The Arbitration and Conciliation Act, 1996 was enacted to consolidate and amend the law relating to domestic arbitration, international commercial arbitration, and the enforcement of foreign arbitral awards. It is a comprehensive piece of legislation that moved India toward a more "pro-arbitration" regime.
The following are the salient features of the Act, with legal references integrated throughout:
1. Based on UNCITRAL Model Law
The most significant feature is that the Act is modeled after the UNCITRAL Model Law on International Commercial Arbitration (1985) and the UNCITRAL Conciliation Rules (1980). As noted in its Preamble, the Act aims to harmonize Indian arbitration law with the globally accepted legal framework, making it easier for international businesses to resolve disputes in India.
2. Minimal Judicial Intervention
A core objective of the Act is to limit the interference of civil courts in the arbitral process. Section 5 explicitly states that in matters governed by Part I of the Act, no judicial authority shall intervene except where specifically provided. This ensures that once parties choose arbitration, the court cannot easily disrupt the proceedings.
3. Party Autonomy
The Act places a high premium on the will of the parties. Under various sections, such as Section 20 (Place of arbitration) and Section 2(1)(a), parties have the freedom to:
Determine the number of arbitrators (as long as it is not an even number).
Choose the procedure for appointing arbitrators.
Decide the "seat" or venue and the language of the proceedings.
4. Competence of Arbitral Tribunal (Kompetenz-Kompetenz)
Under Section 16, the arbitral tribunal is empowered to rule on its own jurisdiction. This includes ruling on any objections with respect to the existence or validity of the arbitration agreement. This principle ensures that the tribunal can continue its work even if one party claims the underlying contract is void.
5. Finality and Enforcement of Awards
An arbitral award is treated with the same seriousness as a court judgment.
Finality: Under Section 35, an arbitral award is final and binding on the parties.
Enforcement: According to Section 36, an award is enforced in the same manner as if it were a decree of a civil court under the Code of Civil Procedure, 1908.
6. Time-Bound Proceedings
To address the issue of delays, the 2015 and 2019 Amendments introduced strict timelines. Section 29A mandates that the award in domestic arbitrations must be made within a period of twelve months from the date of completion of pleadings. This feature distinguishes arbitration from the often lengthy traditional litigation process.
7. Comprehensive Coverage of ADR
The Act is not limited to arbitration alone. Part III (Sections 61 to 81) provides a detailed statutory framework for Conciliation. It gives the settlement agreement reached during conciliation the same status and effect as an arbitral award under Section 74, making it a highly effective and legally backed ADR tool.
8. Provisions for Interim Relief
The Act allows parties to seek temporary protection while the dispute is being decided.
Section 9 allows parties to approach a Court for interim measures before, during, or even after the award is made (but before enforcement).
Section 17 gives the Arbitral Tribunal the power to grant interim measures during the pendency of the proceedings, providing it with powers similar to a civil court.
9. International Commercial Arbitration
The Act makes a clear distinction for disputes involving a foreign party. Under Section 2(1)(f), "International Commercial Arbitration" is defined, and such cases are often subject to different jurisdictional rules—for instance, seeking appointments or relief directly from the High Courts or Supreme Court rather than lower district courts.
10. Grounds for Challenge
The Act restricts the grounds on which an award can be set aside to ensure stability. Section 34 provides an exhaustive list of grounds (such as incapacity of parties, invalid agreement, or conflict with the public policy of India). The courts are generally prohibited from reviewing the merits of the case or re-evaluating evidence.
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