1.

History of Arbitration Law in India

Since ancient times, arbitration has been an integral part of the Indian culture. Local forms
of self-government like jirgas and panchayats conducted informal arbitral proceedings and
their decisions were considered to be binding. These forms of dispute resolution involved
the nomination of local luminaries often village elders or others of high social stature, to
settle disputes within communities. This traditional council of adjudicators eventually
evolved into a form of self-rule in India, the panchayat raj, which incorporated arbitral
practices as part of a post-colonial ideal of local governance and grassroots democracy.
Even Hindu Mythology provides early descriptions of arbitration. In some account of
Ramayana, Lord Rama and his family attempt to settle their dispute through arbitration by
deities. Under British colonial administration, arbitration was accorded a limited, but
gradually expanding, place in the resolution of Indian commercial disputes.
Post-independence, India ratified the New York Convention on 13th July 1960 pursuant to
which the foreign awards (Recognition and Enforcement) Act, 1961 was the first step
towards the development in the international commercial Arbitration which ultimately gave
recognition to the Arbitral awards decided by outside the territories of India, in India.
Arbitration, in the Indian context, has been defined under s. 2(a) of the Indian arbitration and
conciliation Act, 1996 which, however, does not throw any light on what arbitration is, merely
defining it as “any arbitration whether or not administered by a permanent arbitral institute.”
Arbitration has four fundamental characteristics:
 It works as an inherent alternative to national courts.
 It is a privately powered mode of dispute resolution.
 In this mode of dispute resolution, the parties themselves are in control.
 It is binding upon the parties.
The most enticing feature of arbitration is perhaps the fact that the parties are entirely in
control of the process, thus leading to a greater satisfaction with the final award in
comparison to the outcomes of litigation.
2. Modes of ADR

There are four types of Alternative Dispute Resolution methods:

Conciliation,
Mediation,
Arbitration &
Adjudication.
The above-mentioned modes are explained below.
1. Conciliation
It is an ADR technique in which a third party, generally known as a conciliator, helps the
parties involve to reach proper issues, produce options, give advice and try to
conclude/resolution by the of an agreement.
As conciliator is involved in this method, he/she may have expertise in one of the subject
matter and gives advice to the parties and come to a resolution for disposal of the case. A
conciliator can be a voluntary, court-approved, or as per mention in a contract. However,
the person appointed as a conciliator cannot give decisions or judgment regarding the
dispute he/she dealing with.
A conciliator can have sessions face-to-face or telephonic conversation and may hold
separate time for each party to have a session with them.
2. Mediation
It is an ADR process in which a third party is making a mediator which helps the parties to
know about the specific issues, to develop options, and by themselves come to a dispute
resolution.

It can only assist them in their issues and problems, but, cannot give their advice or opinion
regarding the issues raised and can also not give any decision or judgment in the case.

A mediation period is always taking place face-to-face between the parties involve and one
or more than one mediator is present. During mediation, the parties are asked to directly
communicate, give their opinion, and come to a resolution. They may ask, for a separate
session with the mediator, at any point in time. From time to time they will take a break and
discuss the advice given by one party and can also ask for assistance and clarification if
they want.

As a conciliator, a mediator can also be voluntary, court-approved, or as per mention in a

contract. Most of the time, he/she is the person appoint by the government or approve by
the court.
3. Arbitration
Arbitration is an ADR process in which an independent third party, an arbitrator, is appointed
in front of whom the parties present their arguments and evidence; as a result of which the
person appointed gives a binding decision. Arbitration is more useful in cases where there
is more technicality & parties are more confident than on an open court.

The process of Arbitration is more formal and structured in contrast to what is there in
conciliation & mediation. It’s somewhere like a Court because, in the end, the arbitrator who
deals with the case gives a binding decision for both parties.
4. Adjudication
Adjudication is also a part of the ADR process in which an independent third party, refer as
Judge or Adjudicator, listens to the arguments of both sides and gives a decision. It involves
a faster process, usually of 28 days, for both parties to put forward their issues and case in
a form of response or notice. As it is a more formal type of process, the contract between
the parties provides the option of how an adjudicator should be chosen i.e., by professional
bodies.
The major aspect of adjudication is the speed and the time-effective cost procedure which
is followed, like that in an arbitration process. It is more like a court type of situation.
Generally, it has no drawbacks but lack of proper evidence may lead to injustice with the
parties and the amount invested is also non-recoverable. Both points should be kept in mind
while going for this mode of ADR.
3. Advantages & Disadvantages of ADR
Advantages of ADR

Alternative dispute resolution (ADR) procedures have several advantages:

 Reduced time in dispute- It takes less time to reach a final decision.

