The latest arbitration act amendments may not have the desired impact to make the country an arbitration destination, legal eagles said.

Besides, investors would be wary of taking significant exposures in a country notorious for the extremely slow pace of the legal process.

The amended act passed by Parliament on Wednesday gives an impetus to frustrated litigants to knock on the doors of the judiciary in India to set aside an arbitral award on grounds of alleged “fraud” or “corruption”.

Since what is required under the amended clause is prima facie satisfaction of courts that a particular award is vitiated by fraud or corruption, the judicial system is likely to be inundated with appeals against arbitral awards.

Speaking to The Telegraph, senior advocate and former additional solicitor-general K.V. Viswanathan feels the present amendment is manifestly arbitrary and bound to weaken confidence in India as an investment friendly destination.

“This is a manifestly arbitrary amendment as its only purpose is to take away the discretion available to a court and fetter its hands and force it to pass an order in a particular manner, without even referring to balance of convenience and irreparable loss,” says Viswanathan.

He said the amended provision contravenes Article 14 of the Constitution relating to equality before law.

“The provision will erode investor confidence. Already in the statute as it stands sufficient safeguard exists for protecting parties rights. If India is to be made an arbitration hub the act should not be repeatedly tinkered with regressive amendments. This amendment has the effect of shackling courts powers.”

However, another senior advocate Arijit Prasad welcomed the legislation as according to him it is in sync with other international laws on arbitration.

Since most MNCs are familiar with the international arbitration laws, there is no reason why they should find any difficulty in complying with the amended provisions.

“I think the amendment is very appropriate which has aligned the Indian laws with the International laws. I don’t think it would have any adverse effects on investment into India as the multinational companies have to comply with similar laws in their own countries. Therefore, they should not have any difficulty in complying with similar laws in India,” said Prasad.