The Government is
examining the recommendations of the Law Commission of India on
the Arbitration and Conciliation Act, 1996, contained in its 176th
report for a further amendment of the Act. In this connection,
views of the chambers of commerce and other organizations, connected
with the Arbitration Law and this mode of alternative dispute
resolution intended to decongest courts, have been sought.
Added to this,
since the subject matter of arbitration falls under Entry 30 of
List III of the Seventh Schedule to the Constitution of India,
the Government has also sought the comments of all the State Governments
before the amendment of the Arbitration and Conciliation Act,
1996 is taken up. The report of the Commission has also been made
available on the Law Ministry’s website www.lawmin.nic.in
under What’s New?
After the proposed
amendment of the Arbitration and Conciliation Act, 1996 is effected
in the light of the experience of its working so far, comments
of the States and views of the chambers of commerce collated,
it will make our arbitration system time bound, efficient and
cost-effective to meet the challenges of the emerging globalization
of Indian economy by settling arbitral cases in a meaningful way.
While no time frame for such amendment could be given, it would
be done at the earliest.
The Arbitration
and Conciliation Act, 1996 consolidates the laws relating to arbitration
in India and is based mainly on the United Nations Commission
on International Trade Law (UNCITRAL) Model Law. Before this,
India had the Arbitration (Protocol and Convention) Act, 1937,
the Arbitration Act, 1940 and the Foreign Awards (Recognition
and Enforcement) Act, 1961, which have since been subsumed by
the 1996 Act.
Earlier before
enacting the Arbitration and Conciliation Act, 1996, the Indian
courts had noted the wide spread abuse of arbitral processes and
underlying the need for evolving an effective safeguard to arrest
such abuse. The Public Accounts Committee of the Lok Sabha (House
of the People) commented adversely on the working of the Arbitration
Act, 1940 and the Supreme Court in Food Corporation of India Vs.
Joginderpal (AIR 1981 SC 2075-77) observed that the Law of Arbitration
must be ‘simple, less technical and more responsive to the actual
situation’ , --- ‘responsive to the cannons of justice and fair-play’.
The Government
of India recognizing the need for reform in the law relating to
arbitration decided to act on the basis of UNCITRAL Model Law,
which was designed for universal application. As a sequel to that
the Arbitration and Conciliation Act, 1996 was enacted with the
salient features that the intervention of courts was even more
limited than that envisaged under the Model Law. The Arbitration
and Conciliation, 1996 covers both domestic and international
arbitration wherein at least one party is not an Indian national
and also arbitrations where both parties are Indian nationals,
respectively.
