Roll No. - 2119. ADR Final Draft

Arbitration and Conciliation Act, 1996: An Overview
Submitted by:
Divya Raunak (2119), B.A., LL.

LL.B. (Hons)
Submitted to:
Mr. Hrishikesh Manu
Faculty of ADR
This final draft is submitted in the fulfilment of the topic “Arbitration

Arbitration and
Conciliation Act, 1996: An Overview
Overview”
Chanakya National Law University, Patna
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1. ACKNOWLEDGMENT
I would like to thank my faculty Mr. Hrishikesh Manu, whose assignment of such a pertinent
topic made me work towards knowing the subject with a greater interest and enthusiasm and
moreover he guided me throughout the project.
I owe the present accomplishments of my project to my friends, who helped me immensely with
sources of research materials throughout the project and without whom I couldn’t have
completed it in the present way.
I would also like to extend my gratitude to my parents and all those unseen hands that helped me
out at every stage of my project.
THANK YOU!
NAME-DIVYA RAUNAK
ROLL NO. - 2119
6th Semester (B.A., LL.B.)
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DECLARATION
I hereby declare that the work reported in the B.A., LL.B. (Hons.) project report titled
“ARBITRATION AND CONCILIATION ACT: AN OVERVIEW” submitted at Chanakya
National Law University Patna, is an authentic record of my work carried under the mentorship
of Mr. Hrishikesh Manu. I have not submitted this work elsewhere for any other degree or
diploma. I am fully responsible for the contents of my project report.
DIVYA RAUNAK
Chanakya National Law University
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Contents
1. ACKNOWLEDGMENT ..................................................................... 2
2. INTRODUCTION ............................................................................... 5
3. RESEARCH METHODOLOGY ...................................................... 11
4. ARBITRATION AGREEMENT ...................................................... 13
5. ARBITRATORS ................................................................................ 17
6. ARBITRAL AWARD ....................................................................... 20
7. THE ARBITRATION AND CONCILIATION (AMENDMENT)
ACT, 2015 ............................................................................................... 22
8. THE ARBITRATION AND CONCILIATION (AMENDMENT)
BILL, 2019 .............................................................................................. 26
SALIENT FEATURES OF THE NEW BILL .................................. 26
9. CONCLUSION .................................................................................. 31
10. REFERENCES ................................................................................ 32
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2. INTRODUCTION
“Discourage Litigation persuade your neighbors to compromise, whenever you can point out
to them how the nominal winner is often a real loser, in fees, expenses, waste of time….”
-- Abraham Lincoln
The Arbitration and Conciliation Act, 1996 ("the Act") contains provisions to deal with domestic
and international arbitration, and defines the law for conducting conciliation proceedings. There
has been a manifold increase in the number of commercial disputes due to globalisation,
industrialisation and liberalisation. Arbitration has increasingly become a preferred option to
settle commercial disputes globally as well as in India. Therefore, it was the need of the hour to
reform the Act to achieve an effective and efficient arbitration system for commercial dispute
resolution.
Thus, with a view to make India a hub of institutional arbitration for both domestic as well as
international arbitration and to keep pace with international arbitration practices, certain
amendments are proposed in the Arbitration (Amendment) Bill, 2018. For this purpose, The
Arbitration and Conciliation (Amendment) Bill, 2018 was introduced in the Lok Sabha on
18th July, 2018 and was passed by the Lok Sabha on 10th August, 2018 and was pending in Rajya
Sabha. However, the Sixteenth Lok Sabha was dissolved and the Bill lapsed. Hence, the 2018
bill with minor changes was introduced as the Arbitration and Conciliation (Amendment) Bill,
2019 ("new bill") on 15th July, 2019 and was passed by Rajya Sabha on 18th July, 2019.
The main object of the amendments under the new bill is to strengthen institutional arbitration in
the country, by establishing an independent body for grading of arbitral institutions and
accreditation of arbitrators, etc. Though arbitral institutions have been working in India, they are
not preferred by the parties, as the parties prefer ad-hoc arbitration or arbitral institutions located
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abroad. A large number of these arbitration cases are conducted in countries such as Singapore,
the UK and France. The amendments under the new bill seek to minimise the need to approach
the Courts for appointment of arbitrators and make India a robust centre for institutional
arbitration both domestic and international.
HISTORICAL BACKGROUND
In India, arbitration was known even before the British rule but in the form of ‘Panch’ and
‘Panchayat’ which are now known as ‘Arbitration’ and ‘Arbitrators’ respectively. Panchayat
means a proceeding before a person who was considered to be the head of the village and he
used to adjudicate the dispute between the parties amicably and his decision was considered to
final and binding upon both the parties.
Later, the 1787 regulation provided the rules for referring a suit to arbitration if both the parties
agreed to it. But those rules were vague and did not provide a clear structure to the parties on
how to regulate the proceedings of arbitration. Then, a regulation was enforced in order to
promote only a certain nature of dispute to arbitration and also encouraged the people to act as
arbitrators under regulation XVI of 1793. Subsequently, several regulations were made in order
to promote arbitration. Finally the 1996 Act was enacted and it was repealed three times to
achieve its objects. The object of the 1996 act is to amend and to unite the domestic arbitration,
international commercial arbitration and also to enforce the foreign arbitral awards. There were
also amendments to this act in the years 2015 and 2019 in order to reduce the court’s
involvement in the arbitration proceedings.
Section 89 of the code of civil procedure also gives importance to arbitration. It states that the
parties can opt for the arbitration proceedings to settle a dispute, provided that both the parties
must agree to it. The award given by the arbitrator must be considered as a decree given by the
court and the parties must abide by the award given by the arbitrator
DEFINITION
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ARBITRATION can be defined as a method by which parties to a dispute get the same settled
through the intervention of a third person. Parties can also settle their disputes through a
permanent arbitral Institutions like, Indian Council of Arbitration, Chamber of Commerce, etc.
Halsbury has defined Arbitration as follows :- “Arbitration is the reference of dispute between
not less than two parties, for determination, after hearing both sides in a judicial manner, by a
person or persons other than a court of competent jurisdiction.
ADVANTAGES OF ARBITRATION OVER LITIGATION
1. Arbitration promises PRIVACY. In a civil court, the proceedings are held in public which
often embarrasses the parties.
2. Arbitration provides liberty to choose an arbitrator, who can be a specialist in the subject
matter of the dispute. The arbitrators may be experts and can resolve the dispute fairly and
expeditiously as they are well versed with the usages and practices prevailing in the trade or
industry.
3. The venue of arbitration can be a place convenient to both the parties. It need not be a formal
platform. A simple office cabin is enough. Likewise, the parties can choose a language of their
choice.
4. Even the rules governing arbitration proceedings can be defined mutually by both the parties.
For example, the parties may decide that there should not be any oral hearing.
5. A court case is a costly affair. The claimant has to pay for the advocates, court fees, process
fees and other incidental expenses. In arbitration, the expenses are lesser and many times the
parties themselves argue their cases. The arbitration involves few procedural steps and no court
fees.
6. Arbitration is faster and can be expedited. The court has to follow its own system and takes
abnormally longer time to dispense of the cases. It is a trite that millions of unresolved cases are
pending before the courts.
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7. A judicial settlement is a complicated procedure. A court has to follow the procedure laid
down in the Code of Civil Procedure, 1908 and the Rules of the Indian Evidence Act. In
arbitration, the procedure is simple and informal. An arbitrator has to follow the principles of
natural justice.
8. Section 34 of the Act provides very limited grounds upon which a court may set aside an
award. The Act has also given the status of a decree to the award by arbitrators. The award of the
arbitrators is final and generally no appeal lies from the award. While in a regular civil suit there
may be an appeal and appeal against appeal.
9. In arbitration, the dispute can be resolved without inflicting stress and emotional burdens on
the parties which is a common feature in court proceedings.
10. In a large number of cases, ‘Arbitration’ facilitates the maintenance of continued relationship
between the parties even after the settlement.
ARBITRATION PROCEDURE IN INDIA
The arbitration arises due to a dispute between the two parties. So, to start an arbitration
procedure, the contract or the agreement that is executed between the parties must have an
arbitration clause. The arbitration procedure will be carried on in the following manner:
 Arbitration clause:
A contract or agreement that was entered by the parties must contain an arbitration clause in
order to resolve the disputes through arbitration. An arbitration clause can be a separate
agreement or an agreement in an agreement. That means the arbitration clause may be in the
form of a separate agreement or in a contract. An arbitration clause says that when a dispute
arises between the parties, it must be resolved through the process of arbitration. The parties
shall also mention the seat and venue of the proceedings in the arbitration clause itself.
 Notice for commencement of arbitration:
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The provision for notice for commencement of arbitration was given in section 21 of the 1996
Act. When the dispute arises and the party has opted for arbitration, the aggrieved party will send
a notice to the other party for invoking the arbitration proceedings. It contains the names of the
parties and their representatives, a brief description of the dispute, a statement of relief sought
etc.
 Appointment of arbitrator:
After the respondent receives the notice from the applicant about commencement of arbitration,
both the parties will appoint an arbitrator in a manner that is described in the arbitration clause.
This provision is given under section 11 of the 1996 Act.
 Statement of claim and defence:

