Arbitration Conciliation and Mediation, First Edition, LexisNexis

Arbitration Conciliation and Mediation, First Edition, LexisNexis, Vishnu S Warrier
Arbitration Conciliation and Mediation, First Edition, LexisNexis, Vishnu S Warrier

Alternative Dispute Resolution (ADR) refers to any means of settling disputes outside of the courtroom. Arbitration is a method of resolving disputes through an arbitrator, appointed by the parties in a dispute. ADR is a collective term by which the parties to any dispute can settle any issues arising between them, with or without the help of a third party. It is an alternative method to the regular court proceedings for settling any dispute.

A dispute is essentially a lis inter partes, and the justice dispensation system in India has found an alternative to such forms of adversarial litigation in the form of the Alternative Dispute Resolution mechanism. ADR has an advantage of providing parties with the opportunity to reduce hostility, to resolve conflict in a peaceful manner, and achieve a greater sense of justice in each individual case. Most common forms of ADR are negotiation, conciliation, mediation, and arbitration.

The Indian law of arbitration is contained in the Arbitration and Conciliation Act, 1996 which is based on the 1985 UNICITRAL Model Law on International Commercial Arbitration and the UNCITRAL Arbitration Rules of 1976. The Statement of Objects and Reasons of the Act recognises that India’s economic reforms will become effective only if the nation’s dispute resolution provisions are in tune with the international regime.

This book titled “Arbitration, Conciliation and Mediation” is an attempt to provide a compact, integrated text on the law relating to Arbitration, Conciliation and Mediation. In this book, author Mr. Vishnu S Warrier tried to provide section wise comments, along with a detailed discussion on leading cases of both Indian and Foreign courts, which will assist the reader in interpreting and understanding the provisions of the Arbitration and Conciliation Act, 1996.

This book titled “Arbitration, Conciliation and Mediation” is intended both, to inform managers and the managed, about laws that apply directly to them, and to help lawmakers, public agency staff, and interested observers to better understand the nature of the existing legal influences on Arbitration, Conciliation and Mediation.


Author: Vishnu S Warrier

Publisher: LexisNexis

ISBN-10: 9351435547

Edition: 1

Number of Pages: 259 Pages

Publication Year: 2015

Language: English

ISBN-13: 9789351435549

Binding: Paperback

Fatwas have no legal standing: Supreme Court

Dr. Ravishankar K. Mor, Asst. Prof., Dept. of law, Yeshwant Mahavidyalaya, Wardha

VISHWA LOCHAN MADAN Vs UNION OF INDIA & ORS. (W.P. (civil)No. 386/2005) Date of Judgement 07.07.14


Petitioner alleges that all Fatwas  have  the  support  of  All India Muslim Personal Law Board and it is striving for the establishment  of parallel Muslim judicial system in  India.   According  to  the  petitioner, adjudication of disputes is essentially the  function  of  sovereign  State, which can never be abdicated or parted with. In order to highlight the severity of issue, petitioners presented the instances of a few fatawas which seems to be pertinently violative of rights conferred under part three of the constitution of India. Lets have a look upon then,

A  Fatwa  given  by  Dar-ul-Uloom  of Deoband in relation to Imrana’s incident.  Imrana, a  28  years  old  Muslim woman, mother of five children was allegedly  raped  by  her  father-in-law.

The question arose about her marital status and those of her  children  born in the wedlock with  rapist’s  son.   The  Fatwa  of  Dar-ul-Uloom  in  this connection reads as follows:

“If one raped his son’s wife and it is proved  through  witnesses,  or the rapist himself confesses it, Haram Musaharat will be proved.   It  means that the wife of the son will become unlawful forever to him i.e.  the  son. The woman with whom father has copulated legally or had  sexual  intercourse illegally in both ways, the son can’t keep physical relationship  with  her.

The Holy Quran says:

“Marry not the woman whom your father copulated”

The  Fatwa  has  dissolved  the  marriage  and  passed  a  decree  for perpetual injunction restraining  the  husband  and  wife  living  together, though none of them ever approached the Dar-ul-Uloom.

