BASIC FEATURES OF ARBITRATION & CONCILIATION ACT, 1996

Arbitration and Conciliation Act was initially issued as an ordinance on 16.1.96 and became an Act ultimately in 1996 August. It has been made effective from 25th January , 1996 1. Date of Applicability and effect on old Law of 1940 -S.85 of the new Act provides that : i) ii) iii) (iv) Arbitrations which commenced prior to 25.1.96 - They shall continue to be governed by the 1940 Act. However in (I) above if the parties so like , they may adopt new law of 1996 to govern the proceedings, For arbitrations starting after 25.1.96 , even if the contracts were earlier to this date, only the 1996 law shall be applicable, All rules and notifications issued under 1940 Act shall continue to be valid unless they are in any way repugnant to the 1996 law.

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Arbitration agreement : Under new law this term has a very broad description and wide cannotation. Thus not only a written and signed document , but also an exchange of telegram , telex or any other mode of telecommunication keeping record of it , shall also form an Arbitration Agreement. Even allegation of existence of agreement by one party and not denied by the other shall also be deemed as an agreement. Waiver of Rights : An important feature is that is a party knows tha the can derogate from this law or that he has certain rights under the agreement , and he does not claim those rights at the proper movement , he shall be deemed to have waived it. Role of Courts : Under the new law , role of court or any other judicial authority has been totally done away with , except with , except on a few places where also the court plays the role to assist arbitration and not to thwart it or to issue injuctions on it. How ever the Chief Justice has been included in the law to clear the stalemate in matters like selecting and appointing the arbitrator , if the parties fail. Presiding Arbitrator : The concept of umpire is not existing in new law. Instead

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there will be a Presiding Officer to be a appointed arbitrators , who will be only one among other arbitrators and will not have any additional powers or privileges. 6. Arbitration Tribunal : The parties are at liberty to provide for any number of arbitrators and the mode of their appointment so long as it is not an even number. If the parties do not give mode of appointment , then each party will appoint one and two arbitrators will appoint third arbitrator. Disqualification of Arbitrator : The law provides no qualification for arbitrator but it says if the appointee person is found to be not an inependent or impartial person, or does not posses qualification as given in the arbitration agreement , then the parties can challenge his authority. Challenging the Arbitrator : Challenge regarding the qualification , impartiality, scope of authority , jurisdiction etc. of arbitrator shall lie before the arbitrator Tribunal itself. On such an occasion either the Arbitrator may withdraw himself or take up the matter for his decision. If he holds that the challenge has no basis , he will proceed with the matter and give his award. Interim measures : The court as well as the Arbitral Tribunal has been given powers to issue interim measures in the interest of the arbitration ; if so approched by a party. Such orders can be issued before , during or even after the award has been made but before it becomes decree of the court. Time limit : Unlike the 1940 Act, this provides no time limit for the arbitral Tribunal to make the award nor for any extension of time limit of the same. However , if the arbitrator commits delay in the proceedings his mandate may be terminated. Arbitration procedure : The new law has one full chapter on the procedure for arbitrations. The parties may decide the procedure, failing this , the arbitrator will decide it and also review language , mode of process etc. Amending / Adding the claim : The law provides for the parties to amend /supplement their claim even after the arbitration has started , unless their agreement bars it. The provisions that apply to claim apply to counter claim too. Evidence : The law makes Indian Evidence Act as inapplicable to the proceedings , However , it gives full powers to the Arbitral Tribunal to decide on the admissibility , weightage relevance etc. of any evidence.