This provision is given under section 23 of the arbitration and conciliation Act, 1996. After the
commencement of arbitration and appointment of arbitrator by the parties, the claimant drafts a
statement of claims which contains all the documents which they think are relevant to the case
and also all the evidences proving their statements.
The respondent may also submit a counter claim or a statement of defense in support of his case
which shall be examined before the arbitral tribunal.
 Hearings and written proceedings:

The arbitral tribunal will hear both the parties and examine the evidences. The Tribunal will
decide whether the documents or the evidences produced are valid or not and proceed the case
further. This provision is given under section 24 of the 1996 Act.
 Arbitral award:
After hearing the parties and examining all the issues a final award will be given by the
arbitrator. This award shall be made in writing and shall be signed by all the members of the
Tribunal. This award shall be final and binding on both the parties. However, an appeal cannot
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be filed before the Arbitral tribunal but the parties can appeal against the arbitral award before
the court. Form and contents of the arbitral award are described under section 31 of the Act.
 Enforcement of arbitral award:

After the award is passed by the arbitral tribunal it has to be executed. The provision related to
the finality and enforcement of arbitral award is given under sections 35 and 36 respectively.
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3. RESEARCH METHODOLOGY
Doctrinal research through primary as well secondary sources.
Objective
i. To study the provisions of Arbitration and Conciliation Act, 1996.
ii. To discuss the overview of 1996 act, historical evolution of arbitration in India,
arbitration agreement, arbitrators and their composition, arbitral award and its
execution, various new amendments in the 1996 act.
Hypothesis: Whether 2019 amendment made in the act of 1996 paves a way to promote and
encourage arbitration as a means of alternative dispute resolution in India.
Sources of data collection.
The researcher will collect data from both primary as well as secondary sources
i. The primary sources :
a. Arbitration and Conciliation Act, 1996.
b. Various other statutes.
ii. The secondary sources are :
a. Magazine.
b. Books.
c. Journals.
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Limitation of the study