Another Fatwa of which our attention is drawn  rules  that  no police report can be filed against the father-in-law of Asoobi, who  had  allegedly raped her.  According to the Fatwa, father-in-law  could  have  been  blamed only if there had either been a witness to the case or the victim’s  husband had endorsed  Asoobi’s  allegation.   Yet  another  Fatwa,  which  has  been brought to our notice is in connection with Jatsonara, a 19 year old  Muslim woman, who was asked to accept the rapist father-in-law as her real  husband and divorce her husband.

In the aforesaid background, the petitioner has sought  a  declaration  that the movement/ activities being pursued by All  India  Muslim   Personal  Law Board and other similar organizations for establishment of  Muslim  Judicial System and setting up of Dar-ul-Qazas (Muslim Courts) and Shariat  Court  in India are absolutely illegal, illegitimate  and  unconstitutional.   Further declaration sought for is  that  the  judgments  and  fatwas  pronounced  by authorities have no place in the Indian Constitutional system, and the  same are unenforceable being  wholly  non-est  and  void  ab-initio.   Petitioner further seeks direction to the Union of India and the  States  concerned  to forthwith take effective steps to disband and diffuse all  Dar-ul-Qazas  and the Shariat  Courts  and  to  ensure  that  the  same  do  not  function  to adjudicate  any  matrimonial-disputes  under  the   Muslim   Personal   Law.

Thus the contentions raised in the petition can be summarized as,

  1. Shariat courts and other bodies like Dar-ul-Qazas, Dar-ul-uloom creates parallel court system and are unconstitutional, and
  2. Fatawas issued are in contravention of fundamental rights of the citizen under constitution of India.

Thus this was the opportunity for honourable Supreme Court to decide on the issue which time and again struck news paper headlines in India. Such news of strange fatwas issued by Shariat courts and somewhat similar orders by khap panchayats are not new in India.

The stand taken by Union of India was this

  • Fatwas are advisory in  nature and no Muslim is bound to  follow  those.
  • Further,  Dar-ul-Qazas  does  not administer criminal justice  and  it  really  functions  as  an  arbitrator, mediator, negotiator or conciliator in matters pertaining to family  dispute or any other dispute of civil nature between the Muslims.
  • Dar-ul-Qaza can  be  perceived  as  an  alternative  dispute resolution mechanism, which strives to settle disputes  outside  the  courts expeditiously in an amicable and inexpensive manner and, in  fact,  have  no power or authority to enforce its orders and, hence, it cannot be termed  as either in conflict with or parallel to  the  Indian  Judicial  System.
  • According to the Union of India, few bad  examples  may not justify abolition  of  system,  which  otherwise  is  found  useful  and effective.

The Union of India has not denied that Fatwas as alleged by the petitioner  were not issued but its plea is that they were not issued by any of  the  Dar-ul- Qaza but by a Dar-ul-uloom.

Similar was the submission by other respondents, All India Muslim Personal law Board, Dar-ul-Uloom, Deoband, State of UP and State of Maharashtra.

They all raise the same plea that Fatawas are advisory in nature and lack any enforceability. Though Dar-ul-Uloom,  Deoband  admits  issuing  Fatwa  in Imrana’s case as per Fiqah-e-Hanafi, which is based  on  Quaran  and  Hadith but asserts that it has no agency or powers to enforce its  Fatwas.   It  is within the discretion of the persons or the parties  who  obtain  Fatwas to abide by it or not.  However, according to them,  God  fearing Muslims being answerable to the Almighty, obey the Fatwas, others  may  defy them. At no point of time respondents denied that fatawas as alleged are against the fundamental rights.

Court while dealing with the issue of Dar-Ul-Qazi courts examine the issue on the basis of source of its authority and as no legislation empower such courts held they do not constitute parallel court system.