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Attendance of parties / persons : If the arbitral Tribunal feels that the attendance of a person is absolutely necessary , it may summon him and in case it is necessary , it may take assistance of the court in arranging attendance of the person. Such a measure is available even to the parties to the proceedings with the permissoin of the Tribunal. Default of party : The law provides that if the claimant does not submit his claim , the proceedings may be closed ; if the respondent does not respond , case may proceed and if during the proceedings , and party does not come up, then the Tribunal may decide the case exparte. Use of experts : Arbitrators have been given powers to appoint experts if they so feel in the interest of the proceedings. The report of experts will be only of advisory nature. The experts may have to appear in the proceedings for cross examination by the parties , if they so desire. Fees & costs : The arbitrator and parties are free to decide it among themselves , else the Arbitral Tribunal will decide it and also decide the proportion in which each party has to bear it. Advance fees : The tribunal may also demand the parties to deposit fees and cost with the Tribunal. Even supplementary demand can also be placed if the original sum is found inadequate. The Tribunal shall , in the end , give an account of the deposited sum , and return the balance ,if any , to the parties entitled. Reasoned Award : Unless the parties may provide it otherwise the award shall have to be given with reasons therefore. Compromise award : It is possible that even after starting the Arbitration , parties may like to avail of other measures of ADR. In such case if they arrive at any settlement , they will submit it to the Tribunal who will issue it as a settlement award. Award : The award is to be made by the majority. The contents of the award include date, place , signatures , interest , reasons etc. Interest in awards : The law gives full powers to the arbitrator to award interest from the date of cause of actioin till the date award was made. This is subject to any agreement to the countrary between the parties. The law further provides that if the award of Tribunal is silent about interest from the date of award to the date of decree , then it shall automatically mean as carrying an interest @ 18% p.a. for this period.

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Copy of award : Shall be given free of cost to each party by the arbitral Tribunal. Award as decree : The award need not be filed with the court to convert it into decree of the court. Under the new law , the award itself is as decree and can be enforced in the same manner as a decree of the court. Equitable decision : If the parties provide for , the Tribunal can act as amiable compositeur or act ex acqrio et bono , which means that depending upon the merits of the case , the arbitrator may decide even as per equity while acting in good faith. This is a power of far reaching consequences in finding acceptable solution to the disputes with the consent of the parties. Interim Award / Additional Award : Before the final award has been given , the arbitral tribunal may give an interim award on any of the matters in dispute. This award will finally be merged in the final award. Where in an award certain matters referred to the Arbitration have not appeared in the award and others have appeared ,the arbitrator may , if so agreed by the parties make an additional award , which will be a part of the main award. Continued Proceedings : Where the objections to the award raised by the parties are curable by further proceedings by the arbitral Tribunal then the court may if the parties so agree , refer the case back to the Tribunal to continue its proceedings to remove the defects , and return the award to the court within the time as prescribed. Challenge to Award : The parties can take recourse to the court against the award on the grounds only as mentioned in S 34. These grounds mainly relate to natural justice and procedural aspects and not to the merits of the award or amount being excessive or lesser, as awarded. There are certain cases where even the court can itself set aside the award without calling for any proof from the parties like if the award is against the public policy of India , or relates to any matters which are not arbitrable as per our law. Finality of Award : If a challenge u/s 34 is not raised or not up held , the award shall be final and binding on the parties and enforceable as a decree of the court. Appeals : No appeal lies under this law against any orders of the Arbitral Tribunal to any court , even under Act. 136 to the Supreme Court except on arbitrators on interim measures u/s 17. Court under new law : No court lower than the District Judge can deal with the matters

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failing under this law. Further where a matter has already come before any court which has jurisdiction every other court shall barred from entertaining any further case in that manner. 32. Date of Commencement of Arbitration : The arbitration shall be deemed to have commenced on the date when the request by one party asking for arbitration has been received by the other party. Law of limitation : This law has been specifically made applicable to arbitration proceedings in the same way as it applies to the court proceedings. The court hs been empowered to even waive off the condition of any time limit to raise the claim. , provided in the agreement if the justice so demands. Domestic & International Arbitration : Part I of this law applies to all Arbitrations held in India whether relating to domestic or international trade. Enforcement of foreign awards : This law replaces the earlier existing Protocol law year 1937 and Recognition and Enforcement of Foreign Award Act of 1961. Thus now all the foreign awards will be enforced in India only as per Part II of this act. Conciliation : This is totally a new provision in this law. The parties to dispute may now in place of court or arbitration take recourse to a much more informal., quicker , cheaper and private ADR method called Conciliation Complete confidentiality proceedings , information given or gathered during conciliation has been guaranteed under the law. There are quite a few shady areas in the new law ,but all the same , it deserves a fair and honest trial . It is hoped that it will give a fillip to our trade and commerce internationally.

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