Indian Arbitration and Conciliation Act, 1996
Introduction
The Indian Arbitration and Conciliation Act, 1996 (the “Act”) is the primary legislation
governing domestic and international arbitration in India. The Act applies to all arbitral
proceedings arising out of legal relationships, whether contractual or not, and is intended
to ensure that parties to a dispute can have their differences resolved through arbitration
in a fair, impartial, and timely manner.
The Act provides a framework for the conduct of arbitral proceedings, including the
appointment of arbitrators, the conduct of the arbitration, and the enforcement of arbitral
awards. It also sets out the grounds on which an arbitral award may be challenged or set
aside.
One of the key features of the Act is that it allows parties to opt for institutional
arbitration, which means that the arbitration proceedings are administered by an
arbitration institution, such as the Indian Council of Arbitration or the International
Centre for Alternative Dispute Resolution. This can help to ensure that the arbitration
process is efficient and fair, as the institution will have rules and procedures in place to
govern the arbitration.
The Act has been widely praised for its modern and pro-arbitration approach, and has
played a significant role in promoting the use of arbitration as a means of dispute
resolution in India.
Domestic Arbitration
In India, domestic arbitration refers to the resolution of disputes through arbitration
within the country, as opposed to international arbitration which involves parties from
different countries. The Indian Arbitration and Conciliation Act, 1996 (the “Act”) is the
primary legislation that governs the conduct of domestic arbitration in India.
Under the Act, arbitration is a voluntary dispute resolution process in which the parties to
a dispute agree to submit their differences to an independent third party (the arbitrator)
for a final and binding decision. The Act provides for both ad hoc arbitration and
institutional arbitration, with the latter being administered by arbitral institutions such as
the Indian Council of Arbitration, the Mumbai Centre for International Arbitration, and
the Delhi International Arbitration Centre.
The Act sets out the rules and procedures for the conduct of domestic arbitration,
including the appointment of arbitrators, the conduct of the arbitration proceedings, and
the enforcement of arbitral awards. It also provides for the appointment of arbitrators by
the Chief Justice of India or a designated judge in cases where the parties are unable to
agree on the appointment of an arbitrator.
Overall, domestic arbitration in India is a popular and efficient means of resolving
disputes, particularly in the fields of construction, engineering, and infrastructure
projects. It is generally considered to be a faster and more cost-effective alternative to
litigation in the courts.
Kinds of Domestic Arbitration in Indian arbitration and conciliation act, 1996
Domestic arbitration can take place either ad hoc, or under the rules of an institutional arbitration organization.
There are several types of domestic arbitration that can take place under the Indian
Arbitration and Conciliation Act:
- Ad hoc arbitration: Ad hoc arbitration is a form of arbitration that is not conducted
under the rules of an institutional arbitration organization. Parties to the dispute
agree to appoint an arbitrator (or arbitrators) and determine the procedures for the
arbitration process. - Institutional arbitration: Institutional arbitration is a form of arbitration that is
conducted under the rules of an arbitration organization. Some of the well-known
institutional arbitration organizations in India include the Indian Council of
Arbitration, the International Centre for Alternative Dispute Resolution, and the
Delhi International Arbitration Centre. - Court-annexed arbitration: Court-annexed arbitration is a form of arbitration that is
conducted under the supervision of a court. It is often used in cases where the
parties to the dispute agree to submit their dispute to arbitration but need the
assistance of the court to appoint an arbitrator or to enforce the arbitration award. - Fast track arbitration: Fast track arbitration is a form of arbitration that is designed
to resolve disputes quickly and efficiently. It is often used in cases were the
parties to the dispute want to resolve their differences as quickly as possible.
It is important to note that the choice of the type of domestic arbitration will depend on
the specific needs and preferences of the parties to the dispute. It is advisable to seek
legal advice before deciding on the appropriate form of domestic arbitration.
Who can enter into arbitration agreement? validity, reference to
arbitration, interim measures by court?
This includes individuals, companies, partnerships, and other legal entities.
An arbitration agreement is a written agreement in which the parties agree to submit any
disputes that may arise between them to arbitration, rather than resolving the disputes
through litigation in a court of law. The Act provides that an arbitration agreement is
valid if it is in writing and is signed by the parties, or if it is contained in an exchange of
letters, telex, telegrams, or other means of communication that provide a record of the
agreement.
The Act also provides that a reference to arbitration in a contract shall be deemed to be an
arbitration agreement. This means that if a contract contains a clause that provides for the
resolution of disputes through arbitration, it will be treated as an arbitration agreement
even if it is not specifically labeled as such.
Under the Act, a party to an arbitration agreement can seek interim measures from a court
to protect its interests while the arbitration is ongoing. These measures may include
orders to preserve evidence, prevent the disposition of assets, or enjoin the other party
from taking certain actions. However, the court has discretion to grant or deny the request
for interim measures, and the grant of such measures is not a determination of the merits
of the dispute.
