1.1 Understanding the Arbitration and Conciliation Act 1996
The Arbitration and Conciliation Act 1996 is a crucial legislation that governs the arbitration process in India. The act was enacted to provide a comprehensive framework for the resolution of disputes through arbitration and conciliation. This act was created to promote the alternative dispute resolution method of arbitration, which is considered to be a more efficient and cost-effective way of resolving disputes compared to traditional court litigation. The act provides a legal framework for conducting arbitrations and conciliations in a fair and impartial manner.
It clearly outlines the procedures and principles that arbitrators and parties involved in the dispute must follow, ensuring transparency and fairness in the process. The act also includes provisions for the enforcement of arbitration awards, both domestic and international, which adds credibility to the arbitration process and encourages parties to choose arbitration as a preferred method of dispute resolution.
The Act is further divided into four parts:
Part I (Sections 2-43) – Applies to India as the location of the arbitration. The given award is considered to be a domestic award.
Sections 44–60 of Part II deal with the enforcement of foreign awards.
Part III: Conciliation (Sections 61–81)
Sections 82 through 86 of Part IV are the supplemental provisions.
There are three schedules in it: Convention on the recognition of foreign arbitral awards is described in Schedule I. Schedule II – Guidelines for arbitration clauses.Convention on the enforcement of foreign arbitral awards is found in Schedule III.
1.2 Decoding the Features of Arbitration and Conciliation Act 1996
1. One of the key features of the Arbitration and Conciliation Act 1996 is that it recognizes and upholds the autonomy of parties involved. It allows the parties to determine the procedure for the arbitration, including the appointment of arbitrators, the place of arbitration, and the language to be used during the process.
2. The act also ensures that the arbitration process is confidential, protecting the privacy of parties involved and maintaining the confidentiality of the proceedings.
3. Another important feature of the Arbitration and Conciliation Act 1996 is that it grants arbitrators the authority to issue interim measures and grant specific performance of obligations.
4. Furthermore, the act provides for the appointment of arbitrators in cases where parties fail to agree on an arbitrator, ensuring a fair and impartial adjudication of disputes.
5. The act also allows for the intervention of courts in certain situations, such as the setting aside of arbitral awards in case of misconduct or non-compliance with the arbitration agreement.
Several important clauses of the Act include :
Section 26 of the 2015 Amendment Act is missing: On October 23, Section 26 was removed.
The 2015 modification was rendered prospective, and in that regard, the associated court actions were likewise made prospective.
BCCI v. Kochi Cricket Pvt.Ltd
According to the ruling in this case, the 2015 amendment only applied to proceedings started after October 23, 2015, the day the 2015 amendment took effect. Additionally, it would apply to any ongoing legal actions that were filed prior to the implementation of the 2015 modification.
Conflict arises when the 2018 amendments attempt to apply amendments that were filed following the start of the 2015 amendments. In the event that a petition was filed before the 2015 amendment and was pending when the amendment was put into effect, this will result in an automatic stay to abolish.
Arbitration Council of India: The 2019 revision added a new section, Part 1A. The Central Government was given permission to create the Arbitration Council of India in this document.
Schedule: The 2019 amendment eliminated the predetermined time in the event of international commercial arbitration, easing the schedule provided by the 2015 amendment. When it comes to domestic arbitration, the 12-month time frame will be measured starting from the day the pleadings are finished.
The statute changed Section 11 to allow arbitrators to be chosen by arbitral institutions rather than the Supreme Court and High Court.
Prerequisite for the Arbitrator: In accordance with the modification, the arbitration procedures shall only be made public when it is essential.
Better chances for justice: Section 34 highlights the importance of the record presented to the arbitral tribunal when contesting an award, and Section 45 has been changed to read “unless it prima facie finds” instead of “unless it finds.”
Protection of arbitrators: The 2019 amendment shields arbitrators from legal action for anything they conduct in good faith. Kochi Cricket Pvt. Ltd., Etc. v. BCCI.
1.3 Exploring the Demerits of Arbitration and Conciliation Act 1996
While the Arbitration and Conciliation Act 1996 has many advantages, it is important to acknowledge its limitations as well.
1. One of the demerits of the Act is that it can be time-consuming and costly. This is because the process of arbitration involves hiring arbitrators, legal representation, and other expenses that can add up quickly.
2. Additionally, there have been criticisms that the Act lacks clear guidelines for the enforceability of arbitration awards, leading to potential challenges and delays in the process.
3. Furthermore, some experts argue that the Act does not adequately address the issue of bias and impartiality, as there is no specific provision for challenging arbitrators on grounds of bias or conflict of interest.
4. Another demerit of the Arbitration and Conciliation Act 1996 is that it does not provide a standardized and uniform approach to the arbitration proceedings.
1.4 A Comprehensive Analysis of Arbitration and Conciliation Act 1996
The Arbitration and Conciliation Act 1996, with its features and demerits, provides a framework for the resolution of disputes outside of the formal court system.
