Chapter 1: History of Arbitration Law
A Brief History of Arbitration Law in India
Chapter 2: Domestic Arbitration
Section 1. Short title, extent andcommencement
Section 2. Definitions
Section 3. Receipt of written communications
Section 4. Waiver of right to object .
Section 5. Extent of judicial intervention
Section 6. Administrative Assistance
Section 7. Arbitration Agreement
Section 8. Power to refer parties to arbitration where there is an arbitration agreement
Section 9. Interim measures, etc. by court
Section 11. Appointment of Arbitrators
Section 12. Grounds for Challenge
Section 13. Challenge Procedure
Section 14. Failure or impossibility to act
Section 15. Termination of mandate and substitution of arbitrator
Part II- Chapter IV: Jurisdiction of Arbitral Tribunals
Section 16. Competence of arbitral tribunal to rule on its jurisdiction
Section 17. Interim measures ordered by arbitral tribunal.—
Chapter V: Conduct of Arbitral Proceedings
Section 18. Equal treatment of parties
Section 19. Determination of rules of procedure
Section 20. Place of arbitration
Section 21. Commencement of arbitral proceedings
Section 22. Language.—
Section 23. Statements of claim and defence
Section 24. Hearings and written proceedings
Section 25. Default of a party
Section 26. Expert appointment by arbitral tribunal
Section 27. Court assistance in taking evidence
Part II, Chapter-VI: Making of Arbitral Award and Termination of Proceedings
Section 28. Rules Applicable to Substance of Dispute
Section 29. Decision making by panel of arbitrators. –
Section 29A. Time limit for arbitral award.—
Section 29B. Fast track procedure.—
Section 30. Settlement of disputes – Registration and Stamp duty
Section 31. Form and contents of arbitral award
Section 31A. Regime for costs
Section 32. Termination of proceedings
Section 33. Correction and interpretation of award; additional award.—
Part II, Chapter VII: Recourse against Arbitral Award
Section 34. Application for setting aside arbitral award
Section 35. Finality of Arbitral Awards.—
Section 36. Enforcement-
Part II, Chapter IX: Appeals
Section 37. Appealable orders.—
Part II, Chapter X: Miscellaneous
Section 38. Deposits
Section 39. Lien on arbitral award and deposits as to costs
Section 40. Arbitration agreement not to be discharged by death of party thereto
Section 41. Provisions in case of insolvency .
Section 42. Jurisdiction.Sec. 43. Limitations.—
Chapter 3: Enforcement of Foreign Arbitral Awards
Enforcement of Arbitral Award: The Geneva and New York Conventions
Part II of the Arbitration and Conciliation Act, 1996: Reflection of International Statutes in Municipal Law
Section 44. Definition
Section 45. Power of judicial authority to refer parties to arbitration
Section 46. When Foreign Award Binding
Section 47. Evidence
Section 48. Conditions for Enforcement of Foreign Awards
Section 49. Enforcement of Foreign Awards
Section 50. Appealable Orders
Sec. 52. Chapter II not to apply
Part II Chapter II: Geneva Convention Awards
Section 53. Interpretation
Section 54. Power of judicial authority to refer parties to arbitration
Section 55. Foreign awards when binding
Section 56. Evidence
Section 57. Conditions for enforcement of foreign awards
Section 58. Enforcement of Foreign Awards
Section 59. Appealable Orders
Section 60. Saving
Chapter 4: Judicial Response to Arbitration India
Application of part I to foreign awards: Pre BALCO erroneous judicial interpretations
Bharat Aluminum Company and ORS. v. Kaiser Aluminum Technical Service, INC. And ORS. (BALCO-I) - A Case Study
Enforcement of foreign Award and Post BALCO Judicial trend: a Dawn New Era
commercial Divisions In High Courts: A New Beginning In Expeditious Judicial Determination Of Commercial Disputes
Chapter 5: Conciliation
Section 61. Application and scope
Section 62. Commencement of conciliation proceedings
Section 63. Number of conciliators
Section 64. Appointment of conciliators
Section 65. Submission of statements to conciliator
Section 66. Conciliator not bound by certain enactments
Section 67. Role of conciliator
Section 68. Administrative assistance
Section 69. Communication between conciliator and parties
Section 70. Disclosure of information
Section 71. Cooperation of parties with conciliator
Section 72. Suggestions by parties for settlement of dispute
Section 73. Settlement agreement
Section 74. Status and effect of settlement agreement
Section 75. Confidentiality
Section 76. Termination of conciliation proceedings
Section 77. Resort to arbitral or judicial proceedings
Section 78. Costs
Section 79. Deposits
Section 80. Role of conciliator in other proceedings
Section 81. Admissibility of evidence in other proceedings
Part IV: Supplementary Provisions
Section 82. Power of High Court to make rules
Section 83. Removal of difficulties
Section 84. Power to make rules
Section 85. Repeal and savings
Section 86. Repeal of Ordinance 27 of 1996 and Saving
The First Schedule
The Second Schedule
The Third Schedule
The Fourth Schedule
The Fifth Schedule
The Sixth Schedule
The Seventh Schedule
Abbildung in dieser Leseprobe nicht enthalten
History of Arbitration Law
Hague Convention 1899.
International arbitration was given a more permanent basis by the Hague Conference of 1899, which adopted the Hague Convention on the pacific settlement of international disputes, revised by a conference in 1907. The Convention stated: “International arbitration has for its object the settlement of disputes between States by judges of their own choice and on the basis of respect for law. Recourse to arbitration implies an engagement to submit in good faith to the award.”
The Geneva Protocol 1923.
The 1923 Geneva Protocol on Arbitration Clauses adopted by the League of Nations was a success both in terms of the number of States that became party to it and in regard to its contents. It’s essential provision was that “Each of the Contracting States recognises the validity of an agreement whether relating to existing or future differences between parties subject respectively to the jurisdiction of different Contracting States by which the parties to a contract agree to submit to arbitration all or any differences that may arise in connection with such contract relating to commercial matters or to any other matter capable of settlement by arbitration, whether or not arbitration is to take place in a country to whose jurisdiction none of the parties is subject.”The Protocol also provided that the procedure, including the constitution of the arbitral tribunal, was to be governed by the will of the parties and by the law of the country in whose territory the arbitration took place. The content of the Protocol is today incorporated into Articles II and V (d) of the 1958New York Convention with only minor changes.
At the same time a need was felt for an arbitration organization that would be “International”. Consequently, in 1922 the International Chamber of Commerce (ICC) adopted its first rules of arbitration and in 1923 established the Court of Arbitration. Although the headquarters of the ICC are in Paris, there has never been any suggestion that the ICC Court of International Arbitration (as it is now known) was a French arbitral organization.
Four years after the adoption of the Protocol on Arbitral Clauses (1923), in 1927 the League of Nations adopted the Geneva Convention for the Execution of Foreign Arbitral Awards. Contracting States agreed to enforce arbitral awards made in conformity with the 1923 Protocol in the territory of another contracting State. The Convention was, like the Protocol, adopted by a large number of States and was generally a success in regard to its substance.
Throughout the two decades from 1920 to the outbreak of the Second World War, there was a steady development in Europe of arbitration as a recognized means of dispute settlement in international commercial matters. However, in quantitative terms the amount of arbitration between commercial firms from different countries was still rather small Moreover, the development of arbitration for international commercial disputes that existed in Europe did not generally extend to the rest of the world.
The New York Convention, 1958.
