P.T.
– II Assignment Notes
Q1. Significance of the Arbitration and Conciliation Act, 1996
Background
Before 1996, arbitration in India was governed by three separate laws: the Arbitration Act, 1940,
the Arbitration (Protocol and Convention) Act, 1937, and the Foreign Awards (Recognition and
Enforcement) Act, 1961. These were fragmented and outdated. The Arbitration and Conciliation
Act, 1996 consolidated them into a single law, based on the UNCITRAL Model Law on
International Commercial Arbitration (1985) and the UNCITRAL Conciliation Rules (1980).
Significance
• Brought Indian arbitration law in line with international standards, encouraging foreign
investment and cross-border trade.
• Reduced the burden on courts by promoting arbitration and conciliation as effective
alternatives to litigation.
• Gave legal recognition to conciliation as a formal method of dispute resolution for the first
time in India.
• Minimized judicial intervention in arbitration proceedings, giving primacy to party autonomy.
• Made arbitral awards enforceable in the same manner as a court decree.
Main Objectives
• To provide a fair, efficient, and speedy mechanism for resolving domestic and international
commercial disputes.
• To ensure that the arbitral tribunal states reasons for its award.
• To minimize the supervisory role of courts in the arbitral process.
• To provide that every final arbitral award is enforced like a decree of a civil court.
• To provide legal status to conciliation agreements and settlements arrived at through
conciliation.
• To ensure that the law deals equally with domestic and international arbitration.
Salient Features
• Party Autonomy: Parties are free to decide the number of arbitrators, the procedure, the
seat of arbitration, and the language.
• Limited Judicial Intervention: Courts can only intervene in situations specifically provided
under the Act (e.g., appointment of arbitrators, interim measures, setting aside awards).
• Composition of Arbitral Tribunal: Parties can appoint one or more arbitrators; in case of
disagreement, the Chief Justice or a designated authority can appoint one.
• Interim Measures: Both the arbitral tribunal and the court have the power to grant interim
relief to protect the subject matter of the dispute.
• Finality and Enforcement of Awards: An arbitral award is final and binding on the parties
and enforceable as a decree of the court.
• Grounds to Challenge an Award: Award can be set aside only on limited grounds under
Section 34, such as incapacity of a party, invalid arbitration agreement, lack of proper
notice, or the award being in conflict with public policy.
• Conciliation Provisions: Part III of the Act separately deals with conciliation, allowing
parties to settle disputes amicably with the help of a conciliator, and the settlement
agreement has the same status as an arbitral award.
• Applicability: The Act applies to both domestic arbitration and international commercial
arbitration conducted in India, as well as enforcement of foreign awards under the New
York and Geneva Conventions.
Q2. Short Notes
(a) Mediation
Mediation is a voluntary and confidential process of alternative dispute resolution in which a
neutral third party, called a mediator, assists the disputing parties in reaching a mutually
acceptable settlement. The mediator does not impose a decision but facilitates communication
and negotiation between the parties.
• Voluntary participation by both parties.
• The mediator has no decision-making power; the outcome depends entirely on the parties'
consent.
• Informal, flexible, and less time-consuming than litigation.
• Confidential — discussions during mediation cannot be used as evidence later.
• Preserves relationships between parties, making it especially useful in family, commercial,
and workplace disputes.
• In India, mediation is recognized under Section 89 of the Code of Civil Procedure, 1908,
and further strengthened by the Mediation Act, 2023.
(b) Counselling
Counselling is a supportive process in which a trained counsellor helps an individual or parties
understand their problems, emotions, and options, enabling them to make informed decisions. In
the legal and family law context, counselling is often used to help parties reconcile or to prepare
them emotionally before proceeding with legal remedies such as divorce.
• Focuses on emotional and psychological support rather than legal settlement.
• Encourages self-reflection and better understanding of the situation.
• Commonly used in matrimonial disputes — courts often direct parties to undergo
counselling before granting divorce, to explore the possibility of reconciliation.
• Conducted by qualified counsellors, psychologists, or family welfare committees.
• Aims at the well-being of the individual/family rather than merely resolving a legal dispute.