This is quite interesting to note here that source of such courts were looked at the legislations, “Dar-ul-Qaza  is  neither  created nor sanctioned by any law made by  the  competent  legislature. ” while such courts always claim authority under the religion and not statute, and court taking plea that there is no state enforceability to the decisions of such courts held they do not create parallel judicial administration, though it is apparent that they are dealing with the process of deciding rights and liabilities of the people and as such very much performing judicial function. So far as enforceability is concerned responded has accepted that god fearing Muslim will honour such fatwas. Was this not enough for the courts to declare such practice unconstitutional? Even a single instance of denying fundamental right of the individual must be dealt with highest constitutional authority; this is rather responsibility of the court to see no individual shall be allowed to waive his fundamental right. But court took lenient view and accepted the argument that such Muslim courts are like alternative dispute resolution mechanisms. This really call for further deliberation at highest level of judiciary through a constitutional bench.

On second issue, whether such fatawa are unconstitutional the court has not come out with clear opinion anyway rather has accepted the right of such bodies to issue fatwas in religious matters and held “A Fatwa is an opinion, only an expert is expected to give.” Rather than declaring any such fatwa illegal and unconstitutional court prefer to use the language “we  observe that no Dar-ul-Qazas or for that matter, any  body  or  institution  by  any name, shall give verdict or issue Fatwa touching  upon  the  rights,  status and obligation, of an individual unless such an  individual  has  asked  for it. In the case of incapacity of such an individual, any  person  interested in the welfare of such person may be permitted to  represent  the  cause  of concerned individual.”

In the careful reading one can say court has recognised rights of such courts to issue fatwas even if they touch the constitutional rights of the individual, if asked by the concerned person. Does it mean that one can waive his fundamental rights? .

This case was a good opportunity for honourable court to warn the fundamentalist that in the era of constitution, religious fanatics has no place, no such attempt will be tolerated, but court rather than issuing warning merely declared such fatwas having no legal enforceability and has miserably failed to contained the instances which bring shame to this country. This is clearly a case of lost opportunity.

A Portrait of Conciliation as Method of ADR: An Analytical Perspective

Pankaj Sevta, Research Associate

Art. 1(3) of the UNCITRAL Model Law on International Commercial Conciliation 2002 defines Conciliation to mean “a process, whether referred to by the expression conciliation, mediation or an expression of similar import, whereby parties request a third person or persons (‘the Conciliator’) to assist them in their attempt to reach an amicable settlement of their dispute arising out of or relating to a contractual or other legal relationship ((O.P. Malhotra & Indu Malhotra, The Law and Practice of arbitration and conciliation 1513 (2nd Ed., 2006).)). The definition of conciliation formulated by the International Labour Organization in 1983 has been followed by ACAS ((Brown and Marriott, ADR Principles and Practice 272 (2nd Ed., 1999).))in the following words it is a process of orderly or rational discussion under the guidance of the conciliator ((Karl Mackie, Industrial Relations Disputes: The ACAS Role by the Advisory Service in a Handbook of Dispute Resolution: ADR in Action 104 (1991) .)). The definition of Conciliation is a process in which third party assists the parties to resolve their disputes by agreement. A conciliator may do this by expressing an opinion about the merits of the dispute to help the parties to reach a settlement ((Ashwinie Kumar Bansal, Arbitration & ADR 5 (3rd Ed., 2012).)). Conciliation is a compromise settlement with the assistance of a conciliator. Conciliation is a process of persuading parties to reach agreement and is plainly not arbitration ((Halsbury’s Laws of England, 4th Ed., Vol 2, page 255, para 502)). Conciliation had received statutory recognition in India even before enactment of Part III of Arbitration and Conciliation Act 1996. Order XXXII-A of CPC 1908, Sec. 23 of Hindu Marriage Act 1955 and Sec. 3 of Industrial Dispute Act 1947 provided for conciliation. These provision were not however, exhaustive furnishing detailed framework for conduct of conciliation proceedings. It was only in part III of arbitration and Conciliation Act 1996 that the legislature for the first time provided for a detailed statutory framework for the conduct of conciliation proceedings outside court ((S.K Chawala, Law of Arbitration and Conciliation including other ADR’s 846 (3rd Ed., 2012).)).

