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Conciliation and Arbitration in ADR

Module 9 discusses informal dispute resolution mechanisms, specifically conciliation and arbitration, as part of alternative dispute resolution (ADR) in India. It outlines the principles, objectives, and legislative framework surrounding these processes, emphasizing the role of conciliators and the importance of mutual agreement in resolving disputes. The module also highlights the historical context and evolution of conciliation and arbitration in the Indian legal system, including recent legislative developments.

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0% found this document useful (0 votes)
76 views13 pages

Conciliation and Arbitration in ADR

Module 9 discusses informal dispute resolution mechanisms, specifically conciliation and arbitration, as part of alternative dispute resolution (ADR) in India. It outlines the principles, objectives, and legislative framework surrounding these processes, emphasizing the role of conciliators and the importance of mutual agreement in resolving disputes. The module also highlights the historical context and evolution of conciliation and arbitration in the Indian legal system, including recent legislative developments.

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Asweta M
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Module 9 - Informal Dispute Resolution Mechanisms – II

Subject Name Law


Paper Name Access to Justice
Alternatives to Access to Justice: Conciliation and
Module Name/Title
Arbitration
Pre-requisites Basic understanding of ADRs in India
• To know principles of ADRs
Objectives • To learn provisions on conciliation and arbitration•
To understand the role of the Court in these informal
proceedings
ADRs, conciliation, arbitration, amicable, award,
Keywords
arbitration agreement
ADRS is an appropriate process to many kinds of disputes. In the earlier chapter,
the two important concepts of ADR i.e. negotiation and mediation has been
discussed. Presently the discussion will move on to remaining two concepts i.e.
conciliation and arbitration.
Arbitration as a part of ADR stands apart from other processes, mainly because, it
is more of a adversorial process. On the other hand, the conciliation process is
rightly kept along with other processes as it adopts facilitative approach by the
third party.
Conciliation
The Halsbury’s Laws of England defines Conciliation as a process of persuading
the parties to reach an agreement. Conciliation may comprehensively be defined as
a non-adjudicatory and non-adversarial mechanism to ensure settlement of dispute.
This process of conciliation is headed by an impartial third party (conciliator). He
plays an enabling role and steers the disputant parties to arrive at a satisfactory and
acceptable settlement of a dispute.
As mentioned in the earlier chapters, conciliation being a voluntary process, the
conciliator has no authority to impose any decision on the parties. Like any other
ADR process the conciliation works for mutual determination of dispute and
amicably settlement of the same.
The consensual nature of the dispute resolution process allows parties to join in a
friendly search for an amicable solution. This is done in absence of procedural
restraints or battles over formal technicalities and the parties are encouraged to
visualise options which provide solutions keeping in view their interests and
priorities.
Conciliation is not a new concept for the Indian Legal System. There is a mention
of this process in ancient books of India by kautilya etc. the importance of the
same was realised when; Himachal Pradesh High Court used it in 1984 to a good
effect. Same was recommended by the Law commission of India in its 77th and
131st report. In addition, conciliation was recommended by the Malimath
Committee also demanding establishment of conciliation Courts in India.
Closely followed by these attempts and recommendations was the contribution
from the international community. The United Nations Organisation established an
organ by name UNCITRAL (United National Commission on International Trade
Law) at Hague. This commission made a recommendation regarding two important
ADRS i.e. Conciliation and Arbitration. The recommendations of 1980 and 1982
were finally became part of the Indian legislation through Arbitration and
Conciliation Act, 1996
The Arbitration and Conciliation Act 1996 consists of three parts. These three parts
are effectively repeals existing laws. Part I repeals Arbitration Act 1940. Part II
repeals two legislations Arbitration (Protocol and Convention) Act, 1937 and
Foreign Awards (Recognition and Enforcement) Act, [Link] part III of the
legislation deals with the Conciliation.
