The Indian Arbitration and Conciliation Act, 1996 (No.26 of 1996)

[16th August 1996]

An Act 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 and for matters connected therewith or incidental thereto.

Preamble

WHEREAS the United Nations Commission on International Trade Law (UNCITRAL) has adopted the UNCITRAL Model Law on International Commercial Arbitration in 1985;

AND WHEREAS the General Assembly of the United Nations has recommended that all countries give due consideration to the said Model Law, in view of the desirability of uniformity of the law of arbitral procedures and the specific needs of international commercial arbitration practice;

AND WHEREAS the UNCITRAL has adopted the UNCITRAL Conciliation Rules in 1980;

AND WHEREAS the General Assembly of the United Nations has recommended the use of the said Rules in cases where a dispute arises in the context of international commercial relations and the parties seek an amicable settlement of that dispute by recourse to conciliation;

AND WHEREAS the said Model Law and Rules make significant contribution to the establishment of a unified legal framework for the fair and efficient settlement of disputes arising in international commercial relations;

AND WHEREAS it is expedient to make law respecting arbitration and conciliation, taking into account the aforesaid Model Law and Rules;

Be it enacted by Parliament in the forty seventh year of the Republic as follows:

Preliminary

Short title, extent and commencement. (1) This Act may be called the Arbitration and Conciliation Act, 1996.

It extends to the whole of India:

Provided that Parts I, III and IV shall extend to the State of Jammu and Kashmir only in so far as they relate to international commercial arbitration or, as the case may be, international commercial conciliation.

Explanation - In this sub-section, the expression �international commercial conciliation� shall have the same meaning as the expression �international commercial arbitration� in clause (f) of sub-section (1) of section 2, subject to the modification that for the word �arbitration� occurring therein, the word �conciliation� shall be substituted.

It shall be deemed to have come into force on the 25th day of January 1996.

Chapter 1: General Provisions

Definitions

In this Part, unless the context otherwise requires,

�arbitration� means any arbitration whether or not administered by permanent arbitral institution;

�arbitration agreement� means an agreement referred to in section 7;

�arbitral award� includes an interim award;

�arbitral tribunal� means a sole arbitrator or a panel of arbitrators;

�Court� means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes;

�international commercial arbitration� means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is -

an individual who is a national of, or habitually resident in, any country other than India; or

a body corporate which is incorporated in any country other than India; or

a company or an association or a body of individuals whose central management and control is exercised in any country other than India; or

the Government of a foreign country;

�legal representative� means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased, and, where a party acts in a representative character, the person on whom the estate devolves on the death of the party so acting;

�party� means a party to an arbitration agreement.

Scope

This Part shall apply where the place of arbitration is in India.

This Part shall not affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration.

This Part except sub-section (1) of section 40, sections 41 and 43 shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except in so far as the provisions of this Part are inconsistent with that other enactment or with any rules made thereunder.

Subject to the provisions of sub-section (4), and save in so far as is otherwise provided by any law for the time being in force or in any agreement in force between India and any other country or countries, this Part shall apply to all arbitrations and to all proceedings relating thereto.

Construction and References

Where this Part, except section 28, leaves the parties free to determine a certain issue, that freedom shall include the right of the parties to authorise any person including an institution, to determine that issue.

An arbitral award made under this Part shall be considered as a domestic award.

Where this Part�

refers to the fact that the parties have agreed or that they may agree, or

in any other way refers to an agreement of the parties,

that agreement shall include any arbitration rules referred to in that agreement.

Where this Part, other than clause (a) of section 25 or clause (a) of sub-section (2) of section 32, refers to a claim, it shall also apply to a counter-claim, and where it refers to a defence, it shall also apply to a defence to that counter-claim.

Receipt of written communications�

Unless otherwise agreed by the parties,�

any written communication is deemed to have been received if it is delivered to the addressee personally or at his place of business, habitual residence or mailing address, and

if none of the places referred to in clause (a) can be found after making a reasonable inquiry, a written communication is deemed to have been received if it is sent to the addressee�s last known place of business, habitual residence or mailing address by registered letter or by any other means which provides a record of the attempt to deliver it.

The communication is deemed to have been received on the day it is so delivered.

This section does not apply to written communications in respect of proceedings of any judicial authority.

Waiver of right to object - A party who knows that any provision of this Part from which the parties may derogate, or any requirement under the arbitration agreement, has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or, if a time limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object.

Extent of judicial intervention - Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.

Administrative Assistance - In order to facilitate the conduct of the arbitral proceedings, the parties, or the arbitral tribunal with the consent of the parties, may arrange for administrative assistance by a suitable institution or person.

Indian Supreme Court rules that Appointment of Arbitrator by Chief Justice cannot be challenged by a Special Leave Petition

The Supreme Court of India has ruled that the orders passed by the Chief Justice under Section 11(6) of the Arbitration and Conciliation Act, 1996, cannot be challenged by a Special Leave Petition (SLP) because such orders are administrative in nature. (In the matter of Ador Samia Pvt. Ltd. Vs Peekay Holdings Ltd.; AIR 1999 Supreme Court 3246).

In the above case, an SLP under Article 136 of the Indian Constitution was moved by the petitioner, challenging an order of the Chief Justice of the Bombay High Court, passed under Section 11(6) of the Arbitration and Conciliation Act, 1996. The Chief Justice, through his order, had appointed an Arbitrator to resolve the dispute between the parties.

While deciding the issue, the Court relied upon the decision of the Supreme Court in the case of Indo China Steam Navigation Co. Ltd. V. Jasjit Singh (reported in AIR 1964 SC 1140), wherein it was observed:

"It is clear that before an appeal can be entertained in this Court under Article 136, two conditions have to be satisfied: The order impugned must be an order of a judicial or quasi-judicial character and it should not be purely an administrative or executive order. Besides, the said order should have been passed either by a Court or a Tribunal within the territory of India."

Relying upon the above decision of the Supreme Court, it was held that since the order of the Chief Justice, appointing an arbitrator, is an administrative order, being passed under Section 11(6) of the Act, the same cannot be challenged directly under Article 136 of the Constitution of India.