Arbitration and Conciliation Act,1996

arbitration-and-conciliation-act

The custom to solve the dispute by way of arbitration and conciliation is being of allowed from the past. Disputes were solved in villages either at chaupal or by negotiation of prestigious people. Before the beginning of formal administration of justice, arbitration and conciliation were the major sources of administration of justice. Chief justice sir Robert Raymond has also said that ” Arbitration is a good method of solving dispute by a selected person with the mutual consent of both the parties to a dispute, in which such selected person acts as judge.




With the pass of time, a panchayat was created and a group of five persons started providing justice. Later this system was called arbitration. Regulations of various provinces, that is, Regulation of Bengal, Chennai and Mumbai had the place for this system. The Bengal Regulation of 1973 A.D. provides a system of referring the dispute with the consent of the parties to the arbitration or adjudicator. Later on, the provisions for the appointment of arbitration were made in the civil procedure code,1822, power to arbitrate act, 1899. Under the Bengal Regulation of 1822, Power to arbitrate was also delegated to the revenue courts.

Slowly with time, the system of arbitration kept on increasing. In 1940, the Arbitration Act was enacted which was applied equally throughout India. With the pass of time, this Act was also criticised and it’s defects started to come into knowledge. It results in the passing of a new Act in 1996 called ‘Arbitration and Conciliation Act’.

Detects of old Act

With the increase of the scope of business trade, the scope of Arbitration was also increased. The increasing trend of international trade has also resulted in loosing of the utility of the Arbitration Act of 1940 because this act had no provision regarding the international commercial dispute. Similarly, there were other defects in the Act, like:




  1. The oral arbitration agreement, i.e., Act of 1940 contained provision that an arbitration agreement could be oral.
  2. There was no provision in this Act for the enforcement of the foreign award.
  • There was no provision regarding Conciliation.
  1. Under this Act, Arbitration Award could be filled only in that court which has the jurisdiction to hear the dispute subject matter as a suit.
  2. The definition of an arbitration agreement was neither clear nor complete.
  3. This act provides for taking of prior permission to refer the dispute to the arbitration, even if there is no suit pending regarding that subject matter.
  • The Act provided for the appointment of the umpire.
  • The right to withdraw the authority of the arbitration was entrusted only to the court under it.
  1. The Arbitrator was not having the power to pass interim order under this Act.
  2. The position of the arbitrator could be determined only by the Agreement between the parties.
  3. There was no provision in the Act regarding the language of the Arbitration proceedings.
  • There was no provision in the Act regarding the oral hearing.
  • There was no provision in the Act regarding asking the court to issue an order for the production of documents.
  • According to the provisions of this act, Award was required to be presented before the court to obtain a decree.
  1. Any clerical or mathematics mistake in an Award could be rectified only the court, not by the Arbitration forum.
  • This Act had the provisions to declare the award invalid on the basis of other ground also as it is clear from the word used ‘ Or otherwise is invalid’.
  • As per the provision of this act, the Amendment in Arbitration Award could be made by the court.
  • This Act laid down detailed provision regarding jurisdiction of the court
  • The Act of 1940 did not contain any provision regarding Foreign Awards.
  1. This Act did not provide statutory recognition in respect of conciliation.

Thus Act of 1940 had various defects and because of these defects, the act was replaced to enact a new Act in 1996.




The objective of the Arbitration and Conciliation Act

The objects behind the enactment of Arbitration and Conciliation Act’ 1996 are following

  1. They include International commercial arbitration and conciliation.
  2. To ensure such procedures for arbitration proceedings which may be fast, easy and justifiable.
  3. To give award by Arbitration so that award seems to be provided independently and without bias.
  4. To determine the jurisdiction of arbitration tribunal and to determine that tribunal acts within its limits and jurisdiction.
  5. To decide the supervisory role of courts in arbitration proceedings.
  6. To encourage alternate remedies like arbitration and conciliation to solve the dispute.
  7. To decide the nature of decree of the award and enforce it accordingly.
  8. Conciliation to be recognised like Arbitration Award.
  9. To enact provisions relating to the enforcement of the foreign award, etc.

Efforts to remove the defects of the old Act in the new Act

Efforts have been made to remove the defects of the Arbitration Act, 1940 in the Arbitration and Conciliation Act of the year 1996:

  • While deleting the system of oral arbitration agreement provides for such agreement compulsorily in written are made.
  • The binding of filing an arbitration award in that court which has the jurisdiction to hear the dispute subject matter as a suit has been lifted.
  • A complete and clear definition of the Arbitration Agreement has been given.
  • Now, it is required that a court can only be asked to refer a dispute to the arbitration when that particular dispute is pending before it.
  • Ceased the system of appointment of the umpire.
  • Now, the parties to a dispute are also provided with the right to withdraw the authority of the Arbitrator.
  • The arbitrator has provided the jurisdiction to issue interim order.
  • Tribunal has been empowered to change the place for arbitration.
  • Appropriate provisions are laid down regarding the language of arbitration proceedings.
  • Arrangements for oral hearing have been made.
  • An award on finalization is recognised similar to the decree.
  • Grounds of abatement of Award have been determined.
  • Arrangements for enforcement of foreign award have been made.
  • International commercial arbitration has been included.
  • Alternative remedies like Conciliation have encouraged.

Thus, an attempt has been made to design the new Act as a complete one. But it is still in its early stages. Later, if it shows practical defects there shall be possibilities of the amendment.




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