Before the 1996 legislation the conciliation is mentioned under Industrial Disputes
Act 1947, Family Courts Act 1986 etc. after 1996, the ADRS process got real
boost in its functioning due to insertion of Sec 89 in Civil Procedure Code. In this
chapter, the conciliation and arbitration would be discussed with reference to
various legislations. Recently the conciliation process is added in companies Act
also. This process is expected to deal with the companies matters. This shows the
effectiveness and relevancy of the process in the present world.
For the purpose of discussion, few of such legislations are taken for discussion
Conciliation under Industrial Disputes Act, 1947
The term conciliation is not defined under the I D Act. They only make passing
remark on conciliation officer and conciliation proceedings[1]. However, under
section 4 the legislation make a mention of the role,
…charged with the duty of mediating in and promoting the settlement of industrial
disputes[2].
This sentence actually makes a conclusive remark on the role of the conciliator.
According to the section the role of the conciliator is to mediate. It can be safely
presume that, use of word ‘mediate’, provides ample indications as to the intention
of the legislature. It indicates that, the role of the conciliator is similar to that of
mediator. Taking one step further, it can also be presumed to be used
interchangeably.
However, it is important to note that, the intention of the legislature has not been
consistent. In recent legislations like sec 89 of Civil Procedure Code the legislature
gave separate recognition to the term conciliation and mediation. They have set up
a separate high Court rules of practice for mediation. However, the Conciliation
process would be governed by the Arbitration and Conciliation Act, 1996.
Powers and Duties of Conciliation Officer
In the discussion at the later stage, the author would deal with the role and
functions of the conciliation officer elaborately. However, before discussing the
power and duties of the conciliation officer, it is important to note that, role of
conciliation officer is similar to that of mediator. Therefore, need and necessity of
these powers is under the scanner.
Conciliation officer facilitate, mediate and promote settlement of the dispute.
Therefore, parties to the dispute are firmly seated on the driver’s seat. In such
situation the power to enter any premises after giving reasonable notice and
conduct inspection to find the factual situation. It is submitted that such inspection
may yield important information; however, such information could not be used in
conciliation process as conciliation officer is not a deciding authority. Whereas sec
21, prohibits the conciliation officer from disclosing such information before any
other authority set up after failure of the conciliation proceedings.
However, the power of enforcing the attendance of any person for the purpose of
examination, production of document for inspection, may have some relevance as
the power as Civil Court under Civil Procedure Code is exercised against third
party to the proceedings instead of the party. These powers could clarify the
position of the parties and assist them to come to a final and amicable solution. If
the same power is exercised against the parties, it would lead to an adverse result
as the party may avoid the proceedings, even if the party participates, he may try to
derail the proceedings at the time of drafting of settlement agreement.
Conciliation officers deemed to be a public servant within the meaning of section
21 of Indian Penal Code allows the conciliation officer to function without fear and
favour.
In addition to these powers, conciliation officer has to perform certain mandatory
duties. Conduct of conciliation proceedings is optional at the instance of the
conciliation officer. This power to choose comes with an exception, conduct of
proceedings becomes mandatory in case of public utility services. Where the
dispute relates to public utility services the Conciliation Officers is under the
mandatory duty to conduct the proceedings. This is to ensure that the public utility
services do not suffer from strike of blockades[3].
The conduct of the proceedings may lead to two possible outcomes. Successful
conciliation where the parties settle the dispute and the outcome is settlement
agreement. In such cases, the conciliation officer is duty bound to send a report to
the of the successful conciliation process along with the memorandum of
settlement to the appropriate government.
As second possible outcome, if the proceedings fail, then the conciliation officer
has to submit an elaborate report on steps taken to bring out the settlement, giving
brief facts and circumstances led to the dispute and most importantly, a full
statement of such facts and circumstances and the reasons on account of which, in
the opinion of conciliation officer full settlement could not be arrived at.
Again it is humbly submitted that, such reporting may lead to revealing of
information obtaining during conciliation. It may also put a party in bad light as he
enlists the reason of failures. This information goes against the principles of
ADRs[4].