The researcher has limited time and resources to complete this project. The researcher
has a restricted access or rather no access to the library as the project has been made
from the comfort of home. The researcher is going through a global pandemic which
has affected his normal life in many ways. But still researcher with his hard work will
manage to take out the best possible work.
Scope of the study

After giving the meaning, definition and evolution of arbitration law in India, important
provisions of 1996 act like arbitration agreement; composition, appointment, remuneration and
removal of arbitrators; grant, execution and setting aide of arbitral award; latest amendments in
the 1996 act will be discussed.
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4. ARBITRATION AGREEMENT
Section 7(1) of the Act mentions that Arbitration Agreement means an agreement by the parties
to submit to arbitration all or certain disputes which have been arisen or which may arise
between them in respect of a defined legal relationship, whether contractual or not.
An arbitration agreement should be in writing and signed by both the parties. It need not be in a
particular form. However, the intention to refer to arbitration must be established. An arbitration
can be agreed by way of exchange of letter, telex, telegram fax, etc. The reference in a contract
to a document containing an arbitration clause constitutes an arbitration agreement if the contract
is in writing and the reference is such as to make that arbitration clause part of the contract.
An Arbitration Agreement is a contract and it must satisfy all the essential elements of a contract.
As per the Contract Act, 1872, an agreement between two parties which is enforceable by law is
a contract.
The Amendment Act of 2016, now recognizes communication through electronic means also.
PRECAUTION IN DRAFTING ARBITRATION AGREEMENT
Proper care should be taken while drafting an Arbitration Agreement. The act lays considerable
stress on party autonomy. It gives a presumption in most of the sections that unless a specific
mention is made under the Arbitration Agreement to various issues, the Arbitral tribunal would
have the power to decide on the same. Thus, except a few provisions which are mandatory in the
Act, almost all the provisions are subject to the agreement of the parties. The parties may
determine the number of arbitrators, the procedure for appointing arbitrators, rules of procedures,
the venue of Arbitration, the language of the Arbitration proceedings, procedure of challenging
an Arbitrator etc.
For example, if the place of Arbitration is not determined by the parties, then the Arbitral
Tribunal may decide upon the same. So is the case with the language and other procedures.
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It is advisable to obtain legal advise at the initial stage of drafting an agreement to avoid any
differences later on.
The Arbitration Agreement should precisely mention the scope and the subject matter of the
reference. It should preferably specify the venue and the language of the proceedings and the
mode of services of notice or other communications.
In the case of KK Modi vs KN Modi1, the Supreme Court pointed out that:
1. The arbitration agreement must contemplate that the decision of the tribunal will be binding on
the parties to the agreement.
2. The jurisdiction of the tribunal to decide the rights of the parties must derive from their
consent, or from an order of the Court or from a statute, the terms of which make it clear that the
process is to be an arbitration.
3. The agreement must contemplate that substantive rights of the parties will be determined by
the agreed tribunal.
4. The tribunal will determine the rights of the parties in an impartial and judicial manner with
the tribunal being fair and equal to both sides.
5. The agreement of the parties to refer their disputes to the decision of the tribunal must be
intended to be enforceable in law.
6. The agreement must contemplate that the tribunal will make a decision upon a dispute which
is already formulated at the time when a reference is made to the tribunal.
Other important factors include whether the agreement contemplates that that tribunal will
receive evidence from both sides and give the parties opportunity to put forth their issues and
hear their contentions; whether the wording of the agreement is consistent with the view that the
process was intended to be an arbitration; and whether the agreement requires the tribunal to
decide the dispute according to law.
1
AIR 1998 SC1297
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In the case of Jammu and Kashmir State Forest Corporation v. Abdul Karim Wani & Ors 2,
this Court considered the agreement as an agreement of reference to arbitration. It has
emphasised that (1) the agreement was in writing; (2) It was a contract at present time to refer the
dispute arising out of the present contract; and (3) There was a valid agreement to refer the
dispute to arbitration of the Managing Director, Jammu and Kashmir State Forest Corporation.
The Court observed that endeavor should always be made to find out the intention of the parties,
and that intention has to be found out by reading the terms broadly and clearly without being
circumscribed.
In the case Sukanya Holding Pvt. Ltd. Vs Jayesh H Pandya3, the Supreme interpreted ‘a
matter’ used in section 8(1) as that it indicates that the entire subject matter of the suit should be
subject to arbitration agreement. It would be difficult to give an interpretation to Section 8 under
which occurred bifurcation of the cause of action i.e. the subject matter of the arbitration
agreement between court and arbitral tribunal. It also does not permit bifurcation of the suit
between the parties who are parties to the arbitration agreement and other who are not parties to
it.
DISPUTES EXCLUDED FROM ARBITRATION
Generally speaking all disputes of a civil nature can be referred to Arbitration e.g. breach of a
contract, question of marriage right to hold premises etc. However, certain disputes where the
law has given jurisdiction to determine certain matters to specified tribunal only, cannot be
referred to arbitration.
An illustrative list of such matters is given below:-
• Testamentary matters involving questions about validity of a will.
• Disputes relating to appointment of a guardian.
• Disputes pertaining to criminal proceedings
• Disputes relating to Charitable Trusts
2
(1989) 2 SCC 701 para 24
3
AIR 2003 SC 2252
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• Winding up of a company
• Matters of divorce or restitution of conjugal rights
• Lunacy proceedings
• Disputes arising from an illegal contract
• Insolvency matters, such as adjudication of a person as an insolvent.
• matters falling within the preview of the M. R. T. P. Act.
WHAT DISPUTES CAN BE REFERRED TO ARBITRATION
Generally speaking, all disputes of a civil nature or quasi-civil nature, which can be decided by a
civil court, can be referred to arbitration. Thus disputes relating to property, right to hold an
office, question of marriage or maintenance and finance, compensation for non-fulfillment of a
clause in a contract, disputes in a partnership etc. can be referred to arbitration. Even the disputes
between an insolvent and his creditors can be referred to arbitration by the official receiver or the
official assignee with the leave of the court. Thus disputes arising in respect of defined legal
relationship, whether contractual or not, can be referred to Arbitration.
It is necessary that there is a defined legal relationship between persons, companies, association
of persons, body of individuals etc. created or permitted by law, before a reference can be made
to arbitration.
However, the relationship may not be a contractual one. A dispute may arise out of quasi
contracts e.g. the division of family property. The same may be validly referred to Arbitration.
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5. ARBITRATORS
APPOINTMENT OF ARBITRATORS
Though any person can be appointed as an arbitrator, generally impartial and independent
persons in whom parties repose confidence are to be selected and appointed as arbitrators.
Generally, Chartered Accountants, Company Secretaries, engineers, retired judges and other
professionals are preferred. Parties are free to determine the number of arbitrators, provided that
such number shall not be an even number. If the Arbitration Agreement is silent in this respect,
the arbitral tribunal shall consist of a sole arbitrator. In cases, where three arbitrators are to be
appointed, each party will appoint one arbitrator and the two appointed arbitrators will jointly
appoint a third arbitrator, who will be the presiding arbitrator. In certain cases of failure to
appoint the arbitrators, the Chief Justice of the High Court or his designate has been given power
to appoint the arbitrator.
DUTIES AND RESPONSIBILITIES OF ARBITRATORS
The Arbitrator should give the parties to the reference a fair opportunity to remain present before
the Arbitral Tribunal either in person or through their authorised representative and to produce
their evidence before it to their respective claims.
An Arbitrator must not receive information from one side which is not disclosed to the other,
whether the information is given orally or in the shape of document.
An Arbitrator must be disinterested and unbiased. He must not have any financial or other
interest in any of the parties to the dispute or in the outcome of the award.
Arbitration is a private tribunal for redressal of disputes. The public, therefore, may not be
admitted if admission is objected to by either party to the reference or the arbitral tribunal.
However, various persons who may appear are the parties themselves, all persons claiming
through them respectively, and parties interested for, or attending on behalf of, the parties to the
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reference. Parties are entitled to have persons to attend to assist them in presenting their case
before the arbitral tribunal.
DISCLOSURE BY ARBITRATOR
Section 12 provides that the arbitrator before accepting his appointment shall disclose in writing
to the parties such matters as are likely to give rise to justifiable doubts about his independence
or impartiality. The same holds well throughout the arbitral proceedings and any time after his
appointment such situations arise, he must disclose the same in writing to the parties.
The Amendment Act of 2016, has inserted Sixth Schedule to the Act which provides a format of
disclosure to be given by Arbitrator.
JURISDICTION OF ARBITRATORS
The Act of 1996 empowers the arbitrators to rule on their own jurisdiction including ruling on
any objections with respect to the existence or validity of the arbitration agreement and for that
purpose
a) An arbitration clause which forms part of a contract will be treated as an agreement