Advantages of Resolution of a Dispute by Conciliation

It is pertinent to note that following are the advantages of resolution of dispute by conciliation:

(i)                 It offers a more flexible alternative, for a wide variety of disputes, small as well as large;

(ii)               It obviates the parties from seeking recourse to the court system;

(iii)             It reserves the freedom of the parties to withdraw from conciliation without prejudice to their legal position inter se at any stage of the proceedings;

(iv)             It is committed to maintenance of confidentiality throughout the proceedings and thereafter, of the dispute, the information exchanged, the offers and counter offers of solutions made and the settlement arrived at;

(v)               It is cost effective and produces quicker resolution of dispute;

(vi)             It facilitates the maintenance of continued relationship between the parties even after the settlement is attempted at. This feature is of particular significance to the parties who are required to continue their relationship despite the dispute, as in the case of disputes arising out of construction contracts, family relationships, family properties etc.

(vii)           There is no scope for corruption or bias ((Sarbesh Chandra, ADR: Is conciliation the Best Choice p. 91)).

Techniques of Conciliation

There are two methods of conciliation namely the facilitative method and the evaluative method ((Mackie, Miles, Marsh and Allen, The ADR Practice Guide: Commercial Disputes Resolution 49 (2nd Ed., 2000).)). The difference lies in the role adopted by the conciliator during the course of the proceedings. In a facilitative mode, the conciliator will refrain from providing his opinions or advice and will merely ensure that the parties do not misunderstand each other ((Justice RS Bachawat’s, Law of Arbitration & Conciliation 2519 (5th Ed., 2012).)). In an evaluative mode, the conciliator takes a more proactive approach and attempts to get the parties to accept the merits and demerits in their cases thereby leading them to a mutually acceptable solution ((O.P. Malhotra & Indu Malhotra, The Law and Practice of arbitration and conciliation 1521 (2nd Ed., 2006).)). He makes or obtains an assessment and expresses his views on the merits of the rights of the parties in the dispute ((O.P. Malhotra & Indu Malhotra, The Law and Practice of arbitration and conciliation 1521 (2nd Ed., 2006).)).

Role of the Conciliator

Although, like litigation and arbitration, conciliation also often involves an independent third party, the role of a conciliator is basically different from that of a judge or an arbitrator. “He does not impose a decision on the parties but, on the contrary, his role is to assist the parties to resolve the dispute themselves. He may give opinions on the issues in dispute but his primary function is to assist in achieving a negotiated solution ((Carrol and Dixon, ‘Alternative Dispute Resolution Developments in London’, The International Construction Law Review, pt 4, 1990, pp 436-37, cited by Redfern and Hunter in Law and Practice of International Commercial Arbitration 36 (4th Ed., 2004).)).” At best, he may be described as a neutral facilitator or a catalytic agent. He only endeavors to bring the parties in dispute together and assist them in composing their differences by providing an environment in which the parties can communicate constructively, and then to assist the parties in overcoming their obstacles to settlement. He can suggest terms upon which a settlement can be arrived at, but cannot impose a settlement conceived by him on the parties. His role is merely advisory and not creative or decisive, like the role of an arbitrator or an adjudicator ((O.P. Malhotra, Arbitration of Labour Disputes: Labour Adjudication in India, 2001, Journal of the Indian Law Institute, pp 31-32.)).

Framework for conciliation Proceedings: An Over view to the Scheme under 1996 Act

Conciliation is initiated by a party sending to other party a written invitation to conciliate. Once the other party accepts in writing the invitation to conciliate, the conciliation proceedings start ((Arbitration and Conciliation Act 1996, § 62)). It is for the parties to agree as to the number of conciliators. Unless the parties agree that there should be two or three conciliators, there will be only one conciliator. The conciliator will in the conduct of conciliation, as a general rule, act jointly ((Arbitration and Conciliation Act 1996, § 63)). Where the parties have not enlisted the assistance of a suitable institution or person, the parties themselves can agree on the name of a sole conciliator. Where the conciliation is with two conciliators, each party may appoint one conciliator. Section 66 of the Act specifically provides that the conciliator is not bound either by the Code of Civil Procedure 1908 or Indian Evidence Act 1872. The conciliator is to be guided by the principles of objectivity, fairness and justice ((S.K Chawala, Law of Arbitration and Conciliation including other ADR’s 847 (3rd Ed., 2012).)). He should also give consideration to the usage of the trade concerned, the circumstances surrounding the dispute, including any previous business practices between the parties ((Arbitration and Conciliation Act 1996, § 67(2).)). The manner of conducting the conciliation process is left to the conciliator. After taking into account the wishes of the parties, he may allow a party to present oral statement, if the party so wishes ((Ibid, § 67(3).)). At any stage of the conciliation proceedings, the conciliator may make proposals for settlement of the dispute. Moreover the proposal need not be in writing and need not be accompanied by reasons ((Arbitration and Conciliation Act 1996, § 67(4) See also M. Prabhakar, Alternative Dispute Resolution A Practical Approach (2008).)).