Board of Conciliation
As mentioned above, when a failure report is submitted by the conciliation officer
at the end of the Conciliation Proceedings, such failure report helps the appropriate
government to frame its opinion as to appropriate authority to deal with the
dispute. The industrial disputes act deal with three different kinds of authorities,
persuasive, inquisitorial, coercive and preventive authorities. Preventive authorities
deal with the dispute at the time ripening of the dispute. Appropriate Government
duty bound to refer the dispute to any of the three authorities In such situation it is
important to decide on the nature of authority suitable to deal with the dispute.
If the report suggests that, settlement is a possibility. The appropriate Government
gives a second attempt to settle the dispute by constituting the Board of
conciliation. This process is more evolved as compared to proceedings by
conciliation officer.
The Board consists of representatives of both parties and independent person act as
chairman[5]. The nominees of the parties being in equal number and presence of
parties and nominees provide ample opportunity for a professional negotiation to
deal with the dispute. Under these circumstances, the chances of success multiply.
Conciliation under Arbitration and Conciliation Act 1996
Scope of conciliation
The Act provides unlimited scope of conciliation. The conciliation is permitted
regarding all disputes arising out of legal relationship, whether contractual or
not[6]. However, this blanket permission comes with a rider that if any law
prohibits conciliation over certain kinds of dispute then such law would prevail and
prohibit conciliation.
This provision is a clear indication that the ADRs is not an alternative to Court
where it is going replace judiciary. There are disputes which cannot be conciliated;
it has to be dealt strictly according to law. Therefore, it is submitted that ADR
stands for appropriate dispute resolution, where a dispute is suitable for ADR is
dealt under ADR.
Commencement of Conciliation and Appointment of Conciliator
The conciliation process commences when the disputing parties agree to conciliate
and a neutral conciliator is appointed. Before appointing such third independent
party as conciliator, the party initiating conciliation sends a written invitation for
conciliation to the other party. The communication also contains brief discussion
on the subject matter of the dispute and major issues involved. Conciliation
proceedings commence when the other party accepts in writing the invitation to
conciliate[7].
This is the major departure from Arbitration, where written agreement is a
precondition for valid arbitration process, whereas the conciliation can be
commenced with such written prior agreement.
In conciliation proceedings ordinarily and desirably there should be one
conciliator. However, there is a provision for two or three conciliators. If the
parties’ desire they are permitted appoint one conciliator each and these multiple
conciliators will try to bring a settlement of dispute. The law do not provide for
uneven number of conciliators since the task of the conciliators is to make
recommendations for a settlement and not to render binding decisions, therefore,
there is no risk of split opinion. This arrangement of multiple conciliators seems to
be similar concept as discussed above under ‘Board of Conciliation’.
As mentioned above, conciliation can be conducted with sole conciliator. In such
case the parties may agree on the name of a sole conciliator. In case of multiple
conciliators each party may appoint one conciliator.
Procedure in Conciliation and Role of Conciliator
The proceeding will begin with the effort from the conciliator to understand the
nature of the problem as well to understand perspective both parties. To achieve
the said objective, the conciliator may request each of the parties to submit a brief
written statement explain the general nature of the dispute and the points at issue.
The same document is communicated to the other party also. This is to ensure that
all the stakeholders are having complete knowledge of the stage of the
proceedings. In addition to such initial communication, the conciliator at any stage
of the conciliation proceedings may request a party to submit to additional
information as he deems appropriate.
The role of the conciliator extends from assisting parties to initiate and develop
positive dialogue. Clarity as to nature dispute and interest, clarify
misunderstandings, this clarification may lead to creation of faith upon one
another. Finally it would generate a pleasant atmosphere required for harmonious
and cooperative problem-solving. In order achieve these objectives the conciliator
should be a person on whom parties would be able to repose trust and confidence.
It is important to note that the conciliator is not bound by the Code of Civil
Procedure, 1908 or the Indian Evidence Act, 1872. As the process of conciliation
involves creating a constructive bonding and the above legislations wouldn’t
provide any kind of help. Therefore, rightly the applicability of both laws has been
restricted; the only guiding principle over conciliator is principles of objectivity,
fairness justice and giving due consideration to the rights and obligations of the
parties, the usages of the trade concerned and the circumstances surrounding the
dispute, including any previous business practices between the parties.
