AAGNEY ALEX ROBIN

B1ARA01
S9 A
TUTORIAL 6

Arbitration and Conciliation Act, 1996

Introduction
ADR means Alternative Dispute Resolution which includes various
methods of settling a dispute without getting into the intricacies of the
court. It is a method where parties try to resolve their disputes privately
in front of a third-person expert. The decision is binding on the parties
like the decision of the court. It includes methods like arbitration,
mediation, conciliation and negotiation.

The proceedings are flexible and creative. It provides satisfying solutions

with reduced cost and time and thus, is an emerging field in Law. The
Parliament felt the need and passed an act regarding this matter. The
article deals with an act on arbitration and conciliation known as
Arbitration and Conciliation Act, 1996. It lays out the object, extent and
applicability and discusses the important provisions under the Act.  

Main objective of Arbitration and Conciliation Act, 1996

The main objective of the Act are as follows –

1. It aims to comprehensively(completely) cover international

commercial arbitration and conciliation as well as domestic
arbitration and conciliation.
2. To make provision for an arbitral procedure which is fair, efficient
and capable of meeting the needs of the specific arbitration.
3. It provides that the arbitral tribunal has to give reasons for its
arbitral award.
4. To ensure that the arbitral tribunal remains within the limits of its
jurisdiction.
5. To minimize the supervisory role of courts in the arbitral process.
6. To permit an arbitral tribunal to use Mediation, Conciliation or other
procedures during the arbitral proceedings to encourage
settlement of disputes.
7. To provide that every final arbitral award is enforced in the same
manner as if it were a decree of the court.
8. To provide that a settlement agreement reached by the parties as a
 result of conciliation proceedings, it will have the same status and
effect as an arbitral award.
9. To provide that for the purpose of enforcement of foreign awards,
every arbitral award made in a country which is one of the parties
to the international conventions

Salient features of the Arbitration and Conciliation Act, 1996

Some of the important salient features of Act are as follows –

1. A more comprehensive statute: The Arbitration and Conciliation

Act, 1996 is more comprehensive than the earlier Act of 1940. It
consists of 86 sections divided into 4 parts.
2. Arbitral award treated at per with a decree: Another notable
feature of the Act of 1996 is that the arbitral award and settlement
arrived at during conciliation proceedings have at per with the
decree of the court. In other words the arbitral award is
enforceable in the same manner as a decree of a law court.
3. Curtailment of the courts process: The power of the court under
the Act of 1996 has been considerably curtailed as compared with
the earlier Arbitration Act of 1940. The arbitrator has been
endowed with absolute powers and he is completely immune from
the court’s control during the arbitration proceedings.
4. Abolition of the Umpire system: Another important feature of the
Act of 1996 is the abolition of the umpire system. The earlier Act of
1940 provided that where an even number of arbitrators were
appointed and such arbitrator failed to make an award within the
specified time, or where there was difference of opinion between
two arbitrators, the umpire should enter on the reference instead of
the arbitrators. But now under the new Act of 1996, the number of
arbitrators to determine the dispute has been left to the parties, the
only limitation being that an even number of arbitrators shall not be
appointed. The arbitrators so appointed shall appoint a third
arbitrator called the Presiding Arbitrator(umpire).

5. Qualification of the arbitrator: There were no qualifications for

appointment as an arbitrator as prescribed in the earlier Arbitration
Act of 1940. But now the Act of 1996 provides for qualification of
the arbitrator. Since nowadays a large number of disputes arising
between the parties are of technical nature, therefore such
disputes can properly be decided only by the arbitrators who are
competent and well versed in such matters.
6. Assistance of court in certain matters: the Act of 1996 provides
for taking assistance from the court only in certain specific
matters, the Arbitral tribunal or a party may seek assistance from
the court in taking evidence. The court may therefore order the
witness to provide evidence to the arbitral tribunal directly. But the
act does not confer any power on the Arbitral tribunal to summon
 witnesses. Therefore, the Arbitral tribunal or a party with the
approval of the arbitral tribunal may apply to the court for
assistance in taking evidence.
7. Empower to pass interim orders: another notable feature of the
Act of 1996 is the provision relating to the interim measures, which
empower the arbitrator or arbitral tribunal to pass interim orders in
respect of the subject matter of the dispute at the request of the
party.
8. Arbitral award in conflict with public policy is void: the new Act of
1996 provides that an Arbitral award which is in conflict with the
public policy in India shall not be valid in law being null and void
and can be set aside by the court.
9. International Commercial Arbitration defined: The Act of 1996
specifically defines the term “International Commercial Arbitration”
under Section 2(1)(f), it means an arbitration relating to disputes
arising out of legal relationship whether contractual or not,
considered as commercial under the law in force in India and
where at least one of the parties whether an individual, body
corporate or a company is having business or residing abroad and
in case of Government, the government is of a foreign country.