The conciliator after his appointment may call upon the parties to present a written summary of their respective cases together with any relevant documents ((Arbitration and Conciliation Act 1996, § 65)). After going through the summary of the case filed by the each party, the conciliator may hold a joint meeting with the parties, where each party may make a brief oral presentation of its case. Thereafter the conciliator may also hold a private meeting, often referred to as caucuses with each party separately ((Arbitration and Conciliation Act 1996, § 69)). By doing so he tries to bring parties closer to an agreement ((S.K Chawala, Law of Arbitration and Conciliation including other ADR’s 847 (3rd Ed., 2012).)). Where parties are so inclined, he may even suggest a settlement for acceptance by the parties ((Supra note 9.)). Each party may also submit to the conciliator suggestions for the settlement of the disputes ((Arbitration and Conciliation Act 1996, §  72)). If the conciliator receives factual information from any party, he may disclose the substance of the information to the other party so that it may have an opportunity to present its explanation, if any. However if any information required by the party to be kept confidential, shall not be disclosed by conciliator to the other party ((Arbitration and Conciliation Act 1996, § 70)). If the conciliator is of the view that there is no scope for agreement between the parties or any of them indicates its unwillingness to pursue conciliation, the conciliator may terminate the proceedings ((Arbitration and Conciliation Act 1996, § 76)). Where the parties reaches an agreement on settlement, the conciliator may hold a final joint setting for drawing up and signing a settlement agreement by the parties ((Arbitration and Conciliation Act 1996, § 73(1)(4).)). When the parties sign the settlement agreement, it becomes final and binding on the parties and persons claiming under them. The conciliator also authenticates the settlement agreement and furnishes a copy thereof to each of the parties ((Arbitration and Conciliation Act 1996, § 73(3)(4).)).

As a principle inherent in conciliation procedure, the conciliator and the parties are bound by certain discipline. Unless all the parties otherwise agree, the conciliator is estopped from acting as an arbitrator or as a representative of a party in any arbitral, judicial or other proceedings in respect of a dispute which is or has been the subject matter of conciliation proceedings in which he acted as conciliator. The conciliator cannot also be presented by a party as a witness in any such proceedings ((Arbitration and Conciliation Act 1996, § 80)). There is also a bar on the parties relying on introducing as evidence in any subsequent arbitral or judicial proceedings, the views expressed or suggestions made by either party in the course of conciliation proceedings ((Arbitration and Conciliation Act 1996, § 81)). In other words, any information pertaining to the conciliation proceedings, whether it has resulted in a settlement agreement or not, is required to be kept confidential by all the parties and the conciliators ((Law Of Arbitration And Conciliation With Exhaustive Coverage Of International Commercial Arbitration And ADR 2509 (5th Ed., 2012).)).

The parties may initiate conciliation even during the pendency of arbitration proceedings involving the same dispute, without prejudice to their respective stands in those proceedings. If such conciliation succeeds, they have to report to arbitral tribunal, who may record the settlement in the form of an arbitral award ((Arbitration and Conciliation Act 1996, § 30)).


It can be concluded that looking in to the present scenario, it can be said that there can be valid reference to conciliation only if both parties to the dispute agree to have negotiations with the help of third party or parties. There is no shadow of doubt that if parties resort to conciliation there are ample of advantages like cost effective, freedom of parties, no scope of biasness etc. It can be analyzed that a conciliator in advisory capacity, plays a vital role by resorting to techniques like facilitative method and the evaluative method, in order to provide negotiated decision between the parties. Moreover, giving a glimpse on the existing framework under part III of Arbitration and Conciliation Act, 1996 it can be construed that an appropriate chain of procedure and system exists which through act as guideline for conciliator as well as parties.

