Anatomy of arbitration and conciliation act, 1996

This Act was enacted to consolidate and amend the laws relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards as so define the law relation to conciliation and for matters connected therewith or incidental thereto. The key takeaways from the new Act, was that expressions like ‘arbitrator’ and ‘award’ have been substituted by expressions ‘arbitral tribunal’ and ‘arbitral awards’, respectively. Moreover, the provisions regarding appointment of arbitrators, proceedings and so on have been elaborated with legalese by lending force to the substance of the prior enactments. As a consequence, the arbitration agreement can be in the form of a clause in the contract amongst the parties or via a separate agreement. In Bihar State Mineral Development Corporation v. Encon Building (I) Pvt. Ltd., AIR 2003 SC 3688, the Apex Court has laid down the essential elements of an arbitration agreement as hereunder -

1. There must be a present or future difference in connection with some contemplated affairs,
2. There must be the intention of the parties to settle such differences by a private tribunal,
3. The parties must agree in writing to be bound by the decision of such tribunal
4. The parties must be ad idem.

“Furthermore, for the purpose of construing an arbitration agreement, the term ‘arbitration’ is not required to be specifically mentioned therein.”

According to Sec (§) 7 of the said Act, —

1. “Arbitration Agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

2. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

3. An arbitration agreement shall be in writing.

4. Arbitration agreement is in writing if it is contained in -

1. A document signed by  the parties;
2. An exchange of letters, telex, telegrams or other means of telecommunication which, provide a record of the agreement; or
3. An exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.

5. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.

The anatomy of the Arbitration and Conciliation Act, 1996 comprises of 86 Sections (§§) divided into four parts, besides the Preamble and three Schedules.

§1 deals with short title, extent and commencement.

Part I containing §§ 2 – 43, divided into ten chapters deals with generic provisions of Arbitration.
Part II containing §§ 44 – 60, divided into two chapters deals with enforcement of certain foreign awards.
Part III containing §§ 61 – 81 deals with Conciliation and
Part IV containing §§ 81 – 86 provides for the supplementary and enabling provisions.