A Glimpse of the Arbitration and Conciliation Act, 1996
The Arbitration and Conciliation Act, 1996 is the key legislation governing arbitration in India. The act provides for the procedure of Arbitration proceedings in India. The law of arbitration states that for adopting arbitration as a mechanism of settlement of disputes, an agreement to should be signed by both the parties. The parties can either opt for a separate arbitration agreement to be signed between them or include an arbitration clause in the contract between them. The arbitration clause should specifically mention that if a dispute arises, then it would be resolved through arbitration only and it should specify the number of arbitrators to be appointed and their manner of appointment. An arbitrator is an unbiased independent third party who resolves the dispute between the parties in an impartial manner. The parties are free to choose the number of arbitrators, as long as it is not a even number.
Following are the steps involved in an arbitration proceeding:
1.) Arbitration clause: An agreement or the clause specifically stating that the parties will be adopting arbitration as the mode of dispute resolution.
2.) Arbitration notice: In case a dispute has arisen, then a party will send a notice to the defaulting party for invoking the steps of arbitration process.
3.) Appointment of Arbitrator: Now, both the parties will appoint the arbitrator/s as specified in their arbitration agreement or clause.
4.) Statement of Claim: After the arbitrators have been appointed by both the parties, a statement of claim is drafted by both the parties. A statement of claim entails the dispute between the parties, events which caused the dispute and the compensation claimed by the aggrieved party. The other party can file a counter-claim as a reply to the Statement of Claim.
5.) Hearing of Parties: An arbitral tribunal will hear both the parties and will examine the presented evidence.
6.) Arbitral Award: The decision of the Arbitral tribunal is referred to as ‘Award’ and is binding on both the parties. Moreover, an appeal can be filed in the High Court against the arbitral award pronounced by the arbitral tribunal.
7.) Execution of Award: Once the arbitral award has been passed, it has to be executed. At this stage, an arbitration lawyer should be consulted by the party in whose favour the arbitral award has been passed, to file for execution or enforcement of award.
The provisions of the Code of Civil Procedure (CPC) do not apply to the arbitration proceedings in India. There is also no obligation upon the arbitrator to follow the procedure prescribed in the Code.
In India, an arbitrator is empowered to:
- Make Awards
- Take assistance
- Rule on its jurisdiction
- Pass interim relief
- Determine procedures
- Decide on the official language of the proceedings
- Appoint an expert
- Seek the court’s assistance for evidence
- Terminate proceedings
- Impose interest and proceedings