The Arbitration and Conciliation Act was introduced in India in 1996 to modernize the Alternative Dispute Resolution policy and align it with UNCITRAL. It has six key features, including court intervention and enforcement of foreign awards. The act was created through an exchange of information between the Indian and US Supreme Courts but has not been widely used.
The Arbitration and Conciliation Act was adopted by the Indian legal system in 1996 as an update to the standard Alternative Dispute Resolution (ADR) policy. Though of Indian origin, the Arbitration and Conciliation Act has international ramifications. It is designed to work in concert with United Nations Commission on International Trade Law (UNCITRAL) policies relating to foreign trade arbitration processes.
Alternative dispute resolution in India has been governed by the Arbitration Act of 1940 and, regionally, by an ancient dispute resolution process known as lok adalat. The adoption of the Arbitration and Conciliation Act was an attempt to streamline the Indian legal system and bring its arbitration practices more into line with UNCITRAL. Undertaking arbitration reform was a joint process involving an exchange of information between members of the Indian and US Supreme Courts.
The Indo-US study of Arbitration and the Indian Code of Civil Procedure for Mediation led to the creation of the Arbitration and Conciliation Act. The ongoing examination of ADR cases by the judiciary of both nations legally recognized the provisions of the Arbitration and Conciliation Act in 2002. Despite these advances, judicial systems have made no real effort to use the provisions of the Arbitration and Conciliation Act or choose its ADR methods preferred by lawyers involved in cases of arbitration.
There are six key features of the Arbitration and Conciliation Act, including: the arbitration agreement, the conduct of the arbitral proceedings, the arbitral award, court intervention, conciliation, and the enforcement of foreign awards. The first three of these provisions pertain solely to the established legal process of binding arbitration. Although arbitration takes place outside the traditional court system, both parties to an arbitration agreement are legally bound by the decisions made by the arbitrator.
The court’s intervention in the Arbitration and Conciliation Act is intended to limit objections to the arbitration process. In the past, arbitration law allowed litigants to initiate litigation through the traditional court system at virtually any stage of the process. The Arbitration and Conciliation Act severely limits access to the court and redirects objections to an arbitral tribunal.
Conciliation is an indemnity for settlements to be made in the absence of arbitration or during the arbitration proceeding itself. The conciliator who brings the parties together to negotiate has no official authority. However, once a settled settlement is reached, both parties and the conciliator sign a settlement agreement. This agreement has the same legal status as an arbitration award.
Enforcement of foreign awards is the final provision of the Arbitration and Conciliation Act. Foreign awards can be imposed by India under the New York convention established in 1960. Any country signatory to the United Nations that has accepted the New York convention must comply with the foreign awards provision. Any party wishing to enforce a foreign award must first file an arbitration award with the local district court of the nation that has jurisdiction over the subject matter of the award.
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