It turned out that there was a significant problem with the 1927 Convention in the requirement that the party seeking enforcement of the award had to prove that the conditions for recognition had been fulfilled. The only way to satisfy the requirement was to have the award recognized in the country where the arbitration had taken place. It reduced considerably the usefulness of the Convention. The ICC undertook the preparation of a draft revision of the 1927 Convention and submitted it to the United Nations as the successor organization to the League of Nations, which had prepared both the 1923 Protocol and the 1927 Convention. It was found to be advantageous to combine the provisions of the 1923 Protocol and the 1927 Convention into a single convention. The result was the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).
Apart from combining the two previous instruments into a single text, the principal change as a result of convention was that the award itself, in the form required by the Convention, accompanied by the arbitration agreement must be considered as prima facie worthy of credit. The court (or other authority) must enforce it unless the party resisting enforcement proves that there exists one of the limited number of exceptions in Article V of the Convention. The exceptions to enforcement in Article V (1) are limited to violations of the rules of a procedural nature governing the arbitration and are designed to protect the parties and the integrity of the arbitral process. The enforcing court is thereby restricted from considering whether the award is correct on the merits.
Article V (2) is designed to protect the integrity of the law of the enforcing country. It permits the enforcing court to refuse to enforce the award if the “subject matter of the difference is not capable of settlement by arbitration under the law of that country” or if “the recognition or enforcement of the award would be contrary to the public policy of that country.” This latter provision was probably necessary, but it was dangerous. It could easily have been seen as an invitation to a court to find that the enforcement of an award against a party from the State where enforcement is sought would be in some way against the public policy of the State.
Following the 1958 diplomatic conference, interest in arbitration continued to develop. Ratification of the New York Convention progressed at a steady pace, averaging two to three ratifications per year, and that pace has not changed radically over the years since its adoption. To date 135 countries have ratified the Convention.
European Convention, 1961.
In 1961, three years after the adoption of the New York Convention, the European Convention on International Commercial Arbitration was adopted. The Convention is noteworthy as being the first international instrument to have the words “international commercial arbitration” in its title. It signalled a change in the attitude towards arbitration of international commercial disputes. The nation-State would be in charge of the rules, but those rules should recognize the special requirements of an arbitration which involves international economic matters and in which one or both parties may be foreign.
In 1966 the Arbitration Rules for ad hoc arbitrations were adopted by both the United Nations Economic Commission for Europe (ECE) and the United Nations Economic Commission for Asia and the Far East (ECAFE). The same year the European Convention Providing a Uniform Law on Arbitration was adopted by the Council of Europe. They have been widely used in Continental Europe for ad hoc arbitrations, but they were considered to be unsuitable for arbitrations between common law and civil law countries. The ECAFE Rules on the other hand seem to have been used rarely, if at all, and the Uniform Law has never come into force, the Convention having been ratified only by Belgium.
United Nations Commission on International Trade Law, 1976 (UNCITRAL).
The UNCITRAL Arbitration Rules were adopted by the United Nations Commission on International Trade Law in April 1976. The Rules were specifically designed for use in ad hoc common law/civil law arbitrations. The endorsement of the Rules by the Asian-African Legal Consultative Committee (AALCC), representing a large number of developing countries, the Soviet Union and the United States meant that the Rules were politically acceptable in a large segment of the world. Although prepared for use in ad hoc arbitrations, they were increasingly used as well by arbitral organizations as their institutional rules with suitable changes.
By 1982 UNCITRAL found it desirable to issue its Guidelines for Administering Arbitrations under the UNCITRAL Arbitration Rules, which included a description of the changes that might be made in the Rules when adapting them for use as institutional rules. Because the UNCITRAL Arbitration Rules were written for ad hoc arbitrations, they necessarily allowed the parties complete freedom as to how to proceed with the arbitration. Nevertheless, the Rules recognized that the law governing the arbitration might contain a “provision of law from which the parties cannot derogate”, in which case that provision would prevail.
UNCITRAL Model Law on International Commercial Arbitration, 1985.
The United Nations Commission on International Trade Law (hereinafter referred to as UNCITRAL) Arbitration Rules were followed in the Model Law in 1985. The distinguishing feature about the Model Law is the extent to which it not only gives support to the arbitral process, but the extent to which it permits the parties to conduct the arbitration as they wish. The arbitration may be institutional or it may be ad hoc. Subject to the binding rule in Article 18 that “the parties shall be treated with equality and each party shall be given a full opportunity of presenting his case”, “the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings.”
It was thought by many that the Model Law would be useful for developing countries that did not already have a modern law of arbitration, and it has been widely used by them. However, the first country to adopt the Model Law was Canada. To date the Model Law has been adopted by 39 countries, several of the individual States in the United States, Hong Kong and Macau. In addition to Canada, developed countries that have adopted the Model Law are Australia, Germany, Japan, New Zealand, Singapore and Spain. It is important to note that the Model Law was drafted to govern only international commercial arbitration with the expectation that a State that enacted it might have a separate law governing domestic arbitrations. Even if a State wished to limit the freedom of the parties, arbitral institutions and arbitral tribunals in respect of domestic arbitrations, adoption of the Model Law would permit the State to offer a law of arbitration that met the prevailing consensus on the procedures that should govern international commercial arbitration.
A Brief History of Arbitration Law in India
Arbitration has a long history in India. In ancient times, people often voluntarily submitted their disputes to a group of wise men of a community—called the sabhas and samitis, who were identical to panchayats —for a binding resolution. Submission of disputes to these groups was voluntary and there was no compulsion, like today’s arbitration system. In Panchayats, Panchas where chosen by virtue of their personal qualities of being fairminded, impartial and knowledgeable. The panchayats were held in great veneration. They proceeded in an informal way, untrammelled by technicalities of procedure and laws of evidence. Also, arbitration was governed by social sanctions. But, the simple and informal system of arbitration through the Panchayats, though useful, was ineffective to deal with the complexities arising out of advancement in social and economic spheres.
In medieval era, when the East India Company started taking over administrative control, the Presidency Governments in Bengal, Madras and Bombay enacted ‘Regulations’. Modern arbitration law in India was created by the Bengal Regulations in 1772, during the British rule. The Bengal Regulations provided for reference by a court to arbitration, with the consent of the parties, in lawsuits for accounts, partnership deeds, and breach of contract, amongst others.
The Bengal Regulation XVI of 1793 authorised the courts to recommend to parties to a suit to submit the decision on matters in disputes which had already arisen to arbitration. Later, the Madras Regulation V of 1816 and the Bombay Regulation IV of 1827 were also made. They introduced substantial changes in the Panchayat system in the Presidency towns. After the coming into existence of the Legislative Council of India in 1834, the procedure of the Courts of Civil Judicature was codified by Act VIII of 1859. Sections 312 to 325 of the Act dealt with arbitration between parties to a suit while Sections 326 and 327 dealt with arbitration without the intervention of the Court. Section 312 of that Act enabled the parties to a suit to apply to the court, if they so desired, that an order be passed that the matters in dispute be referred to arbitration. The procedure for arbitration, making and filing of awards was also laid down in subsequent section. The provision for filing and enforcement of awards on such arbitrations was made in 1882 Act No. XIV.
Until 1996, the law governing arbitration in India consisted mainly of three statutes:
(i) the 1937 Arbitration (Protocol and Convention) Act,
(ii) the 1940 Indian Arbitration Act, and
(iii) the 1961 Foreign Awards (Recognition and Enforcement) Act.
The 1940 Act was the general law governing arbitration in India which was similar to English Arbitration Act of 1934, and both the 1937 and the 1961 Acts were designed to enforce foreign arbitral awards (the 1961 Act implemented the New York Convention of 1958).
