such individuals by fraudulent agreements get the awards through taxpayer’s money.”

Shankar emphasized that the only intention behind the amendment was that there ought to be reasonable and fair arbitration in the State and the only objective of the act rests on the aim that individuals should not plunder taxpayer’s money through arbitral grants.

Following the assent to the Bill, Deputy Chairman Harivansh dismissed the Rajya Sabha till March 15, 2021 as opposition parties continued raising questions and slogans requesting discussions on the three Central bills on the Farm laws.

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