Unit 7:Arbitration and Conciliation Act 1996 The purpose of Arbitration Act is to provide quick redressal to commercial disputes

by private Arbitration.
Quick decision of any commercial dispute is necessary for smooth functioning of business and industry. Internationally, it is accepted that normally
commercial disputes should be solved through arbitration and not through normal judicial system.
2. Methods of ADR There are four methods of ADR negotiation mediation conciliation and arbitration
3. Matters not referable to arbitration: Certain matters which are not arbitrable are: Suits for divorce or restitution of conjugal rights Taxation Non-
payment of admitted liability Criminal matters.
4. Arbitration- Meaning An Arbitration is a dispute resolution process( mechanism) where the opposing parties select or appoint an individual called an
Arbitrator.
5. Objectives of arbitration i) To comprehensively cover international commercial arbitration and conciliation as also domestic arbitration and
conciliation. ii) To make provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration. iii) To
provide that the arbitral tribunal gives reasons for its arbitral award. iv) To ensure that the arbitral tribunal remains with in the limit of jurisdiction. v) To
minimize the supervisory role of courts in the arbitral process.
6. Contd vi) To permit an arbitral tribunal to use mediation, conciliation or other procedures during the arbitral proceedings to encourage
settlement of disputes. vii) To provide that every final arbitral award is enforced in the same manner as if it were a decree of the court. viii) To provide
that a settlement agreement reached by the parties as a result of conciliation proceedings will have the same status and effect as an arbitral award on
agreed terms on the substance of the dispute rendered by an arbitral tribunal.
7. Essence of arbitration Arbitration is a settlement of dispute by the decision of one or more persons called arbitrators. It is an arrangement for
investigation and settlement of a dispute between opposing parties by one or more unofficial persons chosen by the parties. In arbitration some dispute
is referred by the parties for settlement to a tribunal of their own choosing. The dispute is not submitted for decision to the ordinary courts but a
domestic tribunal. It is thus a method of settling the disputes in a quasi-judicial manner. The essence of arbitration is that the arbitrator decides the
case and his award is in the nature of a judgement. Arbitration is a speedy and inexpensive method of settling the disputes between the parties.
8. Essentials of Arbitration Agreement It must be in writing It must have all the essential elements of a valid contract The agreement must be to refer a
dispute, present or future, between the parties to arbitration An arbitration agreement may be in the form of an arbitration clause in a contract or in the
form of a separate agreement
9. Appointment of Arbitrator The parties can agree on a procedure for appointing the arbitrator or arbitrators. If they are unable to agree, each party will
appoint one arbitrator and the two appointed arbitrators will appoint the third arbitrator who will act as a presiding arbitrator [Section 11(3)].
10. Conduct of Arbitral Proceedings The Arbitral Tribunal should treat the parties equally and each party should be given full opportunity to present his
case [Section 18]. The Arbitral Tribunal is not bound by Code of Civil Procedure, 1908 or Indian Evidence Act, 1872 [Section 19(1)]. The parties to
arbitration are free to agree on the procedure to be followed by the Arbitral Tribunal. If the parties do not agree to the procedure, the procedure will be
as determined by the arbitral tribunal.
11. Arbitral Award Decision of Arbitral Tribunal is termed as 'Arbitral Award'. Arbitrator can decide the dispute ex aequo et bono (In justice and in good
faith) if both the parties expressly authorize him to do so [Section 28(2)]. The decision of Arbitral Tribunal will be by majority. The arbitral award shall be
in writing and signed by the members of the tribunal [Section 29].
12. Cost of Arbitration Cost of arbitration means reasonable cost relating to fees and expenses of arbitrators and witnesses, legal fees and expenses,
administration fees of the institution supervising the arbitration and other expenses in connection with arbitral proceedings. The tribunal can decide the
cost and share of each party [Section 31(8)].