The government enacted the Arbitration and Conciliation Act, 1996 (the 1996 Act) in an effort to modernize the outdated 1940 Act. The 1996 Act is a comprehensive piece of legislation modelled on the lines of the UNCITRAL Model Law. Its primary purpose was to encourage arbitration as a costeffective and quick mechanism for the settlement of commercial disputes. The 1996 Act covers both domestic arbitration and international commercial arbitration.
Supreme Court of India in Konkan Railway Corpn. Ltd. v . M/S. Mehul Construction Co. observed,
‘….prior to the 1996 Act, the Arbitration Act of 1940, which was in force in India provided for domestic arbitration and no provision was there to deal with the foreign awards. So far as the Foreign Awards are concerned, the same were being dealt with by the Arbitration (Protocol and Convention) Act, 1937, and the Foreign Awards (Recognition and Enforcement) Act, 1961. The increasing growth of global trade and the delay in disposal of cases in Courts under the normal system in several countries made it imperative to have the perception of an Alternative Dispute Resolution System, more particularly, in the matter of commercial disputes. When the entire world was moving in favour of a speedy resolution of commercial disputes, the United Nations Commission on International Trade Law way back in 1985 adopted the UNCITRAL Model Law of International Commercial Arbitration and since then number of countries have given recognition to that Model in their respective legislative system. With the said UNCITRAL Model Law in view the present Arbitration and Conciliation Act of 1996 has been enacted in India replacing the Indian Arbitration Act 1940, which was the principal legislation on Arbitration in the country that had been enacted during the British Rule. The Arbitration Act of 1996 provides not only for domestic arbitration but spreads its sweep to International Commercial Arbitration too. The Indian law relating to the enforcement of Foreign Arbitration Awards provides for greater autonomy in the arbitral process and limits judicial intervention to a narrower circumference than under the previous law. To attract the confidence of International Mercantile community and the growing volume of India's trade and commercial relationship with the rest of the world after the new liberalization policy of the Government, Indian Parliament was persuaded to enact the Arbitration and Conciliation Act of 1996 in UNCITRAL model and, therefore, in interpreting any provisions of the 1996 Act Courts must not ignore the objects and purpose of the enactment of 1996. A bare comparison of different provisions of the Arbitration Act of 1940 with the provisions of the Arbitration and Conciliation Act 1996 would unequivocally indicate that 1996 Act limits intervention of Court with an arbitral process to the minimum and it is certainly not the legislative intent that each and every order passed by an authority under the Act would be a subject matter of judicial scrutiny of a Court of Law. Under the new law the grounds on which an award of an Arbitrator could be challenged before the Court have been severely cut down and such challenge is now permitted on the basis of invalidity of the agreement, want of jurisdiction on the part of the arbitrator or want of proper notice to a party of the appointment of the arbitrator or of arbitral proceedings.’
Court further observed that,
The powers of the arbitrator have been amplified by insertion of specific provisions of several matters. Obstructive tactics adopted by the parties in arbitration proceedings are sought to be thwarted by an express provision inasmuch as if a party knowingly keeps silent and then suddenly raises a procedural objection will not be allowed to do so. The role of institutions in promoting and organising arbitration has been recognised. The power to nominate arbitrator has been given to the Chief Justice or to an institution or person designated by him. The time limit for making awards has been deleted. The existing provisions in 1940 Act relating to arbitration through intervention of Court, when there is no suit pending or by order of the court when there is a suit pending, have been removed. The importance of transnational commercial arbitration has been recognised and it has been specifically provided that even where the arbitration is held in India, the parties to the contract would be free to designate the law applicable to the substance of the dispute. Under the new law unless the agreement provides otherwise, the arbitrators are required to give reasons for the award. The award itself has now been vested with status of a decree, inasmuch as the award itself is made executable as a decree and it will no longer be necessary to apply to the court for a decree in terms of the award. All these aim at achieving the sole object to resolve the dispute as expeditiously as possible with the minimum intervention of a Court of Law so that the trade and commerce is not affected on account of litigations before a court. When United Nations established the Commission on International Trade Law it is on account of the fact that the General Assembly recognised that disparities in national laws governing international trade created obstacles to the flow of trade. The General Assembly regarded the Commission on International Trade Law as a medium which could play a more active role in reducing or removing the obstacles. Such Commission, therefore, was given a mandate for progressive harmonization and unification of the law of International Trade. With that objective when UNCITRAL Model has been prepared and the Parliament in our country enacted the Arbitration and Conciliation Act of 1996 adopting UNCITRAL Model, it would be appropriate to bear the said objective in mind while interpreting any provision of the Act. The Statement of Objects and Reasons of the Act clearly enunciates that the main objective of the legislation was to minimise the supervisory role of Courts in the arbitral process.
The Arbitration Act, 1940
The Arbitration Act, 1940, dealt only with domestic arbitration. Under the 1940 Act, intervention of the court was required in all the three stages of arbitration, i.e. prior to the reference of the dispute to the arbitral tribunal, in the duration of the proceedings before the arbitral tribunal, and after the award was passed by the arbitral tribunal.
- Before an arbitral tribunal took cognizance of a dispute, court intervention was required to set the arbitration proceedings in motion. The existence of an agreement and of a dispute was required to be proved.
- During the course of the proceedings, the intervention of the court was necessary for the extension of time for making an award.
- Finally, before the award could be enforced, it was required to be made the rule of the court.
While the 1940 Act was perceived to be a good piece of legislation in its actual operation and implementation by all concerned - the parties, arbitrators, lawyers and the courts, it proved to be ineffective and was widely felt to have become outdated. This Act like the 1996 Act, didn’t made any specific reference to commercial arbitration and its enforcement.
The Arbitration and Conciliation Act, 1996
The Arbitration and Conciliation Bill 1995 was introduced in the Rajya Sabha on 16th May 1995 with an object of all three preexisting laws of Arbitration. The Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) received the Presidential assent and was brought into force from 16 August 1996.
The 1996 Act, which repealed the 1937 Act, the 1961 Act and the 1940 Act, was enacted:
- To provide an effective and expeditious dispute resolution framework, which would inspire confidence in the Indian dispute resolution system,
- To attract foreign investments and reassure international investors in the reliability of the Indian legal system to provide an expeditious dispute resolution mechanism,
- To comprehensively cover international and commercial arbitration along with domestic arbitration,
- To minimize the supervisory role of Courts in the arbitral process, etc.
In Konkan Railways Corp. Ltd. v. Mehul Construction Co., Supreme Court of India stated that the Arbitration and Conciliation Act, 1996 was introduced in order to attract the ‘international mercantile community’ and at the time of interpretation, regard must be had to the objectives behind the enactment of the Act.
The 1996 Act has two significant parts – Part I provides for any arbitration conducted in India and enforcement of awards there under. Part II provides for enforcement of foreign awards. Any arbitration conducted in India or enforcement of award there under (whether domestic or international) is governed by Part I, while enforcement of any foreign award to which the New York Convention or the Geneva Convention applies, is governed by Part II of the 1996 Act.
The 1996 Act contains two unusual features that differed from the UNCITRAL Model Law.
- The 1996 Act goes beyond the UNICITRAL Model Law in the case of minimizing judicial intervention.
- The UNICITRAL Model Law was designed to apply only to international commercial arbitrations, the 1996 Act applies both to international and domestic arbitrations.