independent of the other terms of the contract, and
b) A decision by the arbitral tribunal that the contract is null and void will not entail ipso jure the
invalidity of the arbitration clause.
REMOVAL OF AN ARBITRATOR
The appointment of an arbitrator may be challenged only if
a)Circumstances exist that give rise to justifiable doubts as to his independence or impartiality or
b)he does not possess the qualification agreed to by the parties.
An arbitrator has to disclose his interest in writing as discussed above.
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The Act provides that a party may challenge an arbitrator appointed by him also. But this can be
done only for those reasons of which he becomes aware after the appointment has been made.
The Amendment Act of 2016, has inserted the Fifth Schedule to the Act which contains about 34
circumstances which may give rise to justifiable doubts as to the independence or impartiality of
the Arbitrator.
REMUNERATION OF ARBITRATORS
As per normal practice, the remuneration of arbitrators is decided in the first meeting after their
appointment. The remuneration will vary from case to case and there is no uniform practice in
this respect. Many institutions like Indian Council of Arbitration has fixed schedule of fees
payable to arbitrators appointed from the panel maintained by them.
Under Section 31, unless otherwise agreed by the parties, the cost of an Arbitrator shall be fixed
by the Arbitral Tribunal. The tribunal shall specify:
a) The party entitled to costs;

b) The party who shall pay the costs;
c) The amount of costs or method of determining that amount; and
d) The manner in which the costs shall be paid.
The Amendment Act of 2016, has introduced Section 31-A titled “Regime of Costs”, which
elaborately deals with costs which may be awarded by the Arbitrator.
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6. ARBITRAL AWARD
The award shall be in writing and the reasons on the basis of which award was passed, shall be
recorded unless the parties agree otherwise. The award shall be drawn on a proper stamp paper.
It shall be dated and signed by the arbitrators. The sum awarded may include the interest which
the claimant is entitled. It shall also provide for the costs and it shall mention the party liable to
pay the costs. A signed copy of the award shall be delivered to each party. The Act also
empowers the arbitrator to make an interim arbitral award on any matter with respect to which he
may make a final award. Newly inserted Section 29A provides time-limit for arbitral award. The
arbitrator is now obliged to make arbitral award within twelve months from the date he enters
upon the reference. Only in certain specified cases, this time period may be extended. Even the
fees of the arbitrator may be reduced if the delay is on his part. However, under section 14, an
arbitrator’s mandate can be terminated if he fails to act without undue delay. The parties are free
to settle the matter any time during the arbitration proceedings. The arbitrator, if satisfied about
the bonafideness of the settlement, has to make the award in term of the settlement arrived at by
the parties.
APPLICATION FOR SETTING ASIDE AN AWARD
The party dissatisfied with the award may within three months of receiving a copy of the award,
apply to the competent Court for setting aside the order on the grounds mentioned in Section 34
of the Act. The Court cannot sit in appeal against the award and cannot interfere with the award
on merits by reappreciating the evidence. Appeal lies against the order passed by the court under
Section 34 of the Act. The grounds for setting aside the awards can be summed up as follows:
a) When the party was under some incapacity.