An introduction to Arbitration Agreements

Author: Risha Sharma, Research Associate

“I realised that the true function of a lawyer was to unite the parties . . .  a large part of my time during the 20 years of my practice as a lawyer was occupied in bringing about private compromise of hundreds of cases. I lost nothing thereby – not even money, certainly not my soul. ” – Mahatma Gandhi

Arbitration has been recognised as an effective form of alternate dispute resolution system. It primarily consists of dispute resolution processes and techniques, which enable the disagreeing parties to come to an agreement without resorting to litigation. The parties normally resolve their disputes with or without the aid of a third party. It entails the submission of disputes to an independent authority by whose decision the parties generally abide.  Due to the time consuming and cost inducing traditional form of litigation, presently, parties to a dispute are resorting to arbitration as a means to settle their disputes in order to avoid the inevitable technicalities of court proceedings. In fact, the Abid Hussain Committee on Trade Policies appointed by the Government of India has recommended in its Report, which was released in December 1984, for the compulsory inclusion of an arbitration clause in all export contracts.

The inception of arbitration agreements is as old as society itself.  When men begin to live and trade together, adjudication is inevitable. Hence, the consequent submission of disputes to an independent adjudicating authority is an ancient concept. India has a long history of Arbitration. In ancient times, people often voluntarily submitted their disputes to a group of wise men in the community, called the panchayat, for a binding resolution ((K Ravi Kumar, ‘Alternative Dispute Resolution in Construction Industry’, International Council of Consultants (ICC)  Papers, at p 2)). The Bengal Regulations created modern arbitration law in India in 1772, during the British rule. The Bengal Regulations provided for reference by a court to arbitration, with the consent of the parties, in lawsuits for accounts, partnership deeds, and breach of contract, amongst others ((Ibid)). Until 1996, the law governing arbitration in India consisted mainly of three statutes:

(i)                The 1937 Arbitration (Protocol and Convention) Act,

(ii)              The 1940 Indian Arbitration Act, and

(iii)            The 1961 Foreign Awards (Recognition and Enforcement) Act.

The 1940 Act was general law governing arbitration in India along the lines of the English Arbitration Act of 1934, and both the 1937 and the 1961 Acts were designed to enforce foreign arbitral awards. The 1961 Act implemented the New York Convention of 1958. The New York Convention of 1958 is one of the most widely used conventions for recognition and enforcement of  foreign awards. The Act of 1996 was passed with a view to modernize the old act of 1940 and is based on the UNCITRAL Model Law.

The Act of 1940 was restricted strictly to domestic arbitration. Accordingly, an intervention was required by the courts at all the three stages of arbitration- prior to the reference of the dispute to the arbitral tribunal, during the duration of the proceedings before the arbitral tribunal, and after the award was passed by the arbitral tribunal ((Sarma Krishna, Oinam Momota, Kaushik Angshuman, Development and Practice of Arbitration in India –Has it Evolved as an Effective Legal Institution, Center on Democracy, Development, and The Rule of Law Freeman Spogli Institute for International Studies,(CDDRL) Stanford Papers at p. 3)). Before an arbitral tribunal took cognizance of a dispute, court intervention was required to set the arbitration proceedings in motion. The existence of an agreement and of a dispute was required to be proved. During the course of the proceedings, the intervention of the court was necessary for the extension of time for making an award. Finally, before the award could be enforced, it was required to be made the rule of the court ((Ibid)). The act of 1996, on the other hand, was enacted to make arbitration more effective, expeditious and sustainable. The Act has been divided into two parts. Part I provides for the arbitration agreements conducted in India and the subsequent arbitral awards. Part II provides for enforcement of foreign awards. Arbitration agreements in India are governed by Part I of the Act whereas the enforcement of a foreign award is governed by Part II of the Act. The 1996 Legislation differs from the UNCITRAL Model in two major aspects. Firstly, where the UNCITRAL Model is applicable only to international arbitration agreements, the Act of 1996 is applicable to both national and international arbitration agreements. Secondly, the act of 1996 minimizes judicial intervention more than the UNCITRAL Model. The changes brought about by the 1996 Act were so drastic that the entire case law built up over the previous fifty-six years on arbitration was rendered superfluous ((Ibid)). The Government of India enacted the 1996 Act by an ordinance which was followed by another one before the Parliament passed it.