The Government of India enacted the 1996 Act by an ordinance, and then extended its life by another ordinance, before Parliament eventually passed it without reference to a Parliamentary Committee.
The Law Commission of India prepared a report on the experience of the 1996 Act and suggested a number of amendments. Based on the recommendations of the Commission, the Government of India introduced the Arbitration and Conciliation (Amendment) Bill, 2003, in Parliament for amending the 1996 Act. It has not been taken up for consideration.
The Constitutional validity of the 1996 Act was challenged in Babar Ali v. Union of India  on the ground that it takes away the power of Courts to Judicial Review. The court while deciding the question of Constitutional validity held as follows;
The Arbitration and Conciliation Act,1996 is neither unconstitutional nor in any way offends the basic structure of the Constitution of India, as Judicial review is available for challenging the award in accordance with the procedure laid down therein. The time and manner of the judicial scrutiny can be legitimately laid down by the Act passed by the parliament.
Law Commission of India: 188th Report, 2003.
A fasttrack procedure was recommended in this Report by Law Commission by way of Amendments to the Indian Arbitration and Conciliation Act, 1996 for ‘fasttrack’ arbitration. The objective was that a commercial case of high value should be disposed of within a period of one year or at the most two years in all the States in India. Stress was given on fast track arbitration of commercial matters in this report.
In the meantime, Government of India, the Ministry of Law and Justice, constituted a Committee popularly known as the ‘Justice Saraf Committee on Arbitration’ under the Chairmanship of Justice B. P. Saraf, retired Chief Justice of J & K High Court and a renowned expert in the field of arbitration, to study in depth the implications of the recommendations of the Law Commission of India contained in its 176th Report and the Arbitration and Conciliation (Amendment) Bill, 2003. The Committee submitted its report on 29th January 2005. Report suggested some changes in 2003 bill, which were considered by Parliamentary Standing Committee in its 9th Report on ‘The Arbitration and Conciliation (Amendment) Bill, 2003,’ which was laid before both the houses of Parliament on 4th August 2005. Committee however recommended the formation of completely new bill as in its opinion the bill allowed more intervention of court than 1996 Act. Hence as of today the bill of 2003 couldn’t be passed neither the new bill has been framed by the Government.
The Arbitration and Conciliation Act 1996
It is a wellknown fact that Indian courts are seething under the weight of backlog of cases. On a rough estimate there are about 30 million cases pending on the dockets of all Courts in this country from the lowest strung to the highest Court of the country. Therefore, to enable India to advance from 20th to 21st century, it is necessary to develop alternative dispute redressal mechanism, which is in tune with the practices adopted by the international community as well as to retain its Indian flavour to deal with the Indian conditions.
In this context, it is important to analyse the provisions of Arbitration and Conciliation Act 1996.
The 1996 Act Was Brought into force to replace The Arbitration Act, 1940, The Arbitration (Protocol and Convention) Act, 1937, and The Foreign Awards (Recognition and Enforcement) Act, 1961, as these enactments were felt to be outdated.
The 1996 Act comprehensively covers;
i. International and domestic commercial arbitration and conciliation.
ii. Makes provisions for fair and efficient arbitral procedure.
iii. Makes provisions for reasoned decisions by arbitral tribunal.
iv. Provisions to minimize supervisory role of courts in arbitral procedure.
v. To provide for abidingness of arbitral award.
The Act is divided into four parts.
Part I contains the provisions for domestic and international commercial arbitration in India. All arbitration conducted in India would be governed by Part I, irrespective of the nationalities of the parties.
Part II provides for enforcement of foreign awards. Part II , is largely restricted to enforcement of foreign awards governed by the New York Convention or the Geneva Convention. Part II is thus, (by its very nature) not a complete code.
The court in Anita Garg v. M/S. Glencore Grain Rotterdam B.V.,  has found that Chapters III to VI, specifically, Section 10 to 33 of Part 1 of the Act, contain curial or procedural law which parties would have autonomy to opt out from. The other Chapters of Part I of the Act form part of the proper law.
Part II, on the other hand regulates arbitration only in respect to the commencement and recognition/enforcement of a foreign award and no provisions under the same can be derogated by a contract between two parties.
The general consensus seems to be that the Act has failed to create any proarbitration legal regime in India. The current practice is said to be a far cry from what was envisaged in the objective of the Act and the UNCITRAL Model Law. There are various reasons, which have resulted in giving a disappointing picture about the working of the 1996 Act. The critics point towards the difficulties in enforcement of arbitral award; frequency and magnitude of judicial intervention.
Types of Arbitration:
The Act primarily covers two types of Arbitration, they are as follows,
a. Domestic Arbitration
It is an Arbitration process for resolution of a dispute arising out of legal relationship, having seat in India, carried out in accordance with laws of India.
b. International Commercial Arbitration
Sec. 2 (1) f of the Act defines the term international commercial arbitration in following word;
“International Commercial Arbitration” means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is—
(i) an individual who is a national of, or habitually resident in, any country other than India; or
(ii) a body corporate which is incorporated in any country other than India; or
(iii) an association or a body of individuals whose central management and control is exercised in any country other than India  ; or
(iv) the Government of a foreign country;
The Arbitration and Conciliation Amendment Act, 2015
The Amendment Act is a step in right direction as it makes significant changes rectifying the loopholes in the Act of 1996. It has made several new additions to the Act like fast track arbitration, timeline for completion of arbitration process, meaning and scope of public policy, extensive guidelines in relation to the independence, impartiality, and fees of arbitrators etc.
Salient features of the Act
A. Minimum Judicial intervention
The main reason behind criticism of Arbitration Act 1940 was it allowed frequent judicial intervention in arbitral proceedings, thereby rendering the Arbitration ineffective. The Act of 1996 has limited a judicial intervention to a greater extend and only on grounds provided under section 34 of the Act.
Section 5 of the Act clearly provides that, ‘no judicial authority shall intervene except where so provided in this Part (i.e. Part I of the Act dealing with domestic arbitration).
B. Principles of equity and fairness
Section 18 of the Act of 1996 requires the Arbitrator to give equal treatment to the parties and afford full opportunity to present their case, thereby ensuring the observance of principles of equity and fair play.
At the time of appointment of arbitrators (in case where number of arbitrators are more than one) section 11 (3) requires each party to appoint one arbitrator, and the two appointed arbitrators to appoint the third arbitrator.
Some of the other provisions ensuring fairness are as follows;
a. sufficient advance notice of any hearing (Section 24 (2))
b. Communication of statements, documents or other information, supplied by party to the arbitrator, to the other party (Section 24 (3))
c. Appointment of expert (Section 26)
d. Decision making by panel of arbitrators (Section 29)
e. Speaking award (reasoned decision) (Section 31 (3))
f. Public Policy (Section 34 (2) (b) (ii))
C. Separate provisions for Domestic and Foreign Arbitration
With an object of minimum judicial intervention in foreign award , the Act of 1996 makes separate provisions for Domestic (Part I) and Foreign Arbitration (Part II)
D. Expedite procedure
Insertion of new section 29A (Time limit (12 months) for arbitral award) and section 29 B (Fast track procedure) will expedite the arbitral procedure in a time bound manner.
E. Based on foundations of Doctrine of party autonomy
Various provisions of the Act that recognises and gives paramount importance to the party autonomy are as follows;
a. Number of arbitrators and their appointment (Section 10 and 11)
b. Determination of rules of procedure (Section 19)
c. Place of arbitration (Section 20)
d. Language (Section 22)
e. Rules applicable to substance of dispute (Section 28)
Every award passed by an arbitral tribunal is final and binding on the parties (unless challenged u/s 34 in case of domestic arbitration and u/s 48 or 57 in case of foreign arbitration). There can be no appeal against the award and only recourse available against it is to challenge the award on limited grounds provided u/s 34, 48 or 57 as the case may be.