b) When the arbitration agreement is not valid.
c) When the party was unable to present the case and was not given proper notice.
d) When the award is beyond the terms of reference.
e) When the award is in conflict with the public policy.
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The Amendment Act of 2016 has defined Public Policy of India in Explanation 1 to Section 34
to avoid any confusion in interpretation of the same.
ENFORCEMENT OF AWARD
The arbitral award unless it is set aside by the Court is final and binding on the parties and it can
be enforced under the Civil Procedure Code in the same manner, as if it is decree of the Court. It
is not necessary to file the award in the Court and obtain a decree as was necessary under the old
Act i.e. Arbitration Act, 1940.
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7. THE ARBITRATION AND CONCILIATION (AMENDMENT) ACT, 2015
From Court-: After the judgment of the Supreme Court in Bharat Aluminium and Co. v. Kaiser
Aluminium and Co4. ("BALCO") the Indian courts had no jurisdiction to intervene in
arbitrations which were seated outside India. Post BALCO, if the assets of a party was located in
India, and there was a likelihood of the dissipation of the assets, the other party could not
approach the Indian courts for interim orders. Since the interim orders made by arbitral tribunals
outside India could not be enforced in India, it created major hurdles for parties who had chosen
to arbitrate outside India. This anomaly has been addressed in the Amendment Act with the
insertion of Section 2(2), which makes the provision for interim relief(s) also applicable in cases
where the place of arbitration is outside India, subject to an agreement to the contrary. However,
there are few concerns. This option is only applicable to parties to an "international commercial
arbitration" with a seat outside India. This means that the protection will not be available to two
Indian parties who choose to arbitrate outside India.
The Amendment Act provides that in case the court passes an interim order, arbitration
proceedings must commence within a period of 90 (ninety) days from the date of such order or
within such time as prescribed by the court. This amendment was brought in to ensure that the
practice of the parties of misusing this provision, by strategically obtaining exparte or ad interim
orders and not proceeding with arbitration, is checked.
 Amendment to Section 7: An Arbitration agreement contained in the form of communication

through electronic means shall also be treated as an arbitration agreement in writing
 Amendment to Section 8: Unless the judicial authority finds that prima facie no valid arbitration
agreement exists, said judicial authority shall refer to the parties to the Arbitration on the action
brought by party to arbitration agreement or person claiming through or under him. If the party
applying for reference to arbitration has not having original or certified copy of arbitration
4
(2012) 9 SCC 552
22
agreement between them but the said copy is retained by other party then such party can make
application to the Court to call upon other party to produce original or certified true of the
arbitration agreement before that court.
 Amendment to Section 9: Where the Court passes an order for any interim measure under sub-
section (1) of Section 9 before the commencement of arbitral proceedings, the arbitral
proceedings shall be commenced within a period of ninety days from the date of such order. It
further provides that once the arbitral tribunal is constituted, the Court shall not entertain an
application for interim measure unless it finds circumstances that may render the remedy
provided under section 17 inefficacious
 Amendment to Section 11: Appointment of arbitrator shall now be made by the Supreme Court
or the High Court, as the case may be, instead of the Chief Justice of India or the Chief Justice of
the High Court. An application for appointment of arbitrator(s) shall be disposed of as
expeditiously as possible and an endeavor shall be made to dispose of the matter within a period
of sixty days from the date of service of notice on the opposite party. The High Court is
empowered to frame rules for the purpose of determination of fees of the arbitral tribunal and the
manner of such payment. The High Court while framing rules shall take into account the rates of
fee specified in the Fourth Schedule to the Act.
 Amendment to Section 12: Ensuring neutrality of arbitrators, when a person is approached in

connection with the possible appointment as arbitrator, he is required to disclose in the writing
the existence of any relationship or interest of any kind which is likely to give rise to justifiable
doubts as to his neutrality. He is also required to disclose any circumstances which are likely to
affect his ability to devote sufficient time to the arbitration and complete the arbitration within
the specified period. A person having relationships as specified in the Seventh Schedule shall be
ineligible to be appointed as an arbitrator; For example: The arbitrator is an employee,
consultant, advisor or has any other past or present business relationship with a party to the
dispute; or the arbitrator is a manager, director or part of the management, or has a similar
controlling influence over the parties to the dispute.
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 Amendment to Section 14: On termination of mandate of an arbitrator, he is to be substituted