The Act of 1996 generally refers to disputes which ‘may not be submitted to arbitration’ and to the possibility of the subject matter in dispute not being ‘capable of settlement by arbitration under the law for the time being’. Indian arbitration proceedings are mostly ad hoc despite the advantages of institutional arbitration over ad hoc arbitration. Some of the arbitral institutions in India are the Chambers of Commerce (organized by either region or trade), the Indian Council of Arbitration (ICA), the Federation of Indian Chamber of Commerce and Industry (FICCI), and the International Centre for Alternate Dispute Resolution (ICADR). Part I comprises of 43 sections spread over ten chapters, making detailed provisions relating to domestic arbitration and international commercial arbitration held in India under this Act. It restates the law and practice of arbitration in India, running chronologically through each stage of arbitration, from the agreement, the appointment of the tribunal, conduct of arbitration proceedings, the award to the recognition and enforcement of the awards. The Act also provides for setting aside of the arbitral award, meaning that these awards are not binding in nature and can be set aside on certain grounds. Further, the act also comprises of sections which set forth appealable orders made by the arbitral tribunal and the court authorised by law to hear appeals from original decrees of the courts passing the order ((Malhotra, O.P. , The Law and Practice of Arbitration and Conciliation Act, 2nd Ed. 2006 LexisNexis Butterworths at p. 60)).

Arbitration is a consensual process and is not a matter of coercion. No arbitration statute can require the parties to arbitrate when they have not agreed to do so ((Id p. 51)). The parties are generally free to structure their arbitration agreement in any manner they choose. One of the key objectives of this Act was to reduce the role of supervisory judicial authority in the arbitral process. The advantage of arbitration over court litigation is mainly speedier resolution; however, there can be exceptions to this due to multiple parties, arbitrators, lawyers and litigation strategy. It is also less costly. The rules of evidence do not apply to arbitration agreements. Arbitration does not require a public hearing; there is no requirement for a public record of the proceedings. In arbitration agreements, confidentiality is required of the arbitrator and by agreement the whole dispute and the resolution of it can be subject to confidentiality imposed on the parties as well as their experts and attorneys. The very process of arbitration is informal as compared to litigation.

On the other hand, arbitration has its disadvantages too. There is no right of appeal even if the arbitrator makes a mistake of fact or law. However, there are some limitations on that rule, the exact limitations are difficult to define, except in general terms, and are fact driven ((Mazigrow Arthur, The Advantages and Disadvantages of Arbitration As Compared to Litigation, at p. 2 April 2008)). There is no right of discovery unless the arbitration agreement so provides or the parties stipulate to allow discovery or the arbitrator permits discovery ((Ibid)). The arbitration process may not be fast and it may not be inexpensive, especially when a panel is involved. There is no jury and from the claimant’s point of view that may be a serious drawback. An arbitrator may make an award based upon broad principles of “justice” and “equity” and not necessarily on rules of law or evidence ((Ibid)). An arbitration award cannot be the basis of a claim for malicious prosecution as well.


Arbitration has been increasingly recognised  as  an appropriate means for the determination of disputes that were hitherto regarded as an exclusive reserve of the national courts. It is a system which endeavours to inspire confidence in the Indian dispute resolution system, attract foreign investment as well as reassure international investors in the reliability of the Indian legal system to provide a cost effective resolution system. However, there are some major lacunae in the Act of 1996 which needs to be dealt with. Further, the arbitration proceedings are not as cost effective as they claim to be, especially ad hoc arbitration proceedings. The arbitration tribunal clearly has no coercive authority in the justice system. With the appropriate amendments and a clear framework, arbitration can transform into an efficient alternate dispute resolution method which is only prompt, effectual and economical.