The conciliator is authorised to arrange both joint and private sittings. Joint sitting
is the process where the conciliator meets the both parties at the same time. This
ensures faith and trust of both parties. However, sometime, the conciliator and at
the insistence of the parties, conciliator may call for a private sitting. Here, the
conciliator meets the only one party in absence of the other. Such private sitting
has its own advantage as it works as a short cut to obtain promises from reluctant
party. But too much adhering to private sitting may sacrifice faith and trust of the
parties.
One of the important aspects of ADRS is ‘cost’. The process of conciliation is cost
effective and fast. To keep it cost effective the venue should be chosen such that, it
is convenient to both parties as well as conciliator. Therefore, parties are given an
opportunity to choose the venue of conciliation proceedings. If they fail to agree
upon a venue then the conciliator would decide the venue in consultation with the
parties. In order to facilitate the conduct of the conciliation proceedings, the
parties, or the conciliator with the consent of the parties, may arrange for
administrative assistance by a suitable institution or person.
During the process of conciliation, the conciliator is authorised to propose possible
settlements. This is an attempt to bring parties to the acceptable terms. The
conciliator is supposed to formulate the terms of a possible settlement and submit
them to the parties for their observations. After receiving the observations of the
parties, the conciliator may reformulate the terms of a possible settlement in the
light of such observations.
The Settlement Agreement
Settlement agreement is the most sought after document. It is a sign of end to the
dispute. However, it is worth to be noted that, it is an end of the dispute in real
sense only if parties adhere to the settlement agreement. The adherence to the
settlement agreement is possible only if the parties understand the agreement and
their interest are protected by such document.
Therefore, it is the most important job of the conciliator to draw up and
authenticate a settlement agreement. Drafting the agreement is only a part of the
job, the main duty lies in ensuring that the parties have full understanding of the
settlement terms. It is the parties’ discretion to settle only part of the disputes by
conciliation and leave the remaining dispute between them for resolution by other
modes of adjudication. It is necessary that the settlement agreement needs to be
signed by parties as well as conciliator. It is important to note that the settlement
agreement drawn up in conciliation proceedings has the same status and effect as if
it is an arbitral award on agreed terms on the substance of the dispute rendered by
an Arbitral Tribunal under section 30 of the Arbitration and Conciliation Act,
1996.
Termination of Conciliation Proceedings
A successful conciliation proceeding concludes with the drafting and signing of a
conciliation settlement agreement. The signing of the settlement agreement by the
parties, on the date of the settlement agreement terminates conciliation
proceedings.
The failure of conciliation proceeding end when any party terminate conciliation
proceedings at any time even without furnishing any reason since it is purely
voluntary process. The parties can terminate conciliation proceedings at any stage
by a written declaration of either party. A written declaration of the conciliator,
after consultation with the parties, to the effect that further efforts at conciliation
are no longer justified, also terminates conciliation proceedings on the date of such
declaration.
Arbitration under Arbitration and Conciliation Act, 1996
Arbitration is an old concept under Indian legal system. It has been part of the
system since 1777, when railways used arbitration to resolve its dispute relating to
laying down of lines and business. The testimony that, it’s an old concept gets
further fillip by the fact that, the term ‘arbitration’ never gets defined, even though
a special legislation is enacted relating to arbitration. In absence of legal definition,
many of the legal luminaries tried to lay down the definition. The combined result
would be a resolution of dispute by a private judge by way of passing a judgement
which is known as award. Such award is binding on the parties.
Subject matter of Arbitration
Arbitration being a judicial process headed by a private judge, he should be
capable of settling any type of dispute. However, the public policy and public
interest imposes restriction on the scope of arbitration by classifying the dispute as
arbitrable and non-arbitrable. Therefore, any dispute between parties having legal
relationship whether contractual or not could be referred to arbitration.
This blanket permission has certain restrictions like matrimonial matters, criminal,
insolvency matters anti-competition matters etc.
Arbitration Agreement and Its Effect
Arbitration agreement is a pre-condition for arbitration process. It shall be in
writing. Therefore, no arbitration is possible in absence of Arbitration agreement.
