Need for Arbitration and Conciliation Act in changing global scenario

The biggest task for India after independence was to rapidly increasing the industrial base of the country. For the above said purpose the first Industrial Policy was introduced. It was shaped on the Mahalanobis Model of growth, which suggested that emphasis on heavy industries would lead the economy towards a long term higher growth path. The policy widened the scope of the public sector. However the political and economical thinkers did not recognized the private sector participation. In the following industrial policies though the government has recognized the need of private participation but the scope was limited. But Industrial Policy, 1991 has made the drastic change. The major objective of Industrial Policy, 1991 was to reduce the bureaucratize control on Indian Industries. Presently, there are only six industries which require compulsory licensing. Similarly, there are only three industries reserved for the public sector.

In the last two decades there is a tremendously growth in industries . This growth has also increased the disputes relating to business. It has been realized by the Government of India that in the interest of economy there is a need for a mechanism recognized by judiciary which could speedily resolve the disputes.

The Parliament of India for the above said purpose has enacted Arbitration and Conciliation Act 1996(w.e.f 16, August 1996). The objective of the Arbitration and Conciliation Act is to settle the dispute speedily without interference of judicial courts. It also been enacted to reduce the burden of over burdened judiciary. It is a mechanism by which a parties to the dispute them self decide the rules to resolve the disputes and the appoint arbitrator. However parties are free to take the aid of Appropriate court for the appointment of arbitrator if they themselves fails to do so.

The parties willing to resolve the dispute must have a written agreement for the above said purpose. Generally there is a arbitration clause in the contract. However there could be a separate agreement(Section 7). Arbitration clause of the contract is itself an agreement. Even if the other clauses of the agreement ceases to exist or become void even then parties has to abide with the arbitration clause.

The party who's interest in at the stake may ask the other party to participate in arbitration proceedings. If the other party do not respond to the invitation then application along with original copy of the agreement will be filed in the concern court. The concern court shall refer it to the arbitration(Section 8).

The parties are free to appoint any number of arbitrators to conduct the proceedings. But when parties are not agreed on the number of arbitrators to be appointed then there will be a sole arbitrator. Where there is a provision for appointment of three arbitrator then each party will appoint one arbitrator and appointed arbitrators will further appoint third arbitrator. It the parties fail to appoint arbitrator or two arbitrators fails to appoint third arbitrator within thirty days from the date of dispute arises then the appointment shall be made, upon the request of the party, by the chief justice. In case of international commercial arbitration, the Chief Justice of India shall appoint the arbitrator(Section 11).

The Arbitration and Conciliation Act gives priority to mutual settlement then the arbitration award. Where there is any possibility of settlement between the parties then the same shall be promoted by arbitral Tribunal. Clause (2) of section 30 states that If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall terminate the proceedings and, if requested by the parties and not objected to by the arbitral tribunal, record the settlement in the form of an arbitral award on agreed terms.

Parties if aggrieved by the arbitration award may file the application for setting aside Arbitration Award under section 34 with in the Limitation period (3 months). The application can only be made on following grounds:-

1) A party was under some incapacity.
2) Not valid under any law in force.
3) Notice was not given or was otherwise unable to present his case.
4) Award beyond submissions made before the arbitral tribunal.
5) Not in accordance with the terms of the agreement.
6) Court found that the dispute is not capable of settlement by arbitration under the law for the time being in force.
7) In conflict with public policy.

The enforceability of arbitration shall be in the same manner as if it were a decree of the court.

The Arbitration and Conciliation Act also contains an alternate remedy called conciliation. Conciliation is a means by which the parties them self decide the terms of settlement agreement. The party which is interested in conciliation must send a written intimation to the other party. It the party do not receive consent in writing within 30 days then it will be considered as a rejection and shall be informed accordingly to the other party (Section 62). All the parties and conciliators shall maintained confidentiality (Section 75). The above said act has given the conciliator responsibility to facilitate the parties to mutually settle their dispute. Unlike arbitration there shall be one conciliator unless parties agree that there shall be two or three conciliators. They should act jointly. The appointment of conciliator in the same as of appointment of arbitrator stated above.

The settlement agreement between the parties is binding on them and enforceable in the same manner as if it were a decree of the court.

The mechanism of arbitration and conciliation embedded in the act is so far been effective in out of court settlement.