Arbitration Tribunal
Arbitration is a process of dispute resolution in which parties to a dispute agree to submit
their differences to the judgment of one or more impartial persons, called arbitrators. In
India, the law governing arbitration is the Arbitration and Conciliation Act, 1996 (the
“Act”).
Under the Act, an arbitration tribunal is a body that is constituted by the parties to an
arbitration agreement for the purpose of resolving a dispute through arbitration. The
tribunal is composed of one or more arbitrators, who are appointed by the parties or by an
appointing authority in accordance with the provisions of the Act.
The Act provides that the tribunal has the power to conduct the arbitration proceedings in
accordance with the rules agreed upon by the parties and the provisions of the Act. The
tribunal has the authority to make decisions on the merits of the case and to award
damages or other relief to the parties as it deems appropriate.
The Act also provides for the appointment of an arbitrator or arbitrators in cases where
the parties are unable to agree on the appointment of an arbitrator or where there is a
dispute over the appointment of an arbitrator. In such cases, the Act provides for the
appointment of an arbitrator or arbitrators by an appointing authority, such as the Chief
Justice of the High Court or the President of the Indian Council of Arbitration.
The Act also provides for the setting aside of an arbitral award by a court in certain
circumstances, such as where the award is in conflict with the public policy of India or
where there was a defect in the constitution of the tribunal.
Appointment
The appointment of an arbitrator under the Indian Arbitration and Conciliation Act, 1996
(the “Act”) can be made in a variety of ways, depending on the specific circumstances of
the case. Some of the ways in which an arbitrator can be appointed under the Act are:
- Appointment by the parties: The parties to the dispute can agree to appoint an
arbitrator or arbitrators by mutual consent. - Appointment by an arbitration institution: If the parties have agreed to refer their
dispute to an arbitration institution, the institution can appoint an arbitrator or
arbitrators in accordance with its rules and procedures. - Appointment by the court: If the parties are unable to agree on the appointment of
an arbitrator, or if an arbitration institution is not involved, the court can appoint
an arbitrator.
Under the Act, an arbitrator must be impartial and independent, and must possess the
necessary qualifications to be able to resolve the dispute. The Act also provides for the
appointment of an umpire (a third arbitrator) to preside over the arbitration if the parties
are unable to agree on the appointment of a sole arbitrator.
It is important to note that the appointment of an arbitrator is a crucial step in the
arbitration process, as the arbitrator will be responsible for resolving the dispute and
issuing a final award. It is therefore important for the parties to carefully consider the
qualifications and suitability of any potential arbitrator before agreeing to their
appointment.
Challenge
Under the Indian Arbitration and Conciliation Act, 1996 (the “Act”), there are several
grounds on which a party may challenge the appointment of an arbitrator or the
jurisdiction of an arbitration tribunal. Some of these grounds are:
- Lack of independence or impartiality: A party may challenge the appointment of
an arbitrator if it believes that the arbitrator is not independent or impartial. - Lack of qualifications: A party may challenge the appointment of an arbitrator if it
believes that the arbitrator lacks the necessary qualifications to serve as an
arbitrator in the particular case. - Conflicts of interest: A party may challenge the appointment of an arbitrator if it
believes that the arbitrator has a conflict of interest that could affect the
impartiality of the arbitration proceedings. - Lack of jurisdiction: A party may challenge the jurisdiction of the arbitration
tribunal if it believes that the tribunal does not have the authority to hear the
dispute. - Invalid arbitration agreement: A party may challenge the jurisdiction of the
arbitration tribunal if it believes that the arbitration agreement is invalid or has
been terminated. - Improper notice: A party may challenge the jurisdiction of the arbitration tribunal
if it did not receive proper notice of the arbitration proceedings. - Waiver of right to challenge: A party may waive its right to challenge the
appointment of an arbitrator or the jurisdiction of the arbitration tribunal by failing
to raise the challenge in a timely manner.
It is important to note that these challenges must be raised at the outset of the arbitration
proceedings, as the Act provides that any challenge to the appointment of an arbitrator or
the jurisdiction of the arbitration tribunal must be made “at the earliest possible
opportunity.” If a party fails to raise such a challenge in a timely manner, it may be
barred from doing so later on in the proceedings
Jurisdiction of Arbitration Tribunal
Under the Indian Arbitration and Conciliation Act 1996 (the “Act”), an arbitration
tribunal has jurisdiction to resolve a dispute if the parties have agreed in writing to submit
their dispute to arbitration, either before or after the dispute has arisen. The Act applies to
both domestic and international commercial arbitration, and provides for the enforcement
of arbitration agreements and arbitral awards in India.
