- 15-Oct-2025
- public international law
The Arbitration and Conciliation Act, 1996 is one of the most important pieces of legislation in India governing the process of arbitration (a method of resolving disputes outside of courts) and conciliation (a process of bringing parties to a mutually agreeable resolution). The Act provides a comprehensive legal framework for both domestic and international arbitration and is designed to ensure that disputes are resolved efficiently, fairly, and in a manner that minimizes court intervention. Over the years, it has undergone several amendments to align with international arbitration standards and to promote India as a global hub for dispute resolution.
The Act is divided into four parts:
The Act provides for the formation of arbitration agreements, which can be either a separate contract or a clause within an existing contract. It mandates that the agreement must be in writing, ensuring clarity about the intention to resolve disputes through arbitration.
The Act allows parties to choose their arbitrators. If they cannot agree on an arbitrator, the courts or arbitral institutions can intervene and make the appointment.
The Act establishes guidelines on how arbitration proceedings should be conducted, focusing on procedural fairness and the autonomy of the parties. It allows flexibility in choosing the arbitration rules, procedures, and venue.
It allows parties to seek interim measures from courts, such as an injunction or preservation of assets, while the arbitration proceedings are ongoing.
The Act mandates that domestic and foreign arbitral awards are binding and enforceable. Awards can be enforced by courts in India, except in cases where the award is contrary to public policy. This is in line with international conventions like the New York Convention.
In addition to arbitration, the Act also provides a framework for conciliation, where a neutral third party facilitates negotiation between the disputing parties to reach a voluntary settlement. Unlike arbitration, the conciliator does not impose a decision but helps the parties arrive at a mutually agreeable solution.
One of the most significant aspects of the Act is its emphasis on minimizing judicial intervention in the arbitration process. Courts are restricted to intervening only in exceptional cases, such as when a party challenges the arbitration agreement or the award on very limited grounds like fraud or a violation of public policy.
India's Arbitration and Conciliation Act, 1996 is based on the UNCITRAL Model Law, which standardizes the practice of international arbitration across countries. Part II of the Act specifically governs the enforcement of foreign arbitral awards.
India is a signatory to the New York Convention, which facilitates the enforcement of international arbitration awards. Section 48 of the Act provides for setting aside an award if it conflicts with the public policy of India, but this scope is limited to avoid undermining the efficiency of international arbitration.
The Act also provides for the enforcement of awards under the Geneva Convention, although it is less commonly invoked compared to the New York Convention.
The 2015 amendments aimed at making the arbitration process faster and more efficient. Some key changes included:
The 2019 amendment further enhanced the arbitral framework by establishing the Arbitration Council of India (ACI), which is tasked with promoting institutional arbitration in India. The amendment also introduced provisions for the timely completion of arbitral proceedings and stricter timelines for challenges to arbitral awards.
The 2021 amendment focused on further reducing delays in arbitration proceedings and improving the efficiency of the arbitration process in India. It introduced provisions for greater transparency and oversight of arbitrations and emphasized the importance of institutional arbitration.
The judicial system in India plays a minimal role in arbitration proceedings, but courts do have certain responsibilities:
In this landmark case, the Supreme Court of India clarified that international commercial arbitration involving Indian parties but conducted outside India would be governed by the principles of international law rather than Indian domestic law, unless the parties specifically agreed otherwise. The ruling reinforced India’s commitment to the New York Convention and aligned its legal approach to international arbitration standards.
The Arbitration and Conciliation Act, 1996 plays a crucial role in resolving disputes efficiently and fairly, both domestically and internationally. The Act's provisions on arbitration and conciliation, along with its commitment to minimizing judicial intervention, make it a key part of India's dispute resolution framework. With continuous amendments aimed at improving its effectiveness, the Act has made India a more attractive destination for arbitration and conciliation, both for domestic and foreign entities.
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