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The Arbitration and Conciliation Act, 1996 |
The Arbitration and Conciliation Act, 1996 is a law to consolidate and update the law of domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards, in order to make it more responsive to the contemporary requirements of economic reforms. The Act also introduces for the first time conciliation as a method of Alternative Dispute Resolution.
The United Nations Commission on International Trade Law (UNCITRAL) adopted in 1985 the model law on international commercial arbitration. The General Assembly of the United Nations recommended that all countries should adopt the model law to harmonize the international commercial arbitration practices under a unified legal framework.
With these end in view the Arbitration and Conciliation Act, 1996 was enacted and it replaced the Arbitration Act, 1940.
Differences between the Arbitration and
Conciliation Act, 1996 and the Arbitration
Act, 1940
The most significant departure in the new Act from the old law is minimization of judicial intervention in arbitration. The new law attempts to ensure the autonomy of the arbitrator. When the arbitrator overrules the objection of any party taken on the ground of invalidity of arbitration agreement or lack of jurisdiction of the arbitrator or on the allegation of bias, the arbitration proceedings continue uninterrupted until an award is made. The aggrieved party can re agitate those grounds of challenge in his application for setting aside the award.
Under the new dispensation the arbitral award can be challenged in court only on very limited grounds of invalidity of the arbitration agreement, lack of jurisdiction of the arbitrator, absence of notice of appointment of arbitrator or non service of notice of arbitration proceedings, denial of opportunity to a party to present his case, decision on matters outside the scope of reference or submission etc.
Unless the agreement between the parties provides otherwise, according to Section 28 of the new Act, the arbitrators are required to give reasons for the award.
Previously the court was required to confirm the award before it could be enforced. Under Section 36 of the new Act the award is made directly executable as a decree of the court against the assets of the judgment debtor.
Where there is an arbitration agreement, according to Section 8 of the new Act, the court must send parties from suit or legal proceedings to arbitration for resolution of their disputes, provided the defendant seeking arbitration files application for that purpose before or with the written statement.
The powers of the arbitrator has been enhanced in many respects such as, the authority to decide on the substantive law for trying the dispute in the absence of any agreement between the parties, the power to apply to the court for compelling the attendance of witness in evidence, the authority of the arbitrator to award pre arbitration interest from the date of the cause of action etc.
In the new law there are provisions to meet the obstructive tactics of recalcitrant parties. Under Section 4 of the new Act, when a party knowingly keeps silent to an irregularity in arbitration and afterwards takes objection on that ground, he is taken to have already waived his right to object by his willful inaction or silence in the meantime.
The power to nominate arbitrator has been given to the concerned Chief Justice under Section 11 of the new Act failing agreement between the parties or in default of appointment by the parties.
The new law acknowledges the role of arbitral institutions. Though arbitral institutions are rendering useful service, the old Act surprisingly did not refer to these organizations.
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