 Reduced costs in relating to the dispute resolution- It requires less money i.e. it is
cheap.
 Flexibility-Parties have more flexibility in choosing what rules will be applied to the
dispute. They have the freedom to do so.
 Produce good results- settlement rates of up to 85 percent.
 Improved satisfaction with the outcome or manner in which the dispute is resolved
among disputants.
 Increased compliance with agreed solutions.
 A single procedure[4]– Parties can agree to resolve in a single procedure a dispute
involving intellectual property.
 Party autonomy- Because of its private nature, ADR affords parties the opportunity
to exercise greater control over the way their dispute is resolved than would be the
case in court litigation. In contrast to court litigation, the parties themselves may
select the most appropriate decision-makers for their dispute. In addition, they may
choose the applicable law, place and language of the proceedings. Increased party
autonomy can also result in a faster process, as parties are free to devise the most
efficient procedures for their dispute. This can result in material cost savings.
 Neutrality– ADR is neutral to the law, language and institutional culture of the parties,
thereby avoiding any home court advantage that one of the parties may enjoy in
court-based litigation.
 Confidentiality- ADR proceedings are private. Thereby, the parties can agree to keep
the actions confidential. This allows them to focus on the merits of the dispute without
concern about its public impact.
 Finality of Awards- Unlike court decisions, which can generally be contested through
one or more rounds of litigation, arbitral awards are not normally subject to appeal.
 Enforceability of Awards- The United Nations Convention for the Recognition and
Enforcement of Foreign Arbitral Awards of 1958, known as the New York Convention,
generally provides for the recognition of arbitral awards on par with domestic court
judgments without review on the merits. This greatly facilitates the enforcement of
awards across borders.
 Preserves relationship- Helps people cooperate instead of creating one winner or
one loser.
Disadvantages of ADR

Some disadvantages of alternative dispute resolution are:

 It can be used as a stalling tactic.

 Parties are not compelled to continue negotiations or mediation.
 Does not produce legal precedents.
 Exclusion of pertinent parties weakens final agreement.
 Parties may have limited bargaining power. Parties do not have much of a say.
 Little or no check on power imbalances between parties.
 May not protect parties’ legal rights. The rights of the parties may not be protected
by alternative dispute resolution.
 Your case might not be a good fit[5]– Alternative dispute resolutions resolve only
issues of money or civil disputes. Alternative dispute resolution proceedings will not
result in injunctive orders. They cannot result in an order requiring one of the parties
to do or cease doing a particular affirmative act.
 There are limits to the discovery process– You should also be aware that you are
generally preceding without the protections offered parties in litigation, such as those
rules governing discovery. Courts generally allow a great deal of latitude in the
discovery process, which you will not have in an alternative dispute resolution.
 There is no guaranteed resolution. With the exception of arbitration, alternative
dispute resolution processes do not always lead to a resolution.
 Arbitration decisions are final. With few exceptions, the decision of a neutral arbitrator
cannot be appealed. Decisions of a court, on the other hand, usually can be appealed
to a higher court.
 Participation could be perceived as weakness. While the option of making the
proceeding confidential addresses some of this concern, some parties still want to
go to court “just on principle.”
 The case might not be a good fit-Alternative dispute resolutions generally resolve
only issues of money or civil disputes.
o There are limits to the discovery process-One should also be aware that
he is generally proceeding without the protections offered parties in litigation,
such as those rules governing discovery.
 4. SALIENT FEATURES OF ARBITRATION AND
CONCILIATION ACT 1996

Salient Features Of Arbitration And Conciliation Act 1996

 Meaning of Arbitration and Definition of Arbitration

 Meaning of Conciliation
 Ned of Arbitration and Conciliation Act, 1996 Salient Features of Arbitration and
Conciliation Act 1996

Meaning Of Arbitration:

Arbitration is a procedure in which a dispute is submitted, by agreement of the

parties, to one or more arbitrators who make a binding decision on the dispute.
In choosing arbitration, the parties opt for a private dispute resolution
procedure instead of going to court.
An Arbitration is the reference of a dispute of difference 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”.

Definition Of Arbitration According To Romilly MR :

“Arbitration is a reference to the decision of one or more persons, either with

or without an umpire, of a particular matter in difference between the
parties”.

Meaning of Conciliation:

Conciliation is an ADR process where an independent third party, the

conciliator, helps people in a dispute to identify the disputed issues, develop
options, consider alternatives and try to reach an agreement. The main
difference between arbitration and conciliation is that in arbitration
proceedings the award is the decision of the Arbitral Tribunal. In case of
conciliation the decision is that of the parties arrived at with the assistance of
the conciliator.
Need Of Arbitration And Conciliation Act, 1996

The law relating to arbitration is contained in the Arbitration and Conciliation

act 1996, it came into force on 25th day of January 1996, It provides for
domestic arbitration, international commercial arbitration and also
enforcement of foreign arbitral awards. It contains the new feature on
Conciliation. It proceeds on the basis of the UN Model Law.

Salient Features Of The Arbitration And Conciliation Act, 1996

 Mode of Setting Commercial Dispute

 Arbitration award
 Powers of the court
 Reasons for the award
 Application to the court is not necessary
 Act contains provision relating to the interim measures
 Act deals with arbitration, conciliation which is based on UN Model Law of
Arbitration
 Act defines the term International commercial arbitration
 Act Abolishes the Umpire system
 The Act insists on the Qualification of the arbitrators
 Enforcement of certain foreign awards
 Standard Arbitration clause in the Act
 The Act can be implemented for domestic and International
 Act has structured and organized detailed procedure for conduct of
Arbitration awards
 Act has Applicability of Foreign Arbitral Tribunal
 This Act provides the power to nominate arbitrators
 Act provides the quick disposal of disputes
 Provisions relating through intervention of court