However, to encourage arbitration, the legislature has given validation for
arbitration agreement in the form of letters, in the form of exchange of
statements[8].
Once Arbitration Agreement is signed it leads to two important consequences.
The doors of the Court are actually closed for the disputing parties. They are
expected to refer the matter to the arbitration and abide by his decisions. This logic
flows from the principle of law which states that, a right created bilaterally cannot
be abrogated unilaterally. Arbitration is treated as a contractual right. In this case
the parties agree for an alternative process to settle the dispute. Once both parties
agree together and create arbitration, it has to be annulled together. One party alone
cannot cancel this contractual right approach Court[9].
The procedure agreed is simple, if a party approach Court in violation of the
arbitration agreement, the judicial authority would refer the parties to arbitration on
the application from the other party. However, it is important to note that, the
judicial authority cannot refer the parties on its own, i.e. suo moto. It is important
to note that, if defendant files a written statement instead of an application for
reference, then Court would proceed with the case. It is understood that, both
parties have agreed to cancel the arbitration agreement.
Another important consequence is Interim measures. The existence of arbitration
agreement itself empowers the parties to approach Court and seek the interim
measures. These measures vary from protection of subject matters to other
measures which would ensure smooth functioning of the arbitral proceedings.
Appointment of Arbitral Tribunal
As a matter of rule the Arbitral Tribunal can be made of any number except even
number. This is to avoid split decision. The majority decision is ensured by
arbitrator of not even number.
Appointment is the area which could be misused for causing delay. To avoid such
misuse the law on arbitration has prepared various process of appointment. By
following the spirit of ADRS the law provides complete freedom to parties to agree
on any procedure.
However, law proposes different procedure if parties fail to agree on procedure or
fail to follow the agreed procedure. In case the parties had agreed for three
Arbitrators to form an Arbitral Tribunal. Both parties will appoint their own
arbitrator and both arbitrators together will appoint a presiding arbitrator. This
simple process is adopted to avoid deadlock. It is important to note that this
process cannot be followed in case the parties agree for sole arbitrator to form an
arbitral tribunal.
Role of Chief Justice
In case of sole arbitrator and no consensus among parties could be achieved.
Similarly, parties fail to recommend their own arbitrator, or arbitrators fail to
appoint presiding arbitrator, the aggrieved party can make an application to the
Chief Justice and seek appointment of the arbitrator on behalf of parties. This
process is created to avoid deadlock.
However, at the time of appointment the Chief Justice has to provide due
consideration to the qualifications prescribed by the parties and must give due
weightage to the scheme of appointment prepared by the parties.
The term Chief Justice gets a different meaning depending upon the nature of
dispute. In case of domestic arbitration where the parties involved in dispute are
both Indians, the Chief Justice is the Chief Justice of the respective high Court
having jurisdiction. If the dispute is International Commercial Arbitration, i.e.
between Indian and a foreign national or corporation registered in foreign country
or whose head office is outside India, or any association or body of persons
registered with foreign country, then the Chief Justice is Chief Justice of India.
Jurisdiction
The Arbitral Tribunal is authorised to decide on the jurisdiction. Jurisdiction means
power to decide. Granting power to decide on its power brings in certain
complications, if Arbitral Tribunal decides that the contract between parties is
void, and then arbitration agreement, which is part of the contract, becomes void,
then the award originating from invalid arbitration agreement pronounced by
invalid Arbitral Tribunal has to be void. If award is invalid then, arbitration
agreement continues to be valid. This complication was answered by a legal
fiction; the legislatures declared that the arbitration clause has an independent
existence. If the contract is declared void then the arbitration agreement which is
the part of the contract remains valid for the purpose of enforcement of the award.
It has limited existence and validity to provide enforcement to the award.
Two types of questions could be raised regarding jurisdiction. The question would
be of lack of jurisdiction, the tribunal may lack jurisdiction because the dispute
may be non-arbitrable or contract is void or beyond the scope of arbitration
agreement. The other question would be exceeding the scope of jurisdiction. The
tribunal starts functioning within jurisdiction and during proceedings it exceeds its
scope[10].
