This article is written by Ms. Vedika V. Kamalu, a 1st year B.A.LLB. student from Manikchand Pahade Law College, Aurangabad.
Introduction
The parliament enacted the Arbitration and Conciliation Act in 1996. It came into force on July 1st 1997 with the objective of promoting arbitration as an alternative method for the resolution of disputes.
The Arbitration and Conciliation Act authorizes the use of arbitration in certain disputes involving commercial parties or employers engaged in trade or commerce; it also authorizes the use of conciliation services as an alternative to arbitration.
Overview of the Arbitration and Conciliation Act
The Arbitration and Conciliation Act is a piece of legislation that allows for the resolution of disputes through arbitration and conciliation. Arbitration is defined as a type of alternative dispute resolution (ADR), which is a process used to settle disputes outside of court. The Act also applies to mediation, which is another type of ADR used to resolve disputes between parties who are unable to reach an agreement on their own.
The scope of this act is limited by its definition: It only applies when two or more parties are involved in a dispute and all parties agree to use ADR methods rather than going through legal proceedings in court. If a party does not want their case to be resolved through arbitration or conciliation, they can opt out by writing down their decision within seven days of receiving notice from another party involved in their case about using ADR methods instead of going through regular court processes such as jury trials, etc.
Objectives of the Arbitration and Conciliation Act
The objectives of the Arbitration and Conciliation Act, 1996 are:
- To promote and facilitate the resolution of disputes through arbitration.
- To provide a speedy and cost-effective dispute resolution mechanism.
- To encourage the use of arbitration and providing a framework for the conduct of arbitration proceedings.
Arbitration Has Many Advantages
Flexibility: The parties can tailor the process to their specific needs, including the number of arbitrators, time limits, and other procedural issues.
Speed: Because arbitration is a streamlined process, you can resolve your case quickly rather than waiting months or years for a court date.
Confidentiality: Both parties agree not to reveal any information about their case outside of court (unless ordered by law). This ensures that no one knows anything about your business dealings unless they are required to know for legal reasons—and even then, only what is required.
Cost-effectiveness: Arbitration is typically less expensive than litigation because there are no lawyers’ fees involved, but if both sides hire attorneys, it becomes more expensive than litigation because those fees must be paid out-of-pocket by each party rather than being split between two sides as they would be during mediation sessions held at mediator offices, where all three parties sit together at once rather than just talking over phone lines between themselves separately from each other.
The arbitration process is as follows:
- Arbitrator appointment – The parties to the dispute select an arbitrator from a panel of individuals appointed by the Central Government or any other authority specified in this regard.
- Claim required to file – If a claim is made, it must be filed within 30 days of the date that one party served notice on the other party and cannot exceed Rs 10 lakhs (Rs 1 million). Under Section 9(1) of the Act, claims exceeding this limit can only be referred to the courts for resolution.
- Hearings – Unless both parties agree otherwise in writing before or after filing their claims with court/arbitration tribunal respectively, a hearing must take place within three months from the date of filing claims; however, if no decision has been made within this period, either party may apply directly to court/arbitration tribunal asking whether they will accept jurisdiction over their case under section 9 (2).
The Role of the Court
The role of the courts is to enforce arbitration agreements, appoint arbitrators and set aside awards. The court has the power to stay legal proceedings pending arbitration.
Appeal Against an Award
An appeal against an award may be filed in the following cases:
- Where there has been a material irregularity in the conduct of arbitration proceedings; or
- Where there has been an error in law on the face of it, which would have affected the result of the case.
The reasons for the appeal (ACCA) shall be laid down in article 34 (1) of the 1996 Act on Arbitration and Conciliation. The notice shall be served to all the parties concerned by the last known address or place of business within 30 days of the date of the last known address or place of business, and a copy of it shall be sent to each of them. Unless otherwise directed, the court will hear any such application without giving notice to any other party, but no such direction shall be given without giving every opportunity to those affected before making such order as may seem fit considering all circumstances surrounding such case under section 36 (1) (b) of the ACCA 1996.
Limitations of Arbitration
In the case of a legal representative of the parties, the law on arbitration does not apply. This means that arbitrators do not have the authority to order witnesses to attend hearings or produce documents, and they do not have the authority to award damage for noncompliance with their orders (except as provided by law).
Arbitrators do not have the authority to make final decisions on legal or factual issues; they can only make recommendations based on their findings of fact and legal conclusions. These recommendations only bind the parties involved in the dispute, and they do not bind third parties who may be affected by them, such as other employees or customers involved in a dispute between two companies. Finally, under this legislation, the award of an arbitration is not subject to appeal, and if you want to review your case after the arbitration decision, you must start again in court.
Conclusion
Having the Arbitration and Conciliation Act, which permits the speedy resolution of disputes between parties, effectively helps to facilitate a smooth dispute resolution process. Additionally, it contains provisions for the appointing of arbitrators and mediators, who will be responsible for resolving these disputes on a case-by-case basis. It is the purpose of this Act to provide a speedy resolution of disputes through arbitration or conciliation, which are alternative dispute resolution mechanisms (ADRs), to make the process as efficient as possible.
This Act aims to achieve the following objectives:
- Assisting in the resolution of commercial and industrial disputes in a timely manner, by providing a means for doing so. Aiding in the speedy resolution of disputes within a reasonable time frame.
- Providing access to justice to the parties involved in such disputes so as to ensure that their rights are protected.
- Promoting good faith negotiations between parties involved in commercial or industrial disputes.
- Allowing parties to resolve disputes in a cost-effective manner.
- Encouraging the use of alternative dispute resolution methods such as mediation and arbitration.
- Ensuring that all parties are provided with fair and equitable treatment.
In order to promote a settlement agreement between disputing parties, it is important to provide them with the opportunity to meet face-to-face in order to reach an agreement.
References:
- https://www.latestlaws.com/bare-acts/central-acts-rules/alternative-dispute-resolution-laws/arbitration-and-conciliation-act-1996/
- https://blog.ipleaders.in/arbitration-and-conciliation-act-1996/
- https://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research_Papers/International_Commercial_Arbitration.pdf
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