The Arbitration and Conciliation Act 1996: Where It Came From and How It Is Built

In one line

The Arbitration and Conciliation Act 1996 is the single statute that governs arbitration and conciliation in India, and it was written to match a model law the United Nations recommended so that arbitration here would look the same as arbitration everywhere else.

In exam wording: Act 26 of 1996 is an Act to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards, as also to define the law relating to conciliation and for matters connected therewith or incidental thereto.

Why MU's one line is a whole module

The University prints Module II as a single sentence: "2.1 The Arbitration and Conciliation Act, 1996."

That is not a topic. It is a statute of eighty-seven sections in four Parts, with a fifth Part inserted in 2019, and eight Schedules. Under house rule 1.3 the whole of it is what you can be asked about, so this Module works through it section by section. Do not be misled by how little the syllabus prints.

What the law was before, and why it was replaced

Until 1996 arbitration in India was governed by three separate statutes: the Arbitration Act 1940 for domestic arbitration, the Arbitration (Protocol and Convention) Act 1937 for Geneva Convention awards, and the Foreign Awards (Recognition and Enforcement) Act 1961 for New York Convention awards. Sections 85 and 86 of the present Act repealed them, and chapter 445 works through the repeal.

The 1940 Act had a reputation, and it is worth knowing because it explains almost every design choice in the 1996 Act. Under it an award had to be filed in court and a decree obtained on it, so every arbitration ended in litigation; courts could remit or set aside awards on wide grounds; and a party who wanted to delay could do so almost indefinitely. Arbitration under it took as long as a suit.

The preamble, and what it commits India to

The Act's preamble is unusually long and it recites five things, each beginning "whereas". Read together they are the Act's own explanation of itself.

• The United Nations Commission on International Trade Law, UNCITRAL, adopted the UNCITRAL Model Law on International Commercial Arbitration in 1985.
• The General Assembly recommended that all countries give due consideration to that Model Law, in view of the desirability of uniformity of the law of arbitral procedures and the specific needs of international commercial arbitration practice.
• UNCITRAL adopted the UNCITRAL Conciliation Rules in 1980.
• The General Assembly recommended the use of those Rules.
• The Model Law and the Rules make significant contribution to the establishment of a unified legal framework for the fair and efficient settlement of disputes arising in international commercial relations.