by another arbitrator.
 Amendment to Section 17: The arbitral tribunal shall have power to grant all kinds of interim
measures which the Court is empowered to grant under section 9 of the Act. Such interim
measures can be granted by the arbitral tribunal during the arbitral proceedings or at any time
after making the arbitral award, but before it is enforced under section 36 of the Act. Any order
issued by the arbitral tribunal for grant of interim measures shall be deemed to be an order of the
Court for all purposes and shall be enforceable under the Code of Civil Procedure, 1908 in the
same manner as if it were an order of the Court.
 Amendment to Section 23: The respondent, in support of his case, may also submit a
counterclaim or a set-off, if such counterclaim or set-off falls within the scope of the arbitration
agreement.
 Amendment to Section 24: The Arbitral tribunal shall hold oral hearing for the presentation of
evidence or oral arguments on the day-to-day basis and shall not grant any adjournments without
any sufficient cause.
 Amendment to Section 25: The right of the respondent to file the statement of defence has been
forfeited, if the respondent fails to communicate such statement in accordance with the time line
agreed by the parties or Arbitral Tribunal (section 23(1) of the Act) without reasonable cause.
 Amendment to Section 28: The Arbitral tribunal while deciding and making an award, shall
take into account the terms of the contract and trade usages applicable to the transaction.
 Insertion of a new provision- Section 29A: The Tribunal shall ensure speedy completion of
Arbitration proceedings and pass the award within a period of twelve months from the date when
the arbitral tribunal enters upon the reference. However, the parties may extend such period for a
further period not exceeding six months. If the award is made within a period of six months, the
arbitral tribunal shall be entitled to receive additional fees as the parties agree. If the award is not
made within specified period or extended period, the mandate of the arbitrator shall terminate
unless the time is extended by the court.
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 Insertion of a new provision- Section 29B: This Section provides for a fast track procedure for
conducting arbitral proceedings, in cases where the parties mutually agree for such procedure. In
such cases, the arbitral tribunal consisting of a sole arbitrator shall decide the dispute on the basis
of written pleadings, documents and written submission and shall not hold oral hearing. The
award is to be made within a period of six months from the date the arbitral tribunal enters upon
the reference.
 Amendments to Section 31: A sum directed to be paid by an arbitral award shall, unless the
award otherwise directs, carry interest at the rate of two per cent higher than the current rate of
interest prevalent on the date of award, and shall be payable from the date of award to the date of
payment.
 Explanation 1 to the term ‘public policy of India’ substituted in Section 34(2)(b): Arbitral
award shall be treated as an award in conflict with the public policy of India only where making
of the award was induced or affected by fraud or corruption or was in violation of provisions of
confidentiality (section 75) or admissibility of evidence of conciliation proceedings in other
proceedings (section 81); or is in contravention with the fundamental policy of Indian law; or it
is in conflict with the most basic notions of morality or justice.
 Explanation 2 inserted in Section 34(2)(b): The test as to whether the award is in contravention
with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
 Insertion of new sub section (2A) in Section 34: This provision gives an additional ground of
patent illegality to challenge an arbitral award arising out of arbitrations other than international
commercial arbitrations.
 Insertion of new sub section (5) in Section 34: An application for setting aside of award under
this section is to be filed after issuing prior notice to the other party.
 Insertion of new sub section (6) in Section 34: A period of one year has been prescribed for
disposal of an application for setting aside an arbitral award.
 Amendments to Section 36: Mere filing of application for setting aside an arbitral award would
not render that award unenforceable unless the court grants an order of stay on the operation of
the said award on a separate application made for that purpose.
25
8. THE ARBITRATION AND CONCILIATION (AMENDMENT) BILL, 2019
The Arbitration and Conciliation (Amendment) Bill, 2018 was introduced in the Lok Sabha on
18th July, 2018 and was passed by the Lok Sabha on 10th August, 2018 and was pending in Rajya
Sabha. The main object of the amendments under the new bill is to strengthen institutional
arbitration in the country, by establishing an independent body for grading of arbitral institutions
and accreditation of arbitrators, etc. Though arbitral institutions have been working in India, they
are not preferred by the parties, as the parties prefer ad-hoc arbitration or arbitral institutions
located abroad. A large number of these arbitration cases are conducted in countries such as
Singapore, the UK and France. The amendments under the new bill seek to minimise the need to
approach the Courts for appointment of arbitrators and make India a robust centre for
institutional arbitration both domestic and international.
SALIENT FEATURES OF THE NEW BILL
 AMENDMENT TO SECTION 11 (APPOINTMENT OF ARBITRATORS)
The amendment seeks to change the present system of appointment of arbitrators by the Supreme
Court or High Court, to a system where the arbitrators shall be appointed by the "arbitral
institutions" designated by the Supreme Court or High Court;
Under the new bill, the appointment of an arbitrator shall be made on an application by the party,
to the arbitral institution designated by the Supreme Court in case of international commercial
arbitration, or by the High Court in case of arbitrations other than international commercial
arbitrations, as the case may be. The Supreme Court and High Court shall have the power to
designate arbitral institutions, which have been graded by the Arbitration Council of India.
However, in the case of those High Courts within whose jurisdiction graded arbitral institution
are not available, then, the Chief Justice of the concerned High Court may maintain a panel of
arbitrators for discharging the functions and duties of an arbitral institution.
26
An application made by a party for appointment of an arbitrator shall be disposed of by the

arbitral institution within a period of thirty days from the date of service of the notice to the other
party, thereby disposing of the applications in an expeditious manner.
The amendment eliminates the need to file a formal application for appointment of an arbitrator
before the court, thus speeding up the process by reducing the burden from the court and
bringing down the inordinate delays occurring in dispute resolution.
 AMENDMENT TO SECTION 23 (STATEMENTS OF CLAIM AND DEFENCE)
Under the amendment the statement of claim and statement of defence shall be completed within
a period of six months from the date the appointment of an arbitrator, thus creating a strict
timeline for completion of pleadings for the purpose of section 29A, for ensuring a speedy
disposal of arbitral proceedings.
 AMENDMENT TO SECTION 29A (TIME-LIMIT FOR ARBITRAL AWARD)
The award in matters other than international commercial arbitrations shall be made by the
arbitral tribunal within a period of twelve months from the date of completion of pleadings.
However, the awards in the matter of international commercial arbitrations shall be made as
expeditiously as possible and endeavour may be made to dispose of the matter within a period of
twelve months from the date of completion of pleadings.
The amendment seeks to change the commencement of the timeline from the date of
the 'constitution of the tribunal' to the date of 'completion of pleadings'. The completion of
pleadings under the amendment shall mean filing of statement of claim and statement of defence.
Further the amendment seeks to relax the time limit for completion of the international
commercial arbitration, because of the perceived difficulty of working within the time frame of
twelve months in many international commercial arbitrations.
27
 INTRODUCTION OF SECTION 42A (CONFIDENTIALITY OF INFORMATION)
Under the amendment the arbitrator, the arbitral institution and the parties to the arbitration
agreement shall maintain confidentiality of all arbitral proceedings except where its disclosure is
necessary for the purpose of implementation and enforcement of the award. The amendment
mandates that the arbitrator, arbitral institution and the parties shall keep confidentiality of all
arbitration proceedings. It binds the parties to an arbitration agreement to very broad
confidentiality obligations with a single exception.
 INTRODUCTION OF SECTION 42B (PROTECTION OF ACTION TAKEN IN