An award is enforceable (u/s 36 in case of domestic arbitration and u/s 49 or 58 (as the case may be) in case of foreign arbitration) in the same manner as if it were a decree of the Court.
Section 1. Short title, extent andcommencement.
(1) This Act maybe called the Arbitration and Conciliation Act, 1996.
(2) It extends to the whole of India: Provided that Parts I, III and IV shall extend to the State of Jammu and Kashmir only in so far as they relate to international commercial arbitration or, as the case may be, international commercial conciliation.
Explanation. -In this subsection, the expression “international commercial conciliation” shall have the same meaning as the expression “international commercial arbitration” in clause (f) of subsection (1) of section 2, subject to the modification that for the word “arbitration” occurring therein, the word “conciliation” shall be substituted.
(3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. 
Section 2. Definitions.
(1) In this Part, unless the context otherwise requires, -
(a) “Arbitration” means any arbitration whether or not administered by permanent arbitral institution;
(b) “Arbitration agreement” means an agreement referred to in section 7;
(c) “Arbitral award” includes an interim award;
(d) “Arbitral tribunal” means a sole arbitrator or a panel of arbitrators;
(e) “Court” means  —
(i) in the case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subjectmatter of the arbitration if the same had been the subjectmatter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes;
(ii) in the case of international commercial arbitration, the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subjectmatter of the arbitration if the same had been the subjectmatter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of courts subordinate to that High Court;
(f) “International Commercial Arbitration” means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is-
(i) An individual who is a national of, or habitually resident in, any country other than India; or
(ii) A body corporate which is in corporate in any on n try other than India; or
(iii) A company or an association or a body of individuals whose central management and control is exercised in any country other than India; or
(iv). The Government of a foreign country;
(g) “Legal representative” means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased, and, where a party acts in a representative character, the person on whom the estate devolves on the death of the party so acting;
(h) “Party” means a party to an arbitration agreement.
(2) This Part shall apply where the place of arbitration is in India.
 Provided that subject to an agreement to the contrary, the provisions of sections 9, 27 and clause (a) of subsection (1) and subsection (3) of section 37 shall also apply to international commercial arbitration, even if the place of arbitration is outside India, and an arbitral award made o to be made in such place is enforceable and recognised under the provisions of Part II of this Act.
(3) This Part shall not affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration.
(4) This Part except subsection (1) of section 40, sections 41 and 43 shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except in so far as the provisions of this Part are inconsistent with that other enactment or with any rules made there under.
(5) Subject to the provisions of subsection (4), and save in so far as is otherwise provided by any law for the time being in force or in any agreement in force between India and any other country or countries, this Part shall apply to all arbitrations and to all proceedings relating thereto.
Construction of references
(6) Where this Part, except section 28, leaves the parties free to determine a certain issue, that freedom shall include the right of the parties to authorise any person including an institution, to determine that issue.
(7) An arbitral award made under this Part shall be considered as a domestic award.
(8) Where this Part- (a) Refers to the fact that the parties have agreed or that they may agree, or (b) In any other way refers to an agreement of the parties, That agreement shall include any arbitration rules referred to in that agreement.
(9) Where this Part, other than clause (a) of section 25 or clause (a) of subsection (2) of section 32, refers to a claim, it shall also apply to a counterclaim, and where it refers to a defence, it shall also apply to a defence to that counterclaim.
- Black’s Law Dictionary which defines
arbitration as ‘[a] method of dispute resolution involving one or more neutral third parties who are usually agreed to by the disputing parties and whose decision is binding’. This identifies the core elements which are applicable even in the most advanced forms of international commercial arbitration. It states that arbitration:
(i) is a ‘method of dispute resolution’ (arbitration is simply a procedure or method for resolving disputes);
(ii) ‘involving one or more neutral third parties’ (the notion that all of the arbitrators be neutral, independent and impartial is an essential feature of arbitration);
(iii) ‘who are usually agreed to by the disputing parties’ (appointment of the arbitrator or arbitral tribunal by agreement of the parties, or by some agreed method, is one of the most important, defining features of arbitration; more generally, party consent is essential to all aspects of arbitration);
(iv) ‘whose decision is binding’ (there would be limited value in arbitration if a party to an arbitration agreement could subsequently refuse to comply with its obligation to arbitrate or could refuse to honour the arbitrator’s decision. The binding nature of arbitral decisions (called ‘awards’) has been facilitated by the law, which is comprised of both domestic laws and international treaties. The law provides a framework to ensure that arbitration agreements and arbitral awards are legally enforceable).
Shorter oxford English dictionary
Defines arbitration as, “the settlement of question at issue by one to whom parties agree to refer their claims in order to obtain an equitable decision.
Halsbury’s laws of England
The process by which a dispute or difference between two or more parties as to their mutual legal rights and liabilities is referred to and determined judicially and with binding effect by application of law by one or more persons (the arbitral tribunal) instead of by a Court of law.
Romilly MR has given an elaborative meaning of Arbitration which is as follows;
"An arbitration is reference to the decision of one or more persons, of some matter or matters in difference between the parties. It is very true that in one sense it must be implied that although there is no existing difference between the parties, still that a difference may arise between the parties... The distinction between an existing difference and the one which may arise is a material one... Undoubtedly, as a general rule, the seller wants to get the highest price for his property, and the purchaser wishes to give the lowest, and in that sense it may be said that an expected difference between them is to be implied in every case, but unless a difference has actually arisen, it does not appear to me to be an 'arbitration'. Undoubtedly, if two persons enter into an agreement for the sale of any particular property, and try to settle the terms, but cannot agree, and after dispute and discussion respecting the price, they say 'we will refer this question of price to A B, he shall settle it', and thereupon they agree that the matter shall be referred to his arbitration, that would appear to me to be an 'arbitration' in the proper sense of the term...
But if they agree to a price to be fixed by another, that does not appear to me to be an arbitration... Valuation undoubtedly precludes differences, in the proper sense of the term; it prevents differences, and does not settle any which have arisen. That is the distinction between 'appraisement' and 'arbitration'."
From above definition one can infer the meaning of arbitration as, an agreement between parties to refer their dispute (arising out of contract between them) to third neutral expert for amicable settlement. As observed by Court in Dharma Prathishthanam v. Madhok Construction (P) Ltd, the essence of arbitration without assistance or intervention of the court is settlement of the dispute by a tribunal of the own choice of the parties.
The footnote of UNCITRAL Model Law on International Commercial Arbitration, 1985. The term “commercial” should be given a wide interpretation so as to cover matter arising from all relationships of a commercial nature, whether contractual or not. Relationships of commercial nature include, but are not limited to, the following transactions: any trade transaction for the supply or exchange of goods or services; distribution agreements; commercial representation or agency; factoring; leasing; construction of work, consulting; engineering; licensing; investment, financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business cooperation; carriage of goods or passengers by air, sea rail or road
The Supreme Court observed in the Atiabari Tea Company Ltd. v . State of Assam  :
“ The trade and commerce do not mean merely traffic in goods i. e. exchange of commodities for money or other commodities. In the complexities of modern conditions, in their sweep are include carriage of persons and goods by road, air and waterways, contract, banking, insurance transactions, in stock exchange, forward communication of information, supply of energy, postal and telegraphic services and many more activities too numerous to be exhaustively enumerated which may be called commercial intercourse”
In Fatehchand himmatlal & ors. v . State of Maharashtra , the Supreme Court held that “any service or activity which in modern complexities of business would be considered to be a lubricant for the wheels of commerce is commercial.”
