In India, the Arbitration and Conciliation Act, 1996 serves as the backbone of Alternative Dispute Resolution (ADR). In a time when court litigation can be time-consuming and costly, arbitration and conciliation offer a quicker, more efficient, and flexible approach to resolving disputes. For students, professionals, and businesses alike, understanding this Act is essential, particularly its structure and the section-wise framework it follows.
This article provides a comprehensive, section-wise overview of the Act while also highlighting the importance of using accurate and updated law books from trusted sources like the LexisNexis Book Store.
The Importance of Arbitration and Conciliation
Arbitration and conciliation are two important forms of ADR that help resolve civil and commercial disputes outside the court. The Arbitration and Conciliation Act, 1996 was enacted to consolidate and modernize the law relating to domestic arbitration, international commercial arbitration, enforcement of foreign awards, and conciliation.
This Act incorporates principles from the UNCITRAL Model Law on International Commercial Arbitration and ensures India’s alignment with international standards. It encourages dispute resolution that is faster, less adversarial, and more cost-effective than traditional litigation.
Structure of the Arbitration and Conciliation Act, 1996
The Act is divided into four major parts, along with several schedules. Each part focuses on a distinct area of arbitration or conciliation.
Part I – Domestic Arbitration and International Commercial Arbitration conducted in India (Sections 1–43)
Part II – Enforcement of Foreign Arbitral Awards under the New York and Geneva Conventions (Sections 44–60)
Part III – Conciliation (Sections 61–81)
Part IV – Miscellaneous provisions including repeal and savings clauses (Sections 82–86)
Section-Wise Overview
Section 1: Title, Extent, and Commencement
This section sets out the name of the Act and its applicability. It applies to the whole of India and, post-2019 amendments, includes Jammu and Kashmir.
Section 2: Definitions
The definitions clause is critical. It clarifies key terms such as arbitration, arbitral award, arbitral tribunal, international commercial arbitration, and more. Every reader must start here for a strong conceptual base.
Section 7: Arbitration Agreement
This section defines a valid arbitration agreement, which must be in writing and should refer to disputes that have arisen or may arise in the future.
Section 8: Reference to Arbitration
This provision obligates a judicial authority to refer parties to arbitration if there is an arbitration agreement and one of the parties makes such a request before submitting their first statement on the substance of the dispute.
Section 9: Interim Measures by Court
Parties can approach the court for interim measures of protection before, during, or even after the arbitration proceedings but before enforcement of the award.
Section 10 to 15: Composition of Arbitral Tribunal
These sections deal with the number of arbitrators, appointment process, grounds for challenge, termination of arbitrator’s mandate, and the procedure for substitution.
The appointment of arbitrators, as per Section 11, involves party autonomy but also grants courts the power to step in when there is a failure in the agreed process.
Section 16: Competence of Arbitral Tribunal to Rule on Jurisdiction
This section introduces the principle of kompetenz-kompetenz, allowing arbitral tribunals to decide on their own jurisdiction, including objections with respect to the existence or validity of the arbitration agreement.
Section 17: Interim Measures by Arbitral Tribunal
Post the 2015 amendment, orders passed by arbitral tribunals under Section 17 are now enforceable as orders of the court.
Sections 18 to 27: Conduct of Proceedings
These sections establish procedures for the arbitration process including equal treatment of parties, flexibility in procedure, submission of claims and defenses, hearings, evidence, expert reports, and court assistance in taking evidence.
Sections 28 to 33: Making of Arbitral Award
These provisions govern how the tribunal should decide the dispute, especially in terms of applicable law, decision-making, form and contents of the award, costs, and correction of errors.
Section 34: Setting Aside Arbitral Award
This section allows a party to file an application before the court to set aside an arbitral award under specific grounds such as incapacity of a party, invalidity of the agreement, procedural unfairness, or conflict with public policy. This is a critical provision and is often invoked in courts.
Section 36: Enforcement of Arbitral Awards
Arbitral awards become enforceable as a court decree after the time for challenging them under Section 34 has expired or after rejection of a challenge. This ensures finality and enforceability.
Part II: Enforcement of Foreign Awards (Sections 44–60)
This part applies to foreign awards under two international treaties—the New York Convention and the Geneva Convention. It lays down the conditions under which these awards are recognized and enforced in India.
Sections 44 to 52 deal with New York Convention awards, while Sections 53 to 60 deal with Geneva Convention awards.
Part III: Conciliation (Sections 61–81)
Conciliation is a voluntary, non-binding process aimed at reaching an amicable settlement. Unlike arbitration, a conciliator does not give a binding decision.
These sections outline the process for initiating conciliation, appointment of conciliators, their role, confidentiality, and the enforceability of the settlement agreement.
Part IV: Miscellaneous (Sections 82–86)
This part includes provisions that allow High Courts and Central Government to make rules, repeals the previous laws, and provides transitional arrangements.
Key Amendments to the Act
The Arbitration and Conciliation Act has been amended in 2015, 2019, and 2021 to improve efficiency and reduce court interference.
The 2015 Amendment introduced strict timelines, made Section 17 orders enforceable, and limited judicial intervention.
The 2019 Amendment established the Arbitration Council of India, encouraged institutional arbitration, and added confidentiality and immunity provisions.
The 2021 Amendment further allowed for a stay on enforcement of awards if the agreement or award is prima facie induced by fraud or corruption.
Why Use Trusted Law Books to Study the Act
While the bare act provides the exact statutory text, a deeper understanding requires reading high-quality law books that include:
- Section-wise commentary
- Case law references
- Comparative analysis with international arbitration laws
- Expert interpretations
Law books from reputed publishers like the LexisNexis Book Store are regularly updated to reflect the latest amendments and judicial decisions. They are an ideal resource for students, litigators, arbitrators, and judiciary aspirants.
Conclusion
The Arbitration and Conciliation Act, 1996 is a pivotal legislation for modern legal practice and commercial dispute resolution in India. Its structure offers a logical framework for resolving domestic and international disputes efficiently. For anyone looking to understand arbitration and conciliation in depth, reading the Act section by section is the best approach.
Investing in a well-annotated and updated edition from the LexisNexis Book Store is highly recommended for accurate and exam-ready preparation. As arbitration continues to evolve in India, legal professionals must stay updated on legislative reforms, key judgments, and best practices.
