Q.

10- Discuss the Arbitration and Conciliation Act,

1996, its objectives and salient features.
The Arbitration and Conciliation Act, 1996 improves upon the previous laws
regarding arbitration in India namely the Arbitration Act, 1940, the Arbitration
(Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and
Enforcement) Act, 1961.Further, the new statute also covers conciliation which
had not been provided for earlier.The Act also derives authority from the
UNCITRAL Model law on International Commercial Arbitration and the UNCITRAL
rules on conciliation.The Model law on International Commercial Arbitration was
framed after taking into consideration provisions regarding arbitration under
various legal systems. Thus, it is possible to incorporate the model law into the
legal system of practically every nation.The Act of 1996 aims at consolidating
the law relating to domestic arbitration, international commercial arbitration,
enforcement of foreign arbitral awards and rules regarding conciliation.

 Objects of The Act

1. The law on arbitration in India was substantially contained in three
enactments, namely, the Arbitration Act, 1940, the Arbitration (Protocol and
Convention) Act, 1937 and the Foreign Awards (Recognition and Enforcement)
Act, 1961. It was widely felt that the 1940 Act, which contains the general law of
arbitration, has become outdated. The Law Commission of India, several
representative bodies of trade and industry and experts in the field of arbitration
have proposed amendments to this Act to make it more responsive to
contemporary requirements. It is also recognised that our economic reforms
may not become fully effective if the law dealing with settlement of both
domestic and international commercial disputes remains out of tune with such
reforms. Like arbitration, conciliation was also getting increasing worldwide
recognition as an instrument for settlement of disputes. There is, however, no
general law on the subject in India.

2. The United Nations Commission of International Trade Law (UNCITRAL) adopted

in 1985 the Model Law on International Commercial Arbitration. The General
Assembly of the United Nations has recommended that all countries give due
consideration to the said Model Law, in view of the desirability of uniformity of
the law of arbitral procedures and the specific needs of international commercial
arbitration practice. The UNCITRAL also adopted in 1980 a set of Conciliation
Rules. The General Assembly of the United Nations has recommended the use of
these Rules in cases where the disputes arise in the context of international
commercial relations and the parties seek amicable settlement of their disputes
by recourse to conciliation. An important feature of the said UNCITRAL Model
Law and Rules is that they have harmonized concepts on arbitration and
conciliation of different legal systems of the world and thus contain provisions
which are designed for universal application.

3. Though the said UNCITRAL Model Law and Rules are intended to deal with
international commercial arbitration and conciliation, they could, with
appropriate modifications, serve as a model for legislation on domestic
arbitration and conciliation. The present Bill seeks to consolidate and amend the
 law relating to domestic arbitration, international commercial arbitration,
enforcement of foreign arbitral awards and to define the law relating to
conciliation, taking into account the said UNCITRAL Model Law and Rules.