In Orient Middle East Lines Etc. Ltd. v . Brace Transport Corporation… , the Court observed that the term commercial suggests that it pertains to commerce, and therefore ultimately nothing else than money.
The Supreme Court in R. M. Investment Trading Co. v. Boeing Co., held that consultancy service are of a commercial nature, promoting sale of Boeing aircraft and providing commercial and managerial assistance and information which may be helpful to promote sales of Boeing are commercial activities in nature.
Article 1 (3) International Arbitration (UNCITRAL Model Law)
An arbitration is international if:
(a) the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different States; or
(b) one of the following places is situated outside the State in which the parties have their places of business:
(i) the place of arbitration if determined in, or pursuant to, the arbitration agreement;
(ii) any place where a substantial part of the obligations of the commercial relationship is to be performed or the place with which the subject matter of the dispute is most closely connected; or
(c) the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country
The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015
Act provides an exhaustive definition of the term ‘Commercial Dispute’ which includes any dispute related to transactions between merchants, bankers, financiers and traders etc
Section 2 (c) “commercial dispute” means a dispute arising out of––
(i) ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;
(ii) export or import of merchandise or services;
(iii) issues relating to admiralty and maritime law;
(iv) transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters, including sales, leasing and financing of the same;
(v) carriage of goods;
(vi) construction and infrastructure contracts, including tenders;
(vii) agreements relating to immovable property used exclusively in trade or commerce;
(viii) franchising agreements;
(ix) distribution and licensing agreements;
(x) management and consultancy agreements;
(xi) joint venture agreements;
(xii) shareholders agreements;
(xiii) subscription and investment agreements pertaining to the services industry including outsourcing services and financial services;
(xiv) mercantile agency and mercantile usage;
(xv) partnership agreements;
(xvi) technology development agreements;
(xvii) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits;
(xviii) agreements for sale of goods or provision of services;
(xix) exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum;
(xx) insurance and reinsurance;
(xxi) contracts of agency relating to any of the above; and
(xxii) such other commercial disputes as may be notified by the Central Government.
Explanation.––A commercial dispute shall not cease to be a commercial dispute merely because-—
(a) it also involves action for recovery of immovable property or for realisation of monies out of immovable property given as security or involves any other relief pertaining to immovable property;
(b) one of the contracting parties is the State or any of its agencies or instrumentalities, or a private body carrying out public functions;
According to Mustill, M.J. and Boyd, S.C., the Court will not enforce an award unless it is:
(a) Cogent (convincing, persuasive and of consistent reasoning);
(b) Complete (all matters submitted to arbitration);
(c) Certain (unambiguous);
(d) Final; and
Types of Arbitral Award
Sec. 9 and 17 of the 1996 Act provides for an interim award. Sec. 9 provides for power of Court to pass an interim award when arbitration procedure has not commenced or after it has been terminated. Whereas, the arbitral tribunal can pass an interim award u/s 17 during the continuation of Arbitral Process.
Interim award does not determine all the matters involved in a dispute referred to agreed to be referred to arbitration, however all the matters referred to in an interim award are determined finally in final award.
The award requiring specific performance is called as performance award. A party can be ordered to specifically perform certain acts/works, for e.g. handing over goods which are subject matter of dispute etc.
A final award is passed by the arbitral tribunal at the end of arbitral process. In H. G. Bajaj v. Share Deal Finance Consultants Pvt. Ltd.,  the court held that an arbitration award is final determination of claims or part of claim or counterclaim by the Arbitral tribunal.
Sec. 31 of the Act provides for forms and contents of arbitral award whereas sec 36 provides finality to an arbitral award.
When the terms of settlement are negotiated by the parties’ themselves, the terms of settlement so reached by the parties is called as Consent Award. It is recognised u/s 30 (4) of the 1996 Act.
The 1996 Act does not contain definition of some important terms which leads to confusion during arbitral proceedings. Those terms which needs to be defined are as follows,
1. Judicial authority
2. Domestic arbitration
3. Commercial (unfortunately even Model law does not contain the definition of term in main part and provides it as a footnote to Art. 1 (1)).
4. Foreign awards.
Meaning of Arbitration [Sec 2(1)]
In the terms of subsection (1) (a), arbitration means “any arbitration whether or not administered by permanent arbitral institution”.
Definition contains following essentials;
1. Dispute: Arbitration requires a dispute. An agreement to refer future disputes to arbitration is only an agreement, and not arbitration.
2. The matter in dispute must be of a civil nature. Matters of criminal nature cannot be referred to arbitration.
3. Reference of dispute to arbitration.
The definition of the word "Court" in Section 2(1) (e) of the Arbitration Act, 1996 is narrower than the definition contained in Section 2(1) (c) of the Arbitration Act, 1940. As per the definition under the Arbitration Act, 1940, the word "Court" meant any civil Court except the Court of Small Causes. Whereas, Section 2(1) (e) of the Arbitration Act, 1996 provides that, "Court" means principal civil Court of original jurisdiction in a district and includes the "High Court in exercise of the ordinary original civil jurisdiction", having jurisdiction to decide the questions forming subjectmatter of the arbitration if the same had been the subjectmatter of a suit, but does not include any civil Court of a grade inferior to such principal civil Court, or any-Small Cause Court.
The Full Bench of the Bombay High Court in case of Fountain Head Developers v. Mrs. Maria Archangela Sequeira, has held that the District Judge in a district alone is the principle Court of the original civil jurisdiction and does not include any other judge subordinate to him for the purpose of the petition under section 34 and section 9.
In clause (e) of subsection (1) of Section 2 of the Arbitration Act, 1996, the Parliament has exhaustively explained the meaning of the term "Court" in that the word "means" is a term of restriction, while the word "includes" is a term of enlargement and when both the words "means" and "includes" are used together to define a thing, the intendment of the legislature is to supply restricted meaning to the terms.
The definition of the word "Court" in the Arbitration Act, 1996 has thus restricted the expression 'Court' for the purposes in Part I of the Arbitration Act, 1996 to mean and include only the District Court and the High Court exercising its ordinary original civil jurisdiction.
Applicability of Part I
Section 2 (2): This Part shall apply where the place of arbitration is in India.
Section 2 (2) of the Act corresponds to Art. 1(2) of the Model Law which reads as follows:
“Art. 1(2): The provision of the law, except Articles 8, 9, 35 and 36 apply only if the place of arbitration is in the territory of the State.”
Absence on word only u/s 2 (2) of the Act has been interpreted by the courts in India in series of cases and held that, part I will not apply to section 9 (for passing interim order) and courts in India could pass interim order even in case of International Commercial Arbitration. Even the Law Commission of India had suggested in its 176th report, to apply the provision of section 9 to International Commercial Arbitration. However, the position has now been rectified by the Supreme Court in recent pronouncement of BALCO, which has been discussed in detail by in chapter of Judicial Trend.
Amendment to Section 2 (2)
Addition of proviso to section 2 (2) have cleared the ambiguity created by decision in Bhatia International and has brought the provision in line with Model Law. Part I of the Act that included provisions related to interim orders by a court, order of the arbitral tribunal, appealable orders etc. only applied to matters where the place of arbitration was India. Since the interim orders made by arbitral tribunals seated 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 applicable even in cases where the place of arbitration is outside India, subject to an agreement to the contrary.
