THE KERALA REVOCATION OF ARBITRATION CLAUSES AND
REOPENING OF AWARDS ACT, 1998[1]

(Act 12 of 1998)

An Act to provide for the cancellation of arbitration clauses in agreements executed in terms of the local competitive bidding specification, for the revocation of authority of the arbitrators appointed under such agreements, for filing of appeals by the Government against certain awards and decrees in arbitration cases and for extending the period of limitation for filing such appeals.

     Preamble.-WHEREAS the Kallada Irrigation Project, the largest Irrigation Project in the State of Kerala, was started in the year 1961;
     AND WHEREAS the said project was in receipt of financial assistance from the World Bank from June 1982 to March 1989;
     AND WHEREAS a special condition, namely, the local competitive bidding specification envisaged by the World Bank Authority was included as desired by the World Bank in the agreements relating to works connected with the said Irrigation Project;
      AND WHEREAS clauses 51 and 52 of the said local competitive bidding specification provide for the settlement of matters in dispute or difference through arbitration;
     AND WHEREAS inclusion of arbitration clauses in the agreements executed in terms of the local competitive bidding specification was with a view to enable the speedy settlement of matters in dispute or difference in a just and equitable manner;
      AND WHEREAS the arbitration references did not have the desired effect, as several arbitrators have wrongly and arbitrarily awarded unconscionable amounts against provisions of agreements and without materials on record in collusion with the claimant contractors and officials of the department causing heavy loss to the State;
      AND WHEREAS the Government considered it necessary, in public interest to cancel the arbitration clauses in the agreements executed in terms of the local competitive bidding specification, to revoke the authority of the arbitrators appointed thereunder and to enable the filing of appeals against the awards or decrees already passed in certain arbitration references in respect of which the period of limitation has expired;

     BE it enacted in the Forty-ninth Year of the Republic of India as follows:-

       1.  Short title ,extent, commencement and application.-(1)  This Act may be called the Kerala Revocation of Arbitration Clauses and Reopening of Awards Act, 1998.

                (2)   It extends to the whole of the State of Kerala.

                (3)   It shall be deemed to have come into force on the 14th day of November, 1997.

                (4)   It shall apply to all agreements executed in terms of the local competitive bidding specification.

      2.   Definitions.-(1)  In this Act, unless the context otherwise requires,-

                       (a)         "agreement" means an agreement executed in terms of the local competitive bidding specification for various works of the Government of Kerala;
                       (b)   “local competitive bidding specification” means the local competitive bidding specification adopted by the Government in their order G.O(Ms)No.3/81/lR dated the 20th January, 1981;

          (2)  Words and expressions used but not defined in this Act and defined in-
                    (a)   the Arbitration Act, 1940 (Central Act 10 of 1940); or
                    (b)   the Arbitration and Conciliation Act, 1996 (Central Act 26 of 1996), in relation to arbitration                            proceedings commenced on or after the 25th day of January, 1996,
shall have the meanings, respectively, assigned to them in those Acts.

          3.  Cancellation of arbitration clauses and revocation of authority of arbitrator.-(1)  Notwithstanding anything contained in the Indian Contract Act, 1872 (Central Act 9 of 1872) or in the Arbitration Act, 1940 (Central Act 10 of 1940) or in the Arbitration and Conciliation Act, 1996 (Central Act 26 of 1996) or in any other law for the time being in force or in any judgment, decree or order of any court or other authority or in any agreement or other instrument,-
                     (i)  the arbitration clauses in every agreement shall stand cancelled;
                     (ii)  the authority of an arbitrator appointed under an agreement referred to   
                           in clause (i) shall stand revoked; and
                     (iii) any agreement referred to in clause (i) shall cease to have effect in so
                           far as it relates to the matters in dispute or difference referred,
with effect on and from the date of commencement of this Act.

            (2) Nothing in sub-section (1) shall be a bar for any party to an agreement to file a suit in the court having jurisdiction in the matter to which the agreement relates and all questions regarding the validity or effect of the agreement between the parties to the agreement or persons claiming under them and all matters in dispute or difference between the parties to the agreement shall be decided by the court, as if the arbitration clauses had never been included in the agreement.

          4.  Period of limitation for filing suits.-Notwithstanding anything contained in the Arbitration Act, 1940(Central Act 10 of 1940) or in the Arbitration and Conciliation Act, 1996(Central Act 26 of 1996) or in the Limitation Act, 1963(Central Act 36 of 1963), a suit under sub-section (2) of section 3 may be filed within six months from the date of commencement of this Act or within such period as is allowed by the provisions of the Limitation Act, 1963 (Central Act 36 of 1963), in relation to such suits, whichever is later.
         5.  Power of Government to file appeal against certain awards.- Notwithstanding anything contained in the Arbitration Act, 1940(Central Act 10 of 1940) or in the Arbitration and Conciliation Act, 1996(Central Act 26 of 1996) or in the Limitation Act, 1963(Central Act 36 of 1963) or in any other law for the time being in force or in any judgment decree or order of any court or other authority or in any agreement or other instrument, where it appears to the Government that any award passed is not in accordance with the terms of the agreement or there was failure to produce relevant data or other particulars before the Arbitrator before passing the award or the award passed is of unconscionable amounts, they may file appeal against such award within ninety days of the date of commencement of this Act.

          6.  Procedure before court.-For the removal of doubts, it is hereby clarified that the provisions of the Code of Civil Procedure, 1908 (Central Act 5 of 1908), shall apply to all proceedings before court and to all appeals under this Act.

           7. Arbitration Act not to apply.-The provisions of this Act shall apply to any proceedings instituted under this Act notwithstanding anything inconsistent herein with the provisions of the Arbitration Act, 1940(Central Act 10 of 1940) or the Arbitration and Conciliation Act, 1996(Central Act 26 of 1996) or any other law for the time being in force.  

           8.  Repeal and Saving.-(1)  The Kerala Revocation of Arbitration Clauses and Reopening of Awards Ordinance, 1998 (6 of 1998) is hereby repealed.
   
        (2)  Notwithstanding such repeal, anything done or deemed to have been done or any action taken or deemed to have been taken under the said Ordinance shall be deemed to have been done or taken under this Act.