THE ARBITRATION AND CONCILIATION ACT, 1996

This article covers a comprehensive and detailed study about the Arbitration and Conciliation Act, 1996 including its enactment, objectives, structure, scope and application.

 

1. INTRODUCTION

 

Arbitration, a useful compliment to the judicial process, offers an alternative forum to the time consuming and expensive court proceedings and ensures practical, inexpensive, flexible and speedy resolution of disputes with the consensus of the parties. Indian law with the introduction of the Arbitration and Conciliation Act, 1996 that came into force with effect from 25th January, 1996 is now treading the path walked upon by other developed nations. Greater autonomy has been provided and judicial interference has been limited to a narrower circumference than under the previous law.

 

The Arbitration and Conciliation Act, 1996 has repealed the Arbitration Act, 1940 and also the Acts of 1937 and 1961, consolidated and amended the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards and also defines the law relating to conciliation, providing for matters connected therewith and incidental thereto on the basis of the Model Law on International Commercial Arbitration awarded by the United Nations Commission on International Trade Law (UNCITRAL) in 1985. Arbitration in all forms is practiced in India and the law now expressly recognizes institutional arbitration and permits ad-hoc arbitration. An agreement to arbitrate should be in a written form and may or may not form part of the actual contract.

 

2. OBJECTIVES OF THE ACT

 

Major changes have been brought in the new law to attract foreign investors by creating such circumstances so that they may have confidence in the system of commercial disputes resolution and enforcement of foreign awards in India. Some of the notable features of the Act are: Firstly, to comprehensively cover domestic and international commercial arbitration and conciliation. Secondly, it provides for fair, transparent and efficient arbitral procedure. Thirdly, it provides for mandatory speaking award by Arbitral Tribunal. Fourthly, it minimizes the supervisory and intervensionary role of the Courts in the arbitral process. Finally, it provides that every final arbitral award is enforced in the same manner as if it were a decree of the Court.

 

The main object of the Act is to make provision for an arbitral procedure and to minimise the supervisory role of courts in arbitral process in settlement of disputes; Bharat Seva Sansthan v Uttar Pradesh Electronics Corp. Ltd., AIR 2007 SC 2961.

 

3. STRUCTURE, SCOPE AND APPLICATION OF THE ACT

 

The Act contains 86 Sections and 7 Schedules and is divided into four Parts-

 

Part I - deals with Arbitration.

 

Part II - deals with enforcement of certain foreign awards eg., New York Convention Awards, Geneva Convention Awards.

 

Part III - deals with conciliation and

 

Part IV - contains supplementary provisions relating to rule making power of the High Courts and the Central Government including three Schedules.

 

The Act is applicable to whole of India. However, section 1(2) provides that Part I, II, and IV shall extend to the State of Jammu and Kashmir only in so far as they relate to international commercial arbitration or international Commercial conciliation. On the application of Part II, there is no such restriction in so far as the domestic arbitrations are concerned, the Jammu and Kashmir Arbitration and Conciliation Act, 1997, governs them.

 

4. CONCLUSION

 

The Arbitration and Conciliation Act, 1996, has been a landmark legislation in India, modernizing the country's approach to dispute resolution. Its pro-arbitration stance, minimal judicial interference, and international recognition have contributed significantly to attracting foreign investments and fostering a business-friendly environment. By offering a swift and efficient resolution to disputes, the Act has alleviated the burden on the overburdened Indian judicial system, making it a pivotal law in promoting alternative dispute resolution in India. Nevertheless, like any legal framework, the Act continues to evolve through court interpretations and amendments, ensuring that it remains robust and relevant in the dynamic landscape of arbitration and conciliation.