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Arbitration and Conciliation Act 1996

The Arbitration and Conciliation Act, 1996 controls domestic arbitration in India and was amended in 2015 and 2019. This article covers the act, arbitration, and its process.

The Arbitration and Conciliation Act, 1996 improved the previous laws regarding arbitration in India, namely the Arbitration Act, 1940, the Arbitration Act, 1937, and The Foreign Awards Act, 1961. This act also derives authority from the UNCITRAL Model Law on international commercial arbitration and the UNCITRAL rules on conciliation.

It unites and manages the laws associated with domestic arbitration, international business arbitration, and the enforcement of foreign arbitral awards. It also defines the law related to conciliation.

Objectives of the Act

  • Ensure that the rules are laid down for both domestic and international arbitration and conciliation
  • Ensure that these procedures are adequate
  • To reduce the involvement of the court in this procedure
  • To save time and money
  • To have the mutual agreement of both the parties
  • Arbitration and conciliation is an unbiased procedure since it depends on both parties to choose the venue, time, and language

Nature and Scope of Arbitration and Conciliation Act, 1996

In arbitration, the dispute between the two parties is settled through a quote by a third person chosen by both sides. The general point of view is that legal action is costly, tedious, and full of obstacles. Hence, arbitration presents an alternate way to resolve disputes, where the parties can settle their dispute outside the court of law.

The method of resolving issues without the court’s involvement or outside the court of law is called alternative dispute resolution. There are other methods in alternative dispute resolution, such as:

  • Conciliation
  • Arbitration
  • Mediation

Due to the delay in justice by the court, these techniques have been very effective and time-saving. Arbitration has rapidly developed in our country. Its primary motivation is to provide instant justice to both parties.

Types of Arbitration Proceedings

  • Domestic Arbitration: When the disputes are raised in Indian jurisdiction, Indian law governs them. In domestic arbitration, the origin or the nationality of the parties should be Indian
  • Institutional Arbitration: Here, parties are helped by an institute to decide the arbitration procedure. The search institution handles procedures like appointing an arbitrator, a timetable to file the documents, etc. Institutional arbitration decreases the burden on the parties by giving them administrative assistance. This timely assistance helps speed up the process

A Few Prominent Institutional Arbitrations in India

  • Indian Institute of Arbitration and Mediation, Delhi
  • Indian Institute of Technical Arbitrators, Chennai
  • Mumbai Centre for International Arbitration, Mumbai

Arbitration and Conciliation Act, 1996 and its Preamble in India

The Arbitration and Conciliation Act, 1996 contains the law related to arbitration. This act was added to the constitution on January 25, 1996. It provides international commercial arbitration, domestic arbitration, and the enforcement of foreign arbitral awards. It is based on the UN law model and is equal to the law adopted by the United Nations Commission on international trade law.

The preamble of the act is interpreted as follows:

  • Domestic arbitration
  • Enforcement of foreign arbitral awards
  • International and commercial arbitration

Constitution of the Arbitral Council of India

The council shall have the following members:

  • A person who has been a judge of the Supreme Court or the High Court; or Chief Justice of High Court or judge of High Court; or an eminent person with the required knowledge and experience in the field of administration of arbitration to be applied by the central government in consultation with the Chief Justice of India- Chairperson
  • An arbitration practitioner should have the required knowledge and experience in institutional arbitration in both domestic and international arbitration. The central government member shall nominate the search person
  • An academician with enough experience in research and teaching in arbitration and alternative dispute resolution laws will be appointed in consultation with a chairperson member
  • A secretary to the Government of India in the department of legal affairs, Ministry of Law and Justice or his representative not below the rank of Joint Secretary-Member, Ex Officio
  • A representative of a recognized commerce and industry body will be chosen on a rotational basis by the central government part-time member
  • A secretary to the Government of India in the department of expenditure, Minister of Finance, or his representative not below the rank of Joint Secretary-Member, Ex Officio
  • The Chief Executive Officer of the state shall be the secretary

Process of Arbitration in India

When there is a conflict between two parties, arbitration comes into action. The contract between the parties must have an arbitration clause to start an arbitration procedure. The process is carried out in the following manner:

  • Arbitration clause: A contract or an agreement signed by both parties must contain an arbitration clause to resolve the dispute through arbitration. Arbitration clauses can be in the form of a separate arrangement or a contract in arbitration. The party should also mention the venue for the proceeding of the arbitration clause
  • Statement of claim and defence: This provision is under section 23 of the act. An arbitrator is appointed after both parties agree to an arbitration procedure. The claimant drafts a statement of claims containing all the information and documents they think are relevant to the case and evidence proving their statements
  • Hearing and written procedures: The arbitrators and arbitral tribunal hear about the conflicts between the parties and examine the evidence. Then the tribunals decide whether the information or the evidence provided by the claimants is valid or not and proceed with the case. This lies under Section 24
  • Arbitral award: After the hearing and examination, the arbitrator gives a final award. This is binding and final to both parties. They cannot file an appeal before the arbitrage tribunals, but the parties can appeal in the court against the arbitral. This provision is under Section 31
  • Enforcement of arbitral award: After the arbitral passes the award, it has to be executed. This provision is under sections 35 and 36, respectively


Arbitration has significantly risen in India. Nowadays, civilians also include an arbitration clause in their agreements and contracts to solve their disputes without the court’s involvement. However, there are also some uninterpreted decisions and provisions. The citizens of India need to be aware of these acts to resolve a dispute efficiently. It is essential because many people do not have enough resources for litigation. The cases are solved immediately and free from any advantage or bias.


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