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The Arbitration and Conciliation Act was adopted by the Indian legal system in 1996 as an update of standard Alternative Dispute Resolution (ADR) policy. Though Indian in origin, the Arbitration and Conciliation Act has international ramifications. It is designed to work in concert with United Nations Commission on International Trade Law (UNCITRAL) policies concerning foreign commercial arbitration processes.
Alternative dispute resolution in India has been governed by the Arbitration Act of 1940 and regionally by an ancient dispute resolution process known as lok adalat. The adoption of the Arbitration and Conciliation Act was an attempt to streamline the Indian legal system and bring its arbitration practices into closer concert with UNCITRAL. Undertaking arbitration reform was a joint process involving an exchange of information between members of both the Indian and the United States Supreme Courts.
The Indo-US study of arbitration and Indian Code of Civil Procedure for mediation resulted in the creation of the Arbitration and Conciliation Act. Ongoing examinations of ADR cases by the judiciary of both nations gave statutory recognition to provisions of the Arbitration and Conciliation Act in 2002. Despite this progress, no real effort was taken by the court systems to utilize the provisions of the Arbitration and Conciliation Act or choose its preferred methods of ADR by attorneys involved in arbitration cases.
There exist six key features to the Arbitration and Conciliation Act including: the Arbitration Agreement, the Conduct of Arbitral Proceedings, the Arbitral Award, Intervention by Court, Conciliation, and Enforcement of Foreign Awards. The first three of these provisions deal exclusively with the established legal process of binding arbitration. Though arbitration takes place outside of the traditional court system, both parties in an arbitration agreement are legally bound to the decisions made by the arbiter.
Intervention by court in the Arbitration and Conciliation Act is designed to curtail objections to the arbitration process. In the past, arbitration law allowed participants of the process to initiate litigation through the traditional court system at virtually any stage during the dispute process. The Arbitration and Conciliation Act severely restricts court access and redirects objections to an Arbitral Tribunal.
Conciliation is an allowance for agreements to be made in the absence of arbitration or during the arbitration process itself. The conciliator that brings the parties together to negotiate has no official authority. After a conciliated settlement is reached, however, both parties and the conciliator sign a settlement agreement. This agreement has the same legal status as an Arbitral award.
Enforcement of Foreign Awards is the final provision of the Arbitration and Conciliation Act. Foreign Awards can be enforced by India per the New York convention established in 1960. Any signatory country to the United Nations that has agreed to the New York convention must comply with the Foreign Awards provision. Any party wishing to enforce a foreign award must first present an Arbitral award to the local district court in the nation that has jurisdiction over the subject of the award.
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