Arbitration and conciliation

 

have gained much popularity as an alternative dispute resolution mechanism in India. This is because of the time-consuming and expensive nature of the traditional litigation process. The Arbitration and Conciliation Act, 1996 was enacted to provide a legal framework for arbitration and conciliation in India. The Act was modelled after the UNCITRAL Model Law on International Commercial Arbitration, which was adopted in 1985. In this blog, we will discuss the Arbitration and Conciliation Act, 1996 in detail.

Overview of the Arbitration and Conciliation Act, 1996

The Arbitration and Conciliation Act, 1996 is divided into four parts. Part I deals with arbitration in general, Part II deals with enforcement of foreign awards, Part III deals with conciliation, and Part IV deals with supplementary provisions. The Act applies to both domestic and international arbitrations, with certain modifications in the case of international arbitrations.

Part I: Arbitration

Chapter I of Part I deals with preliminary provisions such as the scope of the Act, definitions, and applicability. Chapter II deals with arbitration agreements, which is an agreement between the parties to submit disputes arising out of a contract to arbitration. Section 7 of the Act provides that an arbitration agreement must be in writing. This includes an agreement that is contained in an exchange of letters, emails, or other means of communication.

Chapter III deals with the composition of arbitral tribunals. An arbitral tribunal consists of one or more arbitrators. If the parties cannot agree on the number of arbitrators, the default number is three. Chapter IV deals with the jurisdiction of arbitral tribunals. The arbitral tribunal has the power to rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement.

Chapter V deals with the conduct of arbitral proceedings. The parties are free to agree on the procedure to be followed by the arbitral tribunal. If the parties have not agreed on the procedure, the arbitral tribunal may conduct the proceedings in such a manner as it considers appropriate. Chapter VI deals with making of awards by the arbitral tribunal. The arbitral tribunal must make its award in writing and must state the reasons upon which it is based.

Chapter VII deals with termination of arbitral proceedings. The arbitral proceedings are terminated by the final award or by an order of the arbitral tribunal. Chapter VIII deals with correction and interpretation of awards. The arbitral tribunal may correct any clerical, typographical, or computational errors in the award. It may also give an interpretation of a specific point or part of the award.

Chapter IX deals with setting aside of awards. An award may be set aside by the court if the party making the application furnishes proof that the arbitration agreement is invalid or the party making the application was not given proper notice of the appointment of the arbitrator or the arbitral proceedings or was otherwise unable to present his case.

Chapter X deals with appealable orders. An appeal may be made to the court against certain orders of the arbitral tribunal, such as an order granting or refusing an interim measure or an order granting or refusing a stay of legal proceedings.

Part II: Enforcement of Foreign Awards

Part II of the Act deals with the enforcement of foreign awards. The Act gives effect to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958. The New York Convention provides for the recognition and enforcement of foreign arbitral awards in signatory countries.

Chapter I of Part II deals with definitions and applicability. Chapter II deals with enforcement of foreign awards. A foreign award may be enforced in India in accordance with the provisions of the Act if it is made in a country which is a signatory to the New York Convention

Chapter III deals with the grounds for refusing enforcement of foreign awards. A foreign award may be refused enforcement if the party against whom it is invoked furnishes proof that:

a) The arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; c) The award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration; d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or e) The award has not yet become binding on the parties or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

Chapter IV deals with the effect of the foreign award. A foreign award, when enforceable, shall be treated as if it were a decree of the court.

Part III: Conciliation

Part III of the Act deals with conciliation. Conciliation is a process whereby the parties to a dispute attempt to reach an amicable settlement with the assistance of a conciliator. Chapter I deals with preliminary provisions, including definitions and applicability.

Chapter II deals with conciliation proceedings. The parties are free to agree on the procedure to be followed in the conciliation proceedings. If the parties have not agreed on the procedure, the conciliator may conduct the proceedings in such a manner as he considers appropriate. The conciliator is not bound by the rules of evidence.

Chapter III deals with the settlement of disputes. If the parties reach a settlement agreement, it shall be reduced to writing and signed by the parties and the conciliator. The settlement agreement is final and binding on the parties.

Chapter IV deals with the termination of conciliation proceedings. The conciliation proceedings are terminated by the signing of a settlement agreement by the parties or by a written declaration of the conciliator to the effect that further efforts at conciliation are no longer justified.

Part IV: Supplementary Provisions

Part IV of the Act deals with supplementary provisions. Chapter I deals with the power of the court to grant interim measures. The court may grant interim measures before or during arbitral or conciliation proceedings. Such measures may include the appointment of a receiver or an injunction.

Chapter II deals with the liability of arbitrators, conciliators, and institutions. An arbitrator or conciliator is not liable for any act or omission in connection with the arbitral or conciliation proceedings, except in cases of fraud or willful misconduct. An institution that provides facilities for arbitration or conciliation is not liable for any act or omission of the arbitral tribunal or conciliator.

Chapter III deals with the confidentiality of arbitral proceedings. The arbitral proceedings are confidential, and the parties must not disclose any information relating to the proceedings or the award. The parties may, however, agree to waive the confidentiality of the proceedings.

Chapter IV deals with the limitation period. An arbitration or conciliation proceeding must be commenced within the limitation period prescribed under the Limitation Act, 1963.

Conclusion

The Arbitration and Conciliation Act, 1996 has provided a legal framework for arbitration and conciliation in India. It has brought about a significant change in the way disputes are resolved in the country. The Act has helped in reducing the burden on courts and has provided a faster and cost