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Arbitration and Conciliation Act 1996- Objective, Scope, Process

The Arbitration and Conciliation Act 1996

  • The Arbitration and Conciliation Act of 1996 is a pivotal piece of legislation in India, governing the resolution of disputes through alternative means. Enacted to streamline and modernize the arbitration process, this statute provides a comprehensive framework for the fair and efficient settlement of conflicts.
  • The Act not only promotes arbitration as a preferred method of dispute resolution but also recognizes the importance of conciliation in reaching amicable settlements. It aligns Indian practices with international standards, facilitating the enforcement of arbitral awards both domestically and internationally.
  • The Act’s emphasis on minimizing judicial intervention and ensuring a speedy resolution has played a crucial role in fostering a more dynamic and responsive dispute resolution environment in the country. With its meticulous provisions and commitment to alternative dispute resolution mechanisms, the Arbitration and Conciliation Act of 1996 has significantly contributed to the evolution of India’s legal landscape in the realm of commercial dispute resolution.

Objective of Arbitration and Conciliation Act 1996

  1. Establish rules for both domestic and international arbitration and conciliation.
  2. Verify the adequacy of these procedures.
  3. Minimize court involvement in the process.
  4. Save time and financial resources.
  5. Ensure mutual agreement between both parties.
  6. Emphasize the unbiased nature of arbitration and conciliation, allowing both parties to decide on the venue, time, and language.

Types of Arbitration and Conciliation Act 1996

  • Domestic Arbitration involves disputes raised within the Indian jurisdiction, governed by Indian law. In this context, parties should have Indian origin or nationality.
  • In Institutional Arbitration, an institute aids the parties in determining the arbitration procedure. The chosen institution manages tasks such as appointing an arbitrator, establishing a timetable for document filing, and more. Institutional arbitration alleviates the parties’ burden by providing administrative assistance, thus expediting the process with timely support.

Nature and Scope of Arbitration and Conciliation Act 1996

Arbitration serves as a method for resolving disputes between two parties through the involvement of a third person chosen jointly by both sides. The prevailing perspective underscores that legal proceedings are expensive, time-consuming, and laden with obstacles. Consequently, arbitration provides an alternative avenue for dispute resolution, allowing parties to settle their disagreements outside the formal legal proceedings.

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

Owing to the delays in the court’s dispensation of justice, these methods have proven highly effective and efficient in saving time. Arbitration has experienced rapid growth in our country, primarily motivated by the aim to deliver prompt justice to both parties.

Prominent Institutional Arbitrations in India

  • Arbitration and Mediation Institute of India, located in Delhi.
  • Technical Arbitrators Institute of India, situated in Chennai.
  • Mumbai International Arbitration Center, based in Mumbai.

Process of Arbitration in India

When a dispute arises between two parties, the process of arbitration is initiated. For arbitration to commence, the contractual agreement between the parties must incorporate an arbitration clause. The procedural steps are as follows:

  1. Arbitration Clause: The contract or agreement, endorsed by both parties, must include an arbitration clause outlining the method for resolving disputes through arbitration. This clause may exist as a separate arrangement or be integrated into the main contract, specifying the venue for arbitration proceedings.
  2. Statement of Claim and Defence: Governed by Section 23 of the act, an arbitrator is appointed once both parties agree to the arbitration process. The claimant formulates a statement of claims, encompassing all pertinent information, documents, and evidence supporting their assertions.
  3. Hearing and Written Procedures: Under Section 24, arbitrators and the arbitral tribunal conduct hearings to address conflicts between the parties and scrutinize the evidence. The tribunal then determines the validity of the information or evidence presented by the claimants before proceeding with the case.
  4. Arbitral Award: Following the hearing and examination, the arbitrator issues a final, binding award. Parties cannot appeal to arbitral tribunals, but they retain the right to appeal in court against the arbitral award, as outlined in Section 31.
  5. Enforcement of Arbitral Award: After the arbitral award is issued, it must be executed, as per Sections 35 and 36, respectively.

Arbitration and Conciliation Act, 1996 and its Preamble in India

The legal framework governing arbitration is encapsulated in the Arbitration and Conciliation Act of 1996. Enacted on January 25, 1996, this legislation encompasses provisions for international commercial arbitration, domestic arbitration, and the enforcement of foreign arbitral awards. Aligned with the model provided by the United Nations, it mirrors the law endorsed by the United Nations Commission on International Trade Law.

The preamble of the act elucidates its scope in the following dimensions:

  • Domestic Arbitration
  • Enforcement of Foreign Arbitral Awards
  • International and Commercial Arbitration
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What is the Arbitration and Conciliation Act of 1996?

An Act to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards as also to define the law relating to conciliation and for matters connected therewith or incidental there.

What are the aims and objectives of Arbitration and Conciliation Act, 1996?

The main objectives of the Act are as follows: To ensure that rules are laid down for international as well as domestic arbitration and conciliation.

Who appoints arbitrator?

The first party to appoint an arbitrator also proposes a candidate to serve as President of the Tribunal.

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