The Arbitration and Conciliation Act 1996 is the key law governing arbitration in India. The Act was enacted to consolidate, define and amend the law in relation to domestic arbitration, international commercial arbitration and the enforcement of foreign arbitral awards.
The Act provides for the procedure of arbitration proceedings in India and steps of arbitration. It states that for adopting the arbitration as a dispute resolution mechanism and an agreement to that effect should be signed between the disputing parties. The parties can either opt for a separate arbitration agreement to be signed between them or include an arbitration clause in the main contract between the parties. Arbitration agreement or the arbitration clause should clearly state that the dispute will be resolved through arbitration only. Further, it should specify the number of arbitrators to be appointed and the manner of their appointment. Arbitrators in India are to be appointed in odd numbers only.
The Indian courts are increasingly adopting a pro-arbitration approach and enforcing valid arbitration agreements. The statement of objects and reasons of the Arbitration and Conciliation Act also recognizes the principle of non-intervention by courts in the arbitration process. However, the Indian courts will refuse to enforce an arbitration agreement where it finds prima facie that – no valid agreement exists or the dispute is not arbitral.
Preamble of the Act
The Arbitration and Conciliation Act came into force on January 25th 1996. Preamble of the act says that it contains law related to arbitration and various other types such as-
- International Arbitration
- Commercial Arbitration
The idea of the act is based on the UN model law to work with the law adopted by the United Nations Commission on International Trade Law (UNCITRAL).
Some significant sections in the Arbitration and Conciliation Act 1996:
Section 9 of the act entitles the parties to arbitration proceedings to obtain interim relief from courts.
Section 18, 19 and 24 of the act requires all parties to be treated fairly at all stages and tribunal should give them adequate/sufficient opportunity to present their case, including a chance to be heard at the time of ad interim orders
Section 31 of the Act provides for the final award given by the arbitrator. This award shall be made in writing and shall be signed by all the members of the Tribunal it shall be final and binding on both the parties.
Sections 35 and Section 36 of the act states that after the award is passed by the arbitral tribunal it has to be executed. The provision related to the finality and enforcement of arbitral award is also mentioned in the aforementioned sections.
Arbitration has been a handy tool and has gained popularity significantly in India with a prominent feature of that delay being very less as compared to court proceedings. In Modern times all big companies, MNCs make mandatory inclusion arbitration clauses in their agreements and contracts so that if there arises any difference or dispute between the parties it can be resolved through arbitration.
The provisions and procedures of the act are still new to the courts and judicial officers so the interpretation by the Supreme court and interference of High Courts is very much required to enhance the working of the Arbitration process which will ease the ways of resolving disputes in future.
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