Alternative Dispute Resolution (ADR) has been in place in India for several centuries. Arbitration as a dispute resolution mechanism gained popularity after the enactment of the Arbitration Act, 1899 which was based on the then English Arbitration Act.
During the early-to-mid 20th century, the law on arbitration in India was substantially contained in three enactments, namely, the Arbitration Act, 1940, the Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and Enforcement) Act, 1961. The need to consolidate and reform the country’s arbitration law further gained traction after the Model Law on International Commercial Arbitration was propounded by the United Nations Commission on International Trade Law (UNCITRAL) in 1985 (“the Model Law”) and the introduction of economic reforms in India in 1991. In order to facilitate business, India adopted the Model Law in its entirety except for a few variations and enacted the Arbitration and Conciliation Act, 1996 (“the Act”), with the objective “to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards as also to define the law relating to conciliation...” It is a comprehensive piece of leg international commercial arbitration and enforcement of foreign arbitral awards as also to define the law relating to conciliation...” It is a comprehensive piece of legislation, divided into the following four sections:
- Part I - Arbitration seated in India;
- Part II - Enforcement of Foreign Awards;
- Part III - Conciliation; and
- Part IV - Supplementary Provisions
There is only one legislation for arbitration in India, for both international and domestic arbitration.
Varied interpretation of the provisions of the Act led to a growing sense of dissatisfaction among the users of arbitration. Attempts to remedy these issues have been made by way of the Arbitration and Conciliation (Amendment) Act, 2015. The Amendment Act 2015 has followed most of the recommendations of the Law Commission of India’s 246th Report and also introduced certain new provisions which are unique to the Indian jurisdiction.