4. The main objectives of the Bill are as under :-

(i) to comprehensively cover international and commercial arbitration and
conciliation as also domestic arbitration and conciliation;
(ii) to make provision for an arbitral procedure which is fair, efficient and capable of
meeting the needs of the specific arbitration;
(iii) to provide that the arbitral tribunal gives reasons for its arbitral award;
(iv) to ensure that the arbitral tribunal remains within the limits of its jurisdiction;
(v) to minimize the supervisory role of courts in the arbitral process;
(vi) to permit an arbitral tribunal to use mediation, conciliation or other procedures
during the arbitral proceedings to encourage settlement of disputes;
(vii) to provide that every final arbitral award is enforced in the same manner as if it
were a decree of the court;
(viii) to provide that a settlement agreement reached by the parties as a result of
conciliation proceedings will have the same status and effect as an arbitral
award on agreed terms on the substance of the dispute rendered by an arbitral
tribunal; and
(ix) to provide that, for purposes of enforcement of foreign awards, every arbitral
award made in the country to which one of the two international Conventions
relating to foreign arbitral awards to which India is a party applies, will be
treated as a foreign award.
The Arbitration and Conciliation Act, 1996 has brought about qualitative
changes in the law of Arbitration. New Act contemplates minimal role of Court
during the conduct of arbitral proceedings till the making of the award. It is
intended that Court will not interfere in the arbitral proceedings till the arbitral
award is made. It proposes to amend and consolidate the laws of Arbitration in
India. It has also harmonized the legal principles of Common Law and Civil Law
by providing Conciliation as a mode of settlement of disputes. The Act of 1996 is
based on Model Law which intends to bring about global uniformity in the
Arbitration Laws. The Model Law is close to the Rules of the International
Chambers of Commerce (ICC).
The present Act has four parts. First part deals with the Domestic as well as
International Commercial Arbitration taking place in India The second part is in
respect of Foreign Awards falling within the ambit of New York and Geneva
Conventions relating to their recognition and enforcement. The third part covers
hitherto unknown branch of Law of Conciliation. It was foreign to Common Law
Jurisprudence but is well entrenched in the Civil law following nations and has
been internationally accepted form of Alternative Dispute Resolution System.
The fourth part contains supplementary proceedings.
 Salient Features of the Arbitration and Conciliation Act,
1996
The Arbitration and Conciliation Act, 1996 contains the following salient features
1. A Comprehensive Statute.-The Arbitration and Conciliation Act, 1996, is related
to the domestic, international and inter-state arbitrations. This Act provides
importance to enforcement of international arbitral awards and conciliation
matters as well. The comprehensive nature of this Act is the result of the United
Nations Commission on International Commercial Arbitration, 1985 because
Geneva Assembly of the United Nations had emphasized and also recommended
uniform model law on arbitration among the countries.
2. An Explanatory Code.-The old Act of 1940 had no provision for international
arbitration whereas this Act of 1996 is an explanatory and a complete Code in
itself, rather it is an exhaustive Code. For the first time a procedure for setting of
Arbitral Tribunals is provided by this statute, it also gives status of Tribunal to
the Arbitrators or Board of Arbitrations or Statutory Arbitrations.
3. Curtailment of the Courts Powers. The Act has limited the powers of court rather
restricted the exercise of judicial power, in other words, it has confined the
extent of judicial intervention as under Section 5 of the Act-"Notwithstanding
anything contained in any other law for the time being in force, in matters
governed by this part, no judicial authority shall intervene except, where so
provided in this part."
4. Finality of arbitral awards is given under Section 35 according to which an
arbitral award shall be final and binding on the parties and persons claiming
under them respectively. Thus, the Act itself provides finality to arbitral awards
and its enforcement (Section 36) without intervention of the Court.
5. Procedure for Conduct of Arbitration and Awards in detail. Chapter V of the
Arbitration and Conciliation Act, 1996 from Section 18 to Section 27 provides
detailed procedure and practice in hearings as well as statements of claim and
defence.
6. The Arbitral Tribunals are empowered to settle any objections raised in respect
of jurisdiction or scope of authority of the arbitrators.
7. Precised Powers of the Court. The Act of 1996 has precised the powers of the
court by taking assistance only in certain specific matters. The Court's
assistance can be sought in taking evidence only with the prior approval of the
arbitral tribunals, as under Section 27(1) "The arbitral tribunal or a party with
the approval of the arbitral tribunal, may apply to the court for assistance in
taking evidence." In the matter of jurisdiction Section 42 of the Act of 1996
states that
8. "Notwithstanding anything contained elsewhere in this part or in any other
9. law for the time being in force, where with respect to an arbitration agreement
any application under this part has been made in a court, that court alone shall
have jurisdiction over the arbitral proceedings and all subsequent applications
arising out of that agreement and the arbitral proceedings shall be made in that
 court and in no other court." 6. Powers of the Arbitrators enhanced.-In
comparison with the old Act, the new Act has enhanced the powers of the
arbitrators in respect of jurisdiction of Arbitral Tribunals and has also improved
the competence of the arbitrators to rule. Chapter IV, Section 16 and Section 17
of the Act, 1996 provide these measures.
10. A new form of Conciliation.-Part III of the Act, 1996 deals with new
internationalised approach to conciliation and explain its application and scope.
The Act under Section 63 intends to prescribe number of conciliators and in case
of more than one conciliator, their number should be decided by the agreement
of the parties.
11. Section 63(2) States-"Where there is more than one conciliator, they ought, as a
general rule, to act jointly." Thus, the new Act makes scope of conciliation more
wide, and much emphasis has been provided on mutual rather consensual
conciliation in every respect. Section 66 of the Act, 1996 takes away restrictions
of certain enactments from conciliation. "The Conciliator is not bound by the
Code of Civil Procedure, 1908 (5 of
12. 1908) or the Indian Evidence Act, 1872 (1 of 1872),"
13. International applicability.-Under the old Act of 1940, there was no provision for
applicability of any interim award made by the Foreign Arbitral Tribunal is., An
Arbitral Tribunal constituted by I.C.C. Court
Arbitration at London. But, the new Act of 1996, has provinions for applicability
of Foreign Arbitral Tribunal's awards.