It emphasizes the importance of confidentiality and privacy in the arbitration process, ensuring that parties can discuss their issues freely and without fear of disclosure.
The Act also grants arbitrators the authority to issue interim measures and enforce specific performance, allowing for effective and efficient resolution of disputes. Additionally, the Act recognizes the need for impartiality in the arbitration process and provides for the appointment of arbitrators in cases where parties cannot agree. Furthermore, the Act permits the intervention of courts in specific situations, such as the setting aside of arbitral awards in cases of misconduct or non-compliance with the arbitration agreement.
1.5 The Impact of Arbitration and Conciliation Act 1996 on Conflict Resolution
The Arbitration and Conciliation Act of 1996 has had a significant impact on conflict resolution. By providing a legal framework for alternative methods of dispute resolution, such as arbitration and conciliation, the Act has offered parties in conflict a faster, more cost-effective, and less formal way of resolving their disputes. This has helped reduce the burden on the court system and allowed for more efficient resolution of conflicts. Furthermore, the Act has encouraged parties to consider resolving their disputes through conciliation, which promotes a cooperative approach and focuses on finding mutually agreeable solutions. This has ultimately facilitated more amicable and sustainable resolutions to conflicts, contributing to a more harmonious society. The Arbitration and Conciliation Act of 1996 has had a significant impact on conflict resolution by providing a legal framework for alternative methods of dispute resolution.
The Act has promoted the use of arbitration and conciliation as viable alternatives to traditional litigation, offering parties in conflict faster, more cost-effective, and less formal ways of resolving their disputes. By making arbitration and conciliation more accessible and encouraging their use, the Act has helped reduce the burden on the courts and expedite the resolution of conflicts in a more efficient manner.
1.6 Key Components of the Arbitration and Conciliation Act 1996
The Arbitration and Conciliation Act 1996 is a comprehensive legislation that incorporates internationally recognized principles of arbitration.
Some of the key components of the Act include:
1. Appointment of arbitrators: The Act allows parties to choose arbitrators who possess the necessary expertise and commercial competence, ensuring that the dispute is resolved by individuals who are well-versed in the subject matter. This promotes a fair and knowledgeable decision-making process.
2. Confidentiality of proceedings: The Act recognizes the importance of preserving the privacy and confidentiality of arbitral proceedings. This promotes open and honest discussions between parties, allowing them to freely express their views and concerns without fear of public disclosure.
3. Finality: The Act promotes finality in arbitration, ensuring that once a decision is reached, it is binding on all parties involved.
4. Enforceability of awards: The Act establishes mechanisms for the enforceability of arbitral awards. This means that parties can have confidence that the decision reached through arbitration will be enforceable and binding, providing a sense of security and certainty.
1.7 Challenges Presented by the Arbitration and Conciliation Act 1996
While the Arbitration and Conciliation Act 1996 has several positive features, it is not without its limitations. Some of the challenges presented by the Act include:
1. The Act does not provide for uniform rules and procedures, leading to inconsistencies in the arbitration process. This lack of uniformity can create confusion and uncertainty for parties involved in arbitration and can hinder the efficient resolution of disputes.
2. The Act does not address the issue of high costs associated with arbitration proceedings. . Parties involved in arbitration proceedings may incur additional expenses in the form of legal fees, arbitrator’s fees, and administrative costs. This can be a significant deterrent for parties seeking to resolve their disputes through arbitration.
3. The Act is known to be complex and requires a deep understanding of the legal framework for effective implementation. This complexity can pose challenges for parties involved in arbitration, particularly those who do not have a strong understanding of the legal principles and procedures involved.
4. Furthermore, the Act places a heavy emphasis on arbitration rather than conciliation, which can lead to lengthier and more complex proceedings.
5. Another challenge presented by the Arbitration and Conciliation Act 1996 is the high referral rates of disputes to bodies such as the Commission for Conciliation, Mediation, and Arbitration. This high referral rate can strain the resources of these bodies and lead to longer wait times for resolution.
6. Additionally, the complexity of labor law adds to the challenges of the Arbitration and Conciliation Act 1996. The ease of access to the Commission for Conciliation, Mediation, and Arbitration, coupled with the complexity of labor law, has resulted in an increasing number of disputes being referred to the CCMA instead of using internal conflict resolution procedures.
1.8 Reevaluating the Arbitration and Conciliation Act 1996
Given the limitations and challenges of the Arbitration and Conciliation Act 1996, it may be beneficial to reevaluate and potentially amend certain aspects of the Act. This could involve addressing the lack of uniformity in rules and procedures, which would provide clarity and consistency in the arbitration process. Additionally, measures should be taken to address the high costs associated with arbitration proceedings, such as implementing fee structures that are more affordable and accessible for all parties involved.
References
Upreti, S. (2021, January 19). Evolution of Arbitration and Conciliation Act, 1996. Retrieved from TaxGuru: https://taxguru.in/corporate-law/evolution-arbitration-conciliation-act-1996.html
This article is written by Reshmi Chakraborty, 1st Year BBA LL.B student, Army Law College Pune.