GOOD FAITH)
The amendment seeks to protect the arbitrator/s from any suit or other legal proceedings for any
action or omission done in good faith in the course of arbitration proceedings. The immunity to
the arbitrators will ensure independence of the arbitrators while conducting the arbitral
proceedings without any fear of proceedings ensuing therefrom.
 INTRODUCTION OF PART IA (ESTABLISHMENT OF ARBITRATION COUNCIL

OF INDIA "ACI")
The amendment seeks for the establishment and incorporation of an independent body namely,
the Arbitration Council of India for the purpose of promoting and encouraging arbitration,
mediation, conciliation or other alternative dispute resolution mechanism and for that purpose to
frame policy and guidelines for the establishment, operation and maintenance of uniform
professional standards in respect of all matters relating to arbitration.
The functions of Arbitration Council of India include: (i) framing policies, governing the grading
and reviewing the grading of arbitral institutions and arbitrators; (ii) providing accreditation of
arbitrators; (iii) holding training, workshops and courses in the area of arbitration in
collaboration with law firms, law universities and arbitral institutes; (iv) make recommendations
to the Central Government on various measures to be adopted to for easy resolution of
commercial disputes; (v) establishing and maintaining depository of arbitral awards made in
28
India; (vi) making recommendations regarding personnel, training and infrastructure of arbitral
institutions; and (vii) such other functions as may be decided by the Central Government.
The Arbitration Council of India shall work towards promoting and encouraging arbitration,
mediation, conciliation or other alternative dispute resolution mechanism and for that purpose to
frame policy and guidelines for the establishment, operation and maintenance of uniform
professional standards in respect of all matters relating to arbitration.
 INTRODUCTION OF SECTION 87 (EFFECT OF ARBITRAL AND RELATED

COURT PROCEEDINGS COMMENCED PRIOR TO 23 RD OCTOBER, 2015)
Unless the parties otherwise agree, the amendments made to the Act by the Arbitration and
Conciliation (Amendment) Act, 2015 shall (a) not apply to the (i) arbitral proceedings
commenced before the commencement of the Arbitration and Conciliation (Amendment) Act,
2015; (ii) court proceedings arising out of or in relation to such arbitral proceedings irrespective
of whether such court proceedings are commenced prior to or after the commencement of the
Arbitration and Conciliation (Amendment) Act, 2015;
Uncertainty persisted about whether the Amendment Act applied to existing arbitrations and
arbitration related court proceedings that commenced before the Amendment Act came into
effect. The amendment clarifies that unless parties agree otherwise, the amendments made to the
Act by the Arbitration and Conciliation (Amendment) Act, 2015 are applicable only to the
arbitral proceedings which commenced on or after 23rd October, 2015 and to such court
proceedings which emanate from such arbitral proceedings.
 INTRODUCTION OF EIGHTH SCHEDULE (QUALIFICATIONS NAD