Note: the other party to the dispute mentioned above should be a

foreigner, foreign company, or foreign government.

10. Scope of conciliation more wide: Part III of the Act of 1996

deals with a new international approach to conciliation and
explains its application scope. Thus making the scope of
conciliation more wide.
11. Arbitrator to give reasons for the award: The Act 1996 under
sub-section 3 of section 31 provides that an arbitral tribunal must
state reasons for its award. However, where the parties
themselves have agreed in writing that no reasons are to be given
or where the award is in terms of a settlement reached between
the parties, the requirement of a reasoned award may be waived
off.
12. Enforcement of foreign awards: The Act of 1996 provides
for enforcement of certain foreign awards made under the New
York Convention and Geneva Convention respectively as contained
in Part II of the said Act as a decree of the court. The countries
which have neither adopted the New York convention nor the
Geneva convention are outside the scope of Part II of the Act and
therefore their awards are not enforceable as foreign awards in
India. 
Advantages of arbitration 

● A person appointed as arbitrator is based on the whims of the

parties.
● If parties agree only then an arbitral tribunal is taken into
matter. 
● It is inexpensive and saves time. 
● It ensures a fair trial. 
● Gives freedom to the parties from judicial intervention. 
● Parties choose the place of arbitration themselves (Section 20).
● The proceedings are kept private and confidentiality is
maintained. 
● The arbitral award is enforced in the same way a decree of the
court is enforced. 

Disadvantages of arbitration

● It does not always guarantee an expeditious resolution. 

● The procedure is at times uncertain. 
● It cannot give remedies like punishment, imprisonment,
injunction, etc. which are given in courts. 
● Due to flexibility, it is ineffective. 
● The method cannot be easily used in disputes involving multiple
parties. 

CLASSIFICATIONS OF VALUATION
1.Corporeal ownership:
Corporeal ownership is of that object which is tangible in nature.
Example: Land, goods, etc.

2. Incorporeal ownership:
Incorporeal ownership is that which is intangible in nature. Example:
Copyright, reputation and etc.

3. Sole ownership:
When a property is owned by only one legal owner it is called sole
ownership. Example: A person owns a car.
4. Co-ownership:
When a property is owned by two or more legal owners it is called co-
ownership or joint ownership. Example: Partnership of business between
three partners.

5. Legal ownership:
It is the legal claim or title to an asset or property.  Therefore, a person
who has legal ownership on a property can transfer it to the ownership
to another party. Example: a lender who has lent money for a property is
the legal owner of that property.

6. Equitable ownership:
We do not consider equitable ownership as true ownership because it is
only the benefit of the property that the buyer will use and enjoy.
Example: If MR. X is the legal owner of a property and MR.Y is the
equitable owner. Then MR.X is not entitled to the use and enjoyment of
the property whereas, MR.Y doesn’t own the property but has the right to
use and enjoy it, something which MR.X cannot do.

7. Trust and beneficial ownership:

Legal and beneficial ownership belongs to an entity who has the specific
property right “use and Title” in equity. But the property belongs to some
other person. Example: If MR. John’s property is transferred to trustees
to hold it for the benefit of the beneficiaries. It is not MR. John’s trust
that owns the land or shares but the trustees of MR. John’s who owns it.
So their names would be used as the trust and beneficiaries.

8. Vested ownership:

According to law vested ownership has the complete and full ownership
on the property. Example: Two people sharing ownership of a property. If
one dies the other gets the gain of vested ownership of the property.

9. Contingent ownership:
In Contingent ownership, the owner does not have the full claim to the
property, but he can claim it on the fulfillment of some conditions. 
These conditions are of two types namely condition precedent and
condition subsequent. Condition Precedent is where on the fulfillment of
it the title is completed. Condition subsequent is whenever on the
fulfillment of it the title already completed is extinguished.
10. Absolute Ownership:
Absolute ownership is a free transferable and inheritable property a
person can have as his actual right. Example: The mortgage of some
property by its owner.

11. Limited Ownership:

Limited ownership is the ownership that is not absolute or perfect.
Where the owner enjoys the right to use and enjoy the property for a
limited period of time as long as some other person is alive.