The Act sets out the procedure for the appointment of arbitrators and the conduct of
arbitration proceedings. It also provides for the recognition and enforcement of foreign
arbitral awards in India, in accordance with the provisions of the 1958 New York
Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
The Act applies to all arbitral proceedings, whether ad hoc or administered, that take
place in India. It also applies to arbitral proceedings that take place outside India if the
place of arbitration is in India, or if the parties have agreed that the Act will apply to the
arbitration.
In summary, the jurisdiction of an arbitration tribunal under the Indian Arbitration and
Conciliation Act is determined by the agreement of the parties to submit their dispute to
arbitration and the applicability of the Act to the arbitration proceedings.
Powers
The Act grants certain powers to the arbitration tribunal to assist it in performing its
duties. Some of the key powers of an arbitration tribunal under the Act are as follows:
- The power to determine its own jurisdiction: The arbitration tribunal has the power
to determine its own jurisdiction, including the existence, scope, and validity of
the arbitration agreement. - The power to rule on challenges to the arbitrators: The arbitration tribunal has the
power to rule on challenges to the appointment of the arbitrators or to the
composition of the tribunal. - The power to decide the rules of procedure: The arbitration tribunal has the power
to decide the rules of procedure to be followed in the arbitration, unless the parties
have agreed on specific rules in their arbitration agreement. - The power to determine the admissibility, relevance, materiality, and weight of the
evidence: The arbitration tribunal has the power to determine the admissibility,
relevance, materiality, and weight of the evidence presented by the parties. - The power to decide on the form and content of the award: The arbitration tribunal
has the power to decide on the form and content of the award, including the
allocation of costs. - The power to correct or interpret the award: The arbitration tribunal has the power
to correct or interpret the award upon the request of a party, provided that the
request is made within 30 days of receipt of the award.
It is important to note that the powers of the arbitration tribunal are limited by the Act
and the arbitration agreement between the parties. The tribunal is required to act fairly
and impartially and must ensure that the parties are given a full and equal opportunity to
present their case.
Procedure and Court Assistance
The Act provides a framework for the resolution of disputes through arbitration and also
sets out the procedures that must be followed in the conduct of arbitration proceedings.
- Appointment of the arbitral tribunal: The arbitral tribunal is typically appointed by
the parties to the arbitration agreement or by a competent authority, such as the
Chief Justice of the relevant High Court or the Chairman of the Indian Council of
Arbitration. - Jurisdiction of the arbitral tribunal: The arbitral tribunal has jurisdiction to hear
and determine the dispute referred to it, subject to any objections by either party. - Conduct of the arbitration proceedings: The Act provides that the parties to the
arbitration are free to agree on the procedures to be followed in the conduct of the
arbitration proceedings. However, if the parties do not agree on the procedures, the
Act provides for certain default procedures to be followed. These include:
ï‚· The arbitral tribunal shall hold hearings at a place and time agreed upon by the
parties or, if the parties cannot agree, at a place and time determined by the arbitral
tribunal.
ï‚· The arbitral tribunal shall give the parties a reasonable opportunity to present their
case and to respond to the case presented by the other party.
ï‚· The arbitral tribunal shall conduct the arbitration in an expeditious manner and
shall make every effort to avoid unnecessary delay. - Assistance of the court: The Act provides that the court may assist the arbitral
tribunal in the performance of its duties and may also take certain measures to
ensure the proper conduct of the arbitration proceedings. For example, the court
may:
ï‚· Appoint an arbitrator if the parties are unable to agree on the appointment of an
arbitrator.
ï‚· Determine any question of competence or jurisdiction of the arbitral tribunal.
ï‚· Order the taking of evidence by an arbitrator or by a court appointed expert.
ï‚· Grant an interim measure of protection, such as an injunction, at the request of a
party. - Challenge to the award: Either party may challenge the award of the arbitral
tribunal by applying to the court to set aside the award. The grounds for setting
aside the award are limited and are set out in the Act
Award
The Act applies to both domestic and international commercial arbitration and provides a
framework for the conduct of arbitral proceedings and the enforcement of arbitral awards.
An award is made by the arbitral tribunal after considering the evidence and arguments
presented by the parties and applying the relevant law. The Act requires that an award be
in writing and signed by the members of the tribunal. It must also state the reasons for the
award, unless the parties have agreed that no reasons are to be given.
The Act provides for the recognition and enforcement of awards made in India or abroad,
subject to certain grounds for setting aside or refusing recognition and enforcement.
These grounds include fraud, corruption, or undue influence in the making of the award,
and a breach of the rules of natural justice.
An award may be challenged in court on the grounds that it is in conflict with the public
policy of India. However, the Act states that an award will not be deemed to be in
conflict with the public policy of India merely because it is contrary to Indian law.
