The Arbitration and Conciliation Act: An Overview

The Arbitration and Conciliation (Amendment) Bill, 2015, was introduced into Parliament by the Government of India in order to formalise and institutionalise the Arbitration and Conciliation Act of 1996. Subsequently, this Act now may be called the Arbitration and Conciliation (Amendment) Act, 2015. And, the Act came into force on the 23rd October, 2015.

What is arbitration?

One kind of ADR is arbitration. It is a procedure in which one or more impartial third parties carefully examine the issue, identify the source of the conflict, speak with the parties, and render a decision. In order to provide recommendations that are binding on the parties involved, i.e., the employer and the employee, they gather pertinent facts and information.

What is conciliation?

Like arbitration, conciliation is also an alternative mode of dispute resolution, but its procedure is not as formal and strict as that of arbitration. The conciliator helps parties arrive at a mutually agreeable decision and resolve the dispute.

In this process, a neutral third party assists the parties to a dispute in reaching an amicable resolution. The person designated with this authority is known as a conciliator. He could assist in reaching a resolution by expressing his viewpoint on the conflict. In other words, the agreement represents a compromise between the parties.

What does the Arbitration and Conciliation Act describe?

It is the legislation that gives legal authorization to the process of arbitration and conciliation in India. The Act also defines the proper procedure and methods of arbitration. The law governing arbitration is found in the Arbitration and Conciliation Act, 1996. On January 25th, 1996, this Act became operative. The provisions for domestic arbitration, international commercial arbitration, and the enforcement of foreign arbitral rulings are all provided for under this act. To be comparable to the law passed by the United Nations Commission on International Trade Law, it is based on the UN model law (UNCITRAL).

The Objective of the Act

The main objectives of the act are −

• Make sure that both domestic and international arbitration and conciliation are subject to the same set of norms.

• Make sure these processes are sufficient.

• to lessen the court's involvement in this process.

• As the location, date, and language are determined by agreement between the parties, arbitration and conciliation are fair processes.

• It stipulates that the parties' conciliation agreement has the same legal weight as any award made by an arbitral tribunal.

The Nature and Scope of the Act

In arbitration, a third party agreed upon by both parties provides a quote to resolve the conflict between the two parties. Legal action is generally thought to be expensive, time−consuming, and fraught with difficulties. Therefore, arbitration offers an alternative to litigation where the parties can settle their differences without going to court. Alternative Dispute Resolution refers to a process for settling disputes outside of a court of law or without the intervention of a judge. There are many techniques for resolving disputes, including

• Conciliation

• Meditation

• Arbitration

India's 1996 Arbitration and Conciliation Act and its Preamble

The law pertaining to arbitration is found in the Arbitration and Conciliation Act, 1996. The constitution was amended to include this law on January 25, 1996. It offers domestic arbitration, foreign arbitral awards' enforcement, and international commercial arbitration. It is based on the UN law paradigm and is equivalent to the international trade law issued by the UN Commission.

The following is how the act's preamble is to be understood −

• A domestic arbitration

• Foreign arbitral awards are enforceable.

• Commercial and international arbitration

Features of the Act

The Act, which is classified into 4 parts and 87 sections, has the following features −

• The ultimate settlement between the parties based on their wishes, terms, and conditions is the intended conclusion because it is a consensual agreement.

• If a solution cannot be achieved through the conciliation procedure, the conciliator may, at the request of the parties, become an arbitrator. The term "hybrid conciliation" refers to this.

• A conciliator is a person who helps the parties reach a compromise.

• The arbitration award's weight and standing will be equivalent to those of the settlement agreement.

2015 Amendment

Major highlights of 2015 amendment are −

First of all, the amendment re−defined the term ' Court '. The amended law clearly differentiated between an international commercial arbitration and domestic arbitration in reference to the definition of 'Court'. In reference to domestic arbitration, the definition of "Court" is the same as it was in the 1996 Act; however, in reference to the international commercial arbitration, 'Court' has been defined to mean only High Court of competent jurisdiction.

Secondly, Section 2 has also been amended and a new Section is added that is Section 2 (2). Section 2(2) states that Part−I shall apply where the place of arbitration is in India. In addition to this, the provisions of Sections 9, 27, 37(1) (a) and 37 (3) shall also apply to international commercial arbitration, even if the seat of arbitration is outside India. However, it can be excused, if parties to the arbitration agreement have agreed to the contrary.

Thirdly, Section 8, which deals with 'Reference of parties to the dispute to arbitration', is also amended. And lastly, Section 9, which deals with 'Interim Measures' is also amended.

Conclusion

India has seen substantial growth in the field of arbitration, and subsequent resolution of many disputes. In order to settle their conflicts outside the court, the majority of businessmen, contractors, business partners, now include arbitration clauses in their contracts and agreements. The Arbitration and Conciliation Act of 1966 attempted to streamline the processes for handling the cases, but it is still preferable to the conventional court technique because it is quicker and more efficient.

Frequently Asked Questions

Q. What do you understand by an arbitration agreement?

Whether it is an employee−employer, corporate contract position, or business partners, it is customary to sign an arbitration agreement at the beginning of the contractual relationship. The agreements are typically hidden under categories like "Arbitration" or "Dispute Resolution" in employee’s handbooks or employment contracts. The arbitration may be governed by the contract as well. It is also possible to specify the procedure for selecting the arbitrators as well as the arbitration rules, such as those of the American Arbitration Association (AAA). After a claim has been made or a dispute has developed, arbitration can also be consented to.

Q. What is a binding arbitration agreement?

In binding arbitration, the case is handled by a third party who is impartial. Arbitration is a trial−free alternative to jury or judge trials. Furthermore, the grounds for challenging or reversing an arbitration award are extremely narrow. A person waives their right to file a lawsuit by signing an arbitration agreement.

Q. What matters can be referred for an arbitration?

The following matters can be referred for an arbitration −

• Civil and quasi−civil disputes of all kinds.

• All issues that could give rise to a civil lawsuit and influence the parties' private rights.

• Everything pertaining to the parties' individual rights, including business and commerce, marriage, child custody, and the circumstances surrounding a husband and wife's separation, etc.