EXPERIENCE OF ARBITRATOR)
The schedule under the new bill prescribes the qualifications and experience required for
appointment of a person as an arbitrator which include (i) is an advocate within the meaning of
the Advocates Act, 1961 having ten years of practice experience as an advocate, or (ii) is a
chartered accountant within the meaning of the Chartered Accountants Act, 1949 having ten
years of practice experience as a chartered accountant; or (iii) is a cost accountant within the
29
meaning of the Cost and Works Accountants Act, 1959 having ten years of practice experience
as a cost accountant; or (iv) is a company secretary within the meaning of the Company
Secretaries Act, 1980 having ten years of practice experience as a company secretary; etc.
A person shall not be qualified to be an arbitrator unless he has the qualification and experience
as laid down under the schedule. The nature of minimum qualifications prescribed effectively
implies that professionals other than that which are laid down under the schedule will not be able
to act as arbitrators in an India seated arbitration. Therefore, the qualifications, experience and
the general norms for appointment of an arbitrator will impose a certain degree of limitation on
the parties to choose an arbitrator.
30
9. CONCLUSION
The Arbitration and Conciliation Act, 1996 seeks to achieve expeditious and effective solution
for redressal of disputes. The new law is expected to motivate the parties to settle their disputes
without intervention of the court. It will also instill confidence in the international mercantile
community. The legal fraternity can look forward to a considerably heightened level of
Arbitration and Conciliation activities in the country.
The 2015 Amendment is a significant step forward in overcoming the systemic malaise of
delays, high costs and ineffective resolution of disputes, which had plagued the arbitration
regime in India. Most of these amendments are welcome, since many would agree that the earlier
arbitration regime was a failure, and did not result in cultivating the culture of arbitration in
India. These amendments will also have to withstand the scrutiny of Indian courts that have often
been criticised for their interventionist approach. The recent judgments of Indian courts which
have had an occasion to interpret the provisions of the Amendment Act, is an early indication
that these amendments will be subject to further judicial scrutiny. It will be interesting to see
how the courts interpret the new amendments in future. Further amendments are needed to iron
out the flaws in the Amendment Act to make it more effective.
The 2019 amendment seeks to aim to promote and encourage arbitration, mediation, conciliation
and other alternative dispute resolution mechanism by establishment of the Arbitration Council
of India which will maintain uniform professional standards in respect of all matters relating to
arbitration by laying down the arbitral norms and accreditation of the arbitrators. Further, the
amendment seeks to provide a speedy disposal of the arbitral proceedings, by laying down a
strict time line for completion of the domestic arbitral proceedings and making arbitration
process more approachable and cost effective, with minimum court intervention. Although the
amendment seeks for a speedy disposal of the arbitral proceedings, unfortunately nothing has
been done qua enforcement of arbitral awards under the new bill thus to an extent frustrating the
object of the amendment, in as much as though the arbitral proceedings may be concluded with
great speed, the enforcement of an arbitral award can take years
31
10. REFERENCES
BOOKS
 O.P. Malhotra and Indu Malhotra, The Law and Practice of Arbitration and
Conciliation(2nd Edn, 2006)
 Dr. N.V. Paranjape, Law Relating to Arbitration and conciliation in India
WEBSITES REFERRED
 singhania.in/blog/highlights-of-amendment-to-the-arbitration-and-conciliation-act-1996-
via-arbitration-ordinance-2015
 prsindia.org/billtrack/the-arbitration-and-conciliation-amendment-bill-2015
 mondaq.com/india/arbitration-dispute-resolution/494184/critical-analysis-of-the-
arbitration-and-conciliation-amendment-act-2015
 blog.ipleaders.in/arbitration-conciliation-act-1996-overview/
 wirc-icai.org/images/material/OVERVIEW-LAW-ARBITRATION-PA
 latestlaws.com/arbitration/all-about-arbitration-and-conciliation-act-1996
 mondaq.com/india/court-procedure/845782/salient-features-of-the-arbitration-and-
conciliation-amendment-bill-2019
32

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Arbitration and Conciliation Act, 1996: An Overview

Arbitration and Conciliation Act, 1996: An Overview

Divya Raunak (2119), B.A., LL.

Mr. Hrishikesh Manu

This final draft is submitted in the fulfilment of the topic “Arbitration

Chanakya National Law University, Patna

ROLL NO. - 2119

6th Semester (B.A., LL.B.)

Chanakya National Law University

3. RESEARCH METHODOLOGY ...................................................... 11

4. ARBITRATION AGREEMENT ...................................................... 13

6. ARBITRAL AWARD ....................................................................... 20

7. THE ARBITRATION AND CONCILIATION (AMENDMENT)

ACT, 2015 ............................................................................................... 22

8. THE ARBITRATION AND CONCILIATION (AMENDMENT)

BILL, 2019 .............................................................................................. 26

SALIENT FEATURES OF THE NEW BILL .................................. 26

10. REFERENCES ................................................................................ 32

ADVANTAGES OF ARBITRATION OVER LITIGATION

ARBITRATION PROCEDURE IN INDIA

 Notice for commencement of arbitration:

 Statement of claim and defence:

 Hearings and written proceedings:

 Enforcement of arbitral award:

Doctrinal research through primary as well secondary sources.

Sources of data collection.

Limitation of the study

Scope of the study

PRECAUTION IN DRAFTING ARBITRATION AGREEMENT

DISPUTES EXCLUDED FROM ARBITRATION

An illustrative list of such matters is given below:-

• Testamentary matters involving questions about validity of a will.

• Disputes relating to appointment of a guardian.

• Disputes pertaining to criminal proceedings

• Disputes relating to Charitable Trusts

• Matters of divorce or restitution of conjugal rights

• Disputes arising from an illegal contract

• Insolvency matters, such as adjudication of a person as an insolvent.

• matters falling within the preview of the M. R. T. P. Act.

WHAT DISPUTES CAN BE REFERRED TO ARBITRATION

DUTIES AND RESPONSIBILITIES OF ARBITRATORS

a) An arbitration clause which forms part of a contract will be treated as an agreement

The appointment of an arbitrator may be challenged only if

b)he does not possess the qualification agreed to by the parties.

An arbitrator has to disclose his interest in writing as discussed above.

a) The party entitled to costs;

APPLICATION FOR SETTING ASIDE AN AWARD

a) When the party was under some incapacity.

7. THE ARBITRATION AND CONCILIATION (AMENDMENT) ACT, 2015

 Amendment to Section 7: An Arbitration agreement contained in the form of communication

 Amendment to Section 12: Ensuring neutrality of arbitrators, when a person is approached in

 Amendment to Section 14: On termination of mandate of an arbitrator, he is to be substituted

8. THE ARBITRATION AND CONCILIATION (AMENDMENT) BILL, 2019

SALIENT FEATURES OF THE NEW BILL

 AMENDMENT TO SECTION 11 (APPOINTMENT OF ARBITRATORS)

An application made by a party for appointment of an arbitrator shall be disposed of by the

 AMENDMENT TO SECTION 23 (STATEMENTS OF CLAIM AND DEFENCE)

 AMENDMENT TO SECTION 29A (TIME-LIMIT FOR ARBITRAL AWARD)

 INTRODUCTION OF SECTION 42A (CONFIDENTIALITY OF INFORMATION)

 INTRODUCTION OF SECTION 42B (PROTECTION OF ACTION TAKEN IN

 INTRODUCTION OF PART IA (ESTABLISHMENT OF ARBITRATION COUNCIL

 INTRODUCTION OF SECTION 87 (EFFECT OF ARBITRAL AND RELATED