Once an award has become final and binding, it is enforceable in the same manner as a
judgment of a court. The Act provides for the appointment of enforcement officers to
assist in the enforcement of awards, and for the attachment and sale of assets to satisfy
the award.
In summary, an award under the Indian Arbitration and Conciliation Act is a final
decision made by an arbitral tribunal in a dispute that has been submitted to arbitration. It
is enforceable in the same manner as a judgment of a court and may be challenged on
limited grounds.
Conciliation
Conciliation is a form of alternative dispute resolution that is recognized and regulated by
the Indian Arbitration and Conciliation Act of 1996. The Act provides for the
appointment of a conciliator by the parties to a dispute or by the court, and sets out the
process for conducting conciliation proceedings.
Conciliation is a voluntary process in which the parties to a dispute try to reach a
mutually acceptable settlement with the help of a neutral third party, the conciliator. The
conciliator facilitates communication and negotiation between the parties and helps them
explore possible solutions to their dispute.
Under the Act, the conciliator is required to maintain confidentiality and cannot reveal
any information disclosed during the conciliation proceedings without the consent of the
parties. The conciliator also has a duty to be impartial and to act in good faith.
If the parties are able to reach a settlement through conciliation, they can enter into a
conciliation agreement that is legally binding. If the parties are unable to reach a
settlement, they may choose to pursue other forms of dispute resolution, such as
arbitration or litigation.
Negotiation
Negotiation is a process in which the parties to a dispute communicate with each other
directly or through representatives in order to try to reach an agreement on the terms of a
settlement.
Under the Act, negotiation may be used at any stage of the arbitration or conciliation
process, including before the commencement of formal proceedings and during the
course of the proceedings. The Act encourages the parties to try to resolve their disputes
through negotiation, as it is generally a faster and less costly alternative to arbitration or
litigation.
However, the Act does not require the parties to engage in negotiation, and they are free
to choose any dispute resolution mechanism that they believe is appropriate for their
particular situation. If the parties are unable to reach an agreement through negotiation,
they may choose to proceed with arbitration or conciliation, or they may decide to pursue
litigation in the courts.
Mediation
Mediation is a form of alternative dispute resolution that involves the use of a neutral
third party, known as a mediator, to facilitate communication and negotiation between
disputing parties in an effort to reach a mutually acceptable resolution of their dispute.
The Indian arbitration and conciliation act 1996 provides for the use of mediation as an
alternative to arbitration in the resolution of disputes.
Under the act, mediation may be used at any stage of a dispute, including before the
commencement of arbitration proceedings. Parties may agree to use mediation either
voluntarily or at the direction of a court or other competent authority.
The act sets out the procedures for the conduct of mediation, including the appointment
of a mediator, the role of the mediator, and the confidentiality of the mediation process. It
also provides for the enforcement of settlement agreements reached through mediation.
Mediation can be a useful tool for resolving disputes because it allows parties to craft
their own resolution of the dispute, rather than having a decision imposed on them by a
third party. It can also be less costly and time-consuming than arbitration or litigation.
However, it is important to note that mediation is not binding unless the parties agree to
be bound by the settlement reached through the mediation process.
Case Laws
There are several case laws that have been decided under the Act, which have helped to
shape and interpret its provisions. Some of the notable cases are:
- Bhatia International v. Bulk Trading S.A. & Anr. (2002): This case dealt with the
issue of whether the provisions of Part I of the Act (which deals with domestic
arbitration) would apply to international commercial arbitrations as well. The
Supreme Court of India held that Part I of the Act would apply to international
commercial arbitrations unless the parties specifically excluded its application. - SBP & Co. v. Patel Engineering Ltd. (2005): This case dealt with the issue of
whether an arbitration agreement contained in a contract that is subsequently
terminated would still be valid and enforceable. The Supreme Court of India held
that an arbitration agreement contained in a contract that is subsequently
terminated would still be valid and enforceable, unless the parties had specifically
provided otherwise. - ONGC v. Saw Pipes (2003): This case dealt with the issue of whether an arbitrator
could be appointed by a court in cases where the parties had not agreed on a
method of appointment. The Supreme Court of India held that a court can appoint
an arbitrator in such cases, provided that it acts in accordance with the provisions
of the Act. - Venture Global Engineering v. Satyam Computer Services Ltd. (2008): This case
dealt with the issue of whether an arbitration award could be set aside on the
ground of “public policy”. The Supreme Court of India held that an arbitration
award can be set aside on the ground of “public policy” only if it is patently illegal
or against the fundamental policy of Indian law.
These are just a few examples of the many cases that have been decided under the Act. It
is advisable to consult with a lawyer or an arbitration specialist to get a better
understanding of the case laws and their implications.
Please note that this article is based on a personal understanding and knowledge, we would advise you to refer other required books and articles available. We strongly encourage you to build your own understanding and consult your mentors or counsel for better clarity and further proceedings.