Q. Feature of Arbitration and Conciliation Act, 1996. Discuss the main causes of its enactment. Scope and development of arbitration law
1. Arbitration is considered as an alternative dispute resolution procedure under which mediation and conciliation are also included. It is considered as International commercial arbitration where two parties from two different countries approach an international arbitrator either by their mutual consent or through an arbitration institution and dissolve their dispute accordingly. The alternative dispute resolution procedure has gained importance in the last few years due to the increase in commercial market dispute and also it is a speedy, cost-effective and efficient way of settlement. The United Nations have given due recognition to Model Law of International Commercial Arbitration and Conciliation rules given by the United Nations Commission on trade and law ( UNCITRAL). The model law and rules have played a significant role in the settlement of commercial disputes and provided rules to various other countries. These can be adapted and made according to their municipal laws as earlier there was no unified law related to trade and its need was felt with globalization which further gave rise to disputes related to it.
Based on UNCITRAL model law, India enacted the Arbitration and Conciliation Act, 1996 further amended in 2015 which deals with domestic and international commercial arbitration in India. The amended Act especially emphasizes minimizing the role of judiciary court in arbitration proceedings and further to consider every arbitration order or award as a decree as it is been considered in civil procedure code. The Act is categorized in two, Part I deals with significant provisions which deal with domestic and International commercial arbitration procedure to be conducted in India irrespective of nationality and Part II talks about enforcement of foreign arbitration award.
2. Main causes of enactment of Arbitration Act
• With a view to consolidate and amend the law relating to domestic arbitration, international commercial arbitration, enforcement of foreign arbitral awards and also to provide for a law relating to conciliation and related matters, a new law called Arbitration and Conciliation Act, 1996 was passed.
• The new Law is based on United Nations Commission on International Trade Law (UNCITRAL), model law on International Commercial Arbitration.
• The Arbitration and Conciliation Act, 1996 aims at streamlining the process of arbitration and facilitating conciliation in business matters.
• The Act recognizes the autonomy of parties in the conduct of arbitral proceedings by the arbitral tribunal and abolishes the scope of judicial review of the award and minimizes the supervisory role of Courts.
• A significant feature of the Act is the appointment of arbitrators by the Chief Justice of India or Chief Justice of High Court. The Chief Justice may either appoint the arbitrator himself or nominate a person or Institution to nominate the arbitrator.
• The autonomy of the arbitral tribunal has further been strengthened by empowering them to decide on jurisdiction and to consider objections regarding the existence or validity of the arbitration agreement.
3. Scope & development
Needless to say, arbitration has a long history in India. In ancient times, the mechanism called “Panchayat” acted as an arbitrator in several matters for a binding resolution .Modern arbitration law in India was created by the Bengal Regulations in 1772, during the British rule. The Bengal Regulations provided for reference by a court to arbitration, with the consent of the parties, in lawsuits for, inter-alia, accounts, partnership deeds, and breach of contract. Until 1996, the law governing arbitration in India consisted mainly of three statutes: (i) Arbitration (Protocol and Convention) Act,1937 (1937 Act) (ii) Indian Arbitration Act,1940 (1940 Act), and (iii) Foreign Awards (Recognition and Enforcement) Act, 1961 (1961 Act). The 1940 Act was the general law governing arbitration in India along the lines of the English Arbitration Act of 1934, and both the 1937 and the 1961 Acts were designed to enforce foreign arbitral awards. The 1961 Act implemented the New York Convention of 1958.
The main objectives/scope of the Act are as follows:
a. To ensure that rules are laid down for international as well as domestic arbitration and conciliation.
b. To ensure that arbitration proceedings are just, fair and effective.
c. To ensure that the arbitral tribunal gives reasons for its award given.
d. To ensure that the arbitral tribunal acts within its jurisdiction.
e. To permit the arbitral tribunal to use methods such as mediation and conciliation during the procedure of arbitration.
f. To minimize the supervisory role of courts.
g. To ensure that an arbitral award is enforceable as a decree of the court.
h. To ensure that the result of conciliation proceedings may be treated as arbitral awards on agreed terms.
i. To treat awards given in a foreign country to which any one of the two international conventions apply as followed by India as being a foreign arbitral award.
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