After the amendment, these provisions (Ss. 9, 27 and 37 (3) (1) (a)) would also apply to international commercial arbitrations even if the place of arbitration is outside India. This would apply unless the parties agreed otherwise. Hence parties to foreign arbitration will not be left remedy less if the subject matter of dispute is situated in India or otherwise parties need any interim relief from Indian Courts.
The parties willingly agreed that arbitration proceedings would be conducted at Singapore in accordance with Singapore International Arbitration Centre Rules (SIAC Rules). The court said that the proper law of agreement would not be applicable. The SIAC Rules would be curial law of arbitration proceedings. Thus, Section 42 and for that matter Part I of 1996 Act, including right of appeal under Section 37, would not be applicable.
Statutory Arbitrations [Section 2(4)]
Section 2(4) of the Arbitration and Conciliation Act, 1996 provides for the application of the Act to statutory arbitrations. It replaces Section 46 of the repealed 1940 Act. The provisions of the Act are applicable to every such statutory arbitration in same manner as if the arbitration is under an agreement of the parties and the statute providing for dispute resolution by arbitration is in itself an arbitration agreement.
Party [Section 2 (1)]
The definition of the word ‘party’ to an arbitration agreement has been expanded under the Amendment Act to also include persons claiming through or under such party. Thus, even nonsignatories to an arbitration agreement, insofar as domestic arbitration or Indian seated ICA, may also participate in arbitration proceedings as long as they are proper and necessary parties to the agreement.
Section 3. Receipt of written communications.—
(1) Unless otherwise agreed by the parties,—
(a) any written communication is deemed to have been received if it is delivered to the addressee personally or at his place of business, habitual residence or mailing address, and
(b) if none of the places referred to in clause (a) can be found after making a reasonable inquiry, a written communication is deemed to have been received if it is sent to the addressee’s last known place of business, habitual residence or mailing address by registered letter or by any other means which provides a record of the attempt to deliver it.
(2) The communication is deemed to have been received on the day it is so delivered.
(3) This section does not apply to written communications in respect of proceedings of any judicial authority.
Section provides for presumed delivery (on the day it is so delivered) of written communication to the addressee in following situations;
a. Personally delivered to addressee (at his place of business, habitual residence or mailing address); or
b. Delivered by registered post at last known place of business, habitual residence or mailing address of addressee
Section 4. Waiver of right to object
A party who knows that—
(a) any provision of this Part from which the parties may derogate, or
(b) any requirement under the arbitration agreement, has not been complied with and yet proceeds with the arbitration without stating his objection to such noncompliance without undue delay or, if a time limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object.
-Section provides ‘waiver of right to object’ in following two situations;
1. When any provision of Part II of the Act is derogated, Or
2. Any requirements under arbitration agreement are not complied
Such waiver will be operative only if aggrieved party (without any objection within stipulated time) proceeds with arbitration proceedings.
Parties to arbitration can object the decision of arbitral tribunal in case of challenge to jurisdiction of tribunal (Sec. 16), challenge of award u/s 34, 48 and 59 of the Act. Exercise of these rights results in delay. Hence, Sec. 4 provides for the waiver of right to object.
Justice Ramesh D. Dhanuka Judge, Bombay High Court stated that, Section 4 of the Arbitration Act provides that a party who knows that any provision of Part-I from which parties may derogate or any requirement under the arbitration agreement has not been complied but still proceeds with the arbitration without stating his objection to such noncompliance without undue delay or if a time limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object.
Section 5. Extent of judicial intervention.
Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part. 
- The scheme of the new Act has done away with court interference during arbitration proceedings. The new Act deals with situations even when there is a challenge to the constitution of the arbitral tribunal (it is left to the arbitrator to decide the same (Sec. 13, 16)).
Section 5 was inserted to discourage judicial intervention. Court can only interfere in arbitral award when it is authorized to do so under part 1 of the Act. Aggrieved party can challenge the award in court on various grounds under Section 34. The Arbitration and Conciliation Bill, 1995 which preceded the 1996 Act stated as one of its main objectives the need "to minimise the supervisory role of courts in the arbitral process". This objective has found expression in Section 5 of the Act which prescribes the extent of the judicial intervention in no uncertain terms.
Resort to intervention by a court during the arbitral proceedings was often used only as a delaying tactic and was more often a source of abuse of the arbitral proceedings, than it was a protection against abuse. The purpose of Sec. 5 is to achieve certainty as to the maximum extent of judicial intervention.
The Supreme Court of India in P. Anand Gajapathi Raju v. PVG Raju, held that Section 5 of the Arbitration and Conciliation Act, 1996 brings out clearly the object of the Act, namely that of encouraging resolution of disputes expeditiously and less expensively and when there is an arbitration agreement, the Court’s intervention should be minimal.
In BHEL v. CN Garg & Ors.,  it was held that, Section 5 was inserted to discourage judicial intervention. It is seen that a party having grievances against an arbitrator on account of bias or prejudice is not without remedy. It only has to wait till the award is made and then it can challenge the award on various grounds under Section 34 of the Arbitration and Conciliation Act, 1996.
In Pappu Rice Mills v . Punjab State Cooperative Supply and Marketing Federation Ltd.  It was held that, the arbitral tribunal is competent to decide the questions of its own jurisdiction and the aggrieved party is entitled to challenge the same under Section 34. Thus, the remedy being available to the plaintiff, the civil court would not be competent to restrain the arbitrator from proceeding with arbitration, in view of Section 5.
Section 5 corresponds to Art. 5 of the UNICITRAL Model Law, however it has, unlike Art. 5 of Model Law, a nonobstante clause added at the beginning of the section. The result of the “nonobstante” clause will be to override ‘other laws’ and prohibit interference under any such law.
Section 6. Administrative Assistance.
In order to facilitate the conduct of the arbitral proceedings, the parties, or the arbitral tribunal with the consent of the parties, may arrange for administrative assistance by a suitable institution or person.
Parties who have chosen Adhoc arbitration over the institutional arbitration have been given choice of administrative assistance from arbitral institutions if it is required in course of arbitral procedure. If arbitrator decided to have such kind of assistance, he must do so with prior consent of parties to arbitration agreement.
Section 7. Arbitration Agreement.
(1) In this Part, “arbitration agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained in—
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of telecommunication [including communication through electronic means]  which provide a record of the agreement; or
(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.
(5) 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.
Sec.7 defines ‘arbitration agreement’ and is almost a reproduction of Art.7 of the Model Law, except that a single paragraph in the Model Law is split up into different clauses in section 7 of the Act.
Section (7) (1) of the Arbitration and Conciliation Act, 1996, defines ‘an arbitration agreement as an agreement by parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.’
Section contains following essentials to constitute arbitration agreement
1. Agreement between parties
2. Agreement for reference of dispute to arbitration
3. The dispute must be in respect of a defined legal relationship whether contractual or not.
Content of Arbitration Agreement
Section 7 prescribes only form of arbitration agreement and not the content. An arbitration agreement must contain a clause referring the parties to agreement to arbitration in case of dispute. It may also provide for number of arbitrator, place, language, procedure and law governing substance and procedure of arbitration.
Capacity of Parties
Though the Act is silent on this point, being an agreement, every arbitration agreement u/s 7 of the Act has to comply with principles enshrined under section 10 and 11 of Indian Contract Act, 1872. An error in this regard will invalidate the agreement and ultimately the proceedings initiated under such agreement.
In Khardah Company v. Raymon & Co. (India),  the Supreme Court held that an arbitration clause cannot be enforceable when the agreement of which it forms an integral part is declared illegal.
The Delhi High Court in, Virgoz Oils and Fats Pte. Ltd. v. National Agricultural Marketing Federation of India  has held that a contract containing an arbitration agreement must be signed by all parties to the contract, in order to make the arbitration agreement valid and binding upon the parties
KK Modi v. KN Modi 
This case discussed the attributes which are necessary for considering an agreement as an arbitration agreement. It was held that among the attributes which must be present are:
1. The arbitration agreement must contemplate that the decision of the tribunal will be binding on the parties to the agreement.
 http://www.britannica.com/EBchecked/topic/32313/arbitration/27077/Historicaldevelopment,2\7\12 3.43PM
 UN Module 5.1 On Dispute Settlement, International Commercial Arbitration, Presented at United Nations Conference on Trade and Development, accessed on 9th May 2016, 12.30 pm.
 Recommendations to assist arbitral institutions and other interested bodies with regard to arbitrations under the UNCITRAL Arbitration Rules were adopted at the fifteenth session of the Commission, UNCITRAL Yearbook (1982), p. 420.
 Article 1, UNCITRAL Conciliation Rules 1980
 Article 19(1), UNCITRAL Model Law
 Module 5.1. International Commercial Arbitration: Overview – UNCTAD, at pg. 25, available at, unctad.org/en/docs/edmmisc232add38_en.pdf
 A Consultation Paper on ‘ Proposed Amendments to the Arbitration & Conciliation Act, 1996,’ Ministry of Law and Justice Government of India, pg. 138-139, retrieved from, http://lawmin.nic.in/la/consultationpaper.pdf
 K Ravi Kumar, ‘ Alternative Dispute Resolution in Construction Industry ’, International Council of
Consultants (ICC) papers, www.iccindia.org, at pg 2.
 Supra note 9, pg. 139
 Statement of aims and objectives, the Foreign Awards (Recognition and Enforcement) Act, 1961
 (2000) 7 S.C.C. 201
 Bill No.30 of 1995.
 The Arbitration and Conciliation Act, 1996. (No. 26 of 1996).
 Notification No. GSR 375 (E) published in the Gazette of India, Extraordinary ,Pt. II
 Section 85 The Arbitration and Conciliation Act 1996
 Statement of objects and reasons, the Arbitration and Conciliation Act, 1996.
 (2000) 7 SCC 201.
 Article 1 the UNCITRAL Model Law.
 the of the Law Commission of India 176th Report on ‘ The Arbitration And Conciliation (Amendment) Bill, 2001’ (2001)
 The Arbitration and Conciliation (Amendment) Bill, 2003 was introduced in Parliament on December 22,
 (2000) 2 SCC 178
 Sengupta. D., International Commercial Arbitration In India, Indian Council of Arbitration Quarterly, Vol. XLXIII / January - March 2012, pg.19, Para 2
 Retrieved from, http://ipba.org/media/fck/files/Arbitration%20in%20India.pdf, accessed on 3rdDec 2012.
 2011(4) ARBLR 59 (Delhi)
 Bharat Aluminum Co. v. Kaiser Aluminum Technical Service, Inc., 2012 (9) SCC 552
 Sengupta. D., International Commercial Arbitration In India, Indian Council of Arbitration quarterly, Vol. XLXIII / January - March 2012, pg.18, Para 3.
 The words "a company or" omitted by Act 3 of 2016, sec. 2 ( w.e.f 23.10.2015)
 Section 36, The Arbitration and Conciliation Act, 1996
 Came into force on 22.8.1996 vide G.S.R. 375(E), dated 22nd August, 1996
 Subs. by Act 3 of 2016, sec. 2, for clause (e) (w.e.f. 23.10.2015)
 Ins. by Act 3 of 2016, sec. 2 (w.e.f. 23.10.2015)
 In many cases experts like engineers, accountants and architects are appointed arbitrators. In such cases the expert has to act in a judicial manner and the fact that he has also to make some valuation or assessment in the process will not reduce his status as an arbitrator. He will enjoy immunity unless he acted fraudulently. See Burgess v. Purchase & Sons (Farms) Ltd.  Ch 216
 AIR 2005 SC 214
 AIR 1961 SC 232
 AIR 1977 SC 1825
 AIR 1986 Guj 62
 AIR 1994 SC 1136
 Mustill, M.J. and Boyd, S.C., The Law and Practice of Commercial Arbitration in England (2nd ed., at p. 384)
 for details see comment on Sec. 9 and 17 of the Act
 AIR 2003 Bom 296
 for details see comment on Sec. 31 and 36
 2007 (3) Bom.C.R. 393
 Globe Cogeneration Power Ltd. v. Sri Hiranyakeshi Sahakari Sakkere Karkhane Niyamit, Sankeshvar, Karnataka, AIR 2005 Karn 94 at 99; S.B.P. and Company v. Patel Engineering Ltd., AIR 2006 SC 450 : 2005 (8) SCC 618
 See for e.g. Bhatia International v. Bulk Trading
 the of the Law Commission of India 176th Report on ‘ The Arbitration And Conciliation (Amendment) Bill, 2001’ (2001), Para 2.1.6
 the Supreme Court in Bharat Aluminium and Co. v. Kaiser Aluminium and Co. (2012) 9 SCC 552 ("BALCO") the Indian courts had no jurisdiction to intervene in arbitrations which were seated outside India. Refer chapter 4 for detail analysis of case
 Yograj Infrastructure Ltd. v. Ssang Yong Engg and Construction Co. Ltd. (2011) 9 SCC 735
 Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc., (2013) 1 SCC 641
 Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya, (2003) 5 SCC 531
 Justice Ramesh D. Dhanuka Judge, Bombay High Court, Note On Some Of The Relevant Provisions Of The Arbitration & Conciliation Act, 1996 And Important Case Laws, Retrieved from http://mja.gov.in/Site/Upload/GR/Justice%20Dhanuka%20Speech%20on%2025-7-15.pdf, accessed on 3rd Oct. 2017
 Part I of the Act permits judicial intervention in following cases;
Section 8: Power (of court) to refer parties to arbitration where there is an arbitration agreement.
Section 9: Passing interim measures.
Section 11: Appointment of arbitrators (by Chief Justice when parties fail to agree or appoint same).
Section 14(2):Terminating mandate of arbitrator (controversy with respect to inability to act without undue
Section 27: Court assistance in taking evidence.
Section 34: Setting aside an award.
Section 37: Appeal against orders u/s 8, 9 and 34.
Section 39(2): Directing delivery of award.
 the of the Law Commission of India 176th Report on ‘ The Arbitration And Conciliation (Amendment) Bill, 2001’ (2001), Para 2.2.1, pg. 30
 Union of India v. Popular Construction Co, (2001) 8 SCC 470
 AIR 2000 SC 1886
 2001(57) DRJ 154 (DB)
 AIR 2000 (P&H) 276
 Ins. by Act 3 of 2016, sec. 3 ( w.e.f. 23.10.2015)
 See Annexure A, Draft Arbitration Agreement
 See for e.g. Unisys International Services Ltd. Eastern Counties Newspapers Ltd.  1 Lloyd’s Rep. 538
 AIR 1962 SC 1810
 2016 SCC Online Del 6203
 1998 AIR SC 1297
- Quote paper
- Vikrant Yadav (Author), 2017, The 1996 Arbitration and Conciliation Act with Amendments of 2015, Munich, GRIN Verlag, https://www.grin.com/document/424098