The question of jurisdiction should be raised at the earliest. The principle of
‘waiver of right to object’ acts against the disputing party. The delay in raising
objection may lead to presumption that the parties agreed for jurisdiction.
Conduct of Arbitral Proceedings
The important aspect of the proceedings is the choice of the law. The Arbitral
Tribunal not bound by the technicalities of Civil Procedure Code and Indian
Evidence Act. The diversion from the regular procedure is a welcome change as it
allows the parties to have freedom as to the selection of procedure[11].
The next debate is whether the parties should be bound by the substantive law?
Section 28 of the arbitration and conciliation act provides an answer to this
question by dividing the arbitral proceedings into two categories.
In case of domestic arbitration, where both parties are Indians, the Indian legal
system would govern the proceedings sans the two legislations mentioned above. If
the arbitral proceedings are international commercial arbitration, then the law
would be the choice of the parties.
Award
The final outcome of the arbitral proceedings is an award. The award must be in
writing and signed by the majority of the arbitral tribunal. The important point to
note is that the minority opinion holder cannot pronounce minority award. His
opinion would be expressed in the majority award and reasons for omission from
signing.
The award has to be accompanied with reasons. Till 1996 the legislatures as well
as judiciary were equivocal as to non-speaking award of the arbitral tribunal. The
law makers felt that it would be an unnecessary burden on the arbitral tribunal, as it
could be comprise of laymen. A good award could be set aside on technicalities.
To avoid such grounds for set aside, reasons were never mandatory.
But since 1996, there is a shift in the approach. The reasons have been made
compulsory except two circumstances, where the party have come up with an
award on agreed terms under sec 30, the reasons are not necessary, as it is an
agreement between the parties rather than an award. Secondly, the parties
themselves through an agreement mandate the Arbitral Tribunal not to give
reasons. This permission has an overriding effect on the sec 31.
The Arbitral Tribunal is authorised to issue final as well as Interim Arbitral Award.
In addition it can also impose interests and costs over the parties.
Setting aside an arbitral award
The arbitral proceedings are binding on the parties unlike negotiation and other
ADRs. Once party submits to arbitration by entering into arbitration agreement, the
process is binding. The same principle is applicable to award also. Once the award
is final it is binding on the parties. However, before award becomes final the
parties are given an option of challenging it before the Court. Such challenge could
be made on different grounds and most of the grounds are procedural and
technical.
Incapacity of the parties
The parties to the agreement are suffering from incapacities or the parties to the
proceedings suffered incapacities like age of minority, insanity, insolvency etc, the
award could be set aside.
The general incapacity of the party could be assessed by referring to Indian
Contract Act. The Act would deal with age, sound mind, and other requirements of
valid contract. However, there are various other incapacities projected by different
legislations. Therefore, the incapacity of the party depends of applicable
legislations.
Arbitration agreement not valid
The other ground for setting aside is invalid arbitration agreement. As mentioned
above, the Court is looking into the technicalities of the arbitration agreement.
Again the Indian Contract Act plays the major role, to ensure the agreement is with
free consent in absence of mistake, coercion, misrepresentation or fraud.
Lack of notice
Sometimes the parties involved in the dispute were not in a position to present the
case effectively, if it is due to lack of notice then the award could be set aside. The
parties are expected to be informed about the appointment of arbitrator or
commencement of the proceedings or they have right to be informed of various
stages of the proceedings.
Therefore, it is important to issue notice of each and every stage of the
proceedings. In case of failure to grant notice or intimate could lead to setting aside
of the award.
Ultra vires award
After the completion of the proceedings the award pronounced by the arbitrator is
beyond the scope of the arbitration agreement, such award is liable to be set aside.
The award could be ultra vires if it is not with in terms of agreement or not
contemplated by terms of reference. Sometimes the Arbitral Tribunalpasses the
award which is beyond the scope of arbitration agreement, under all these
circumstances the award is liable to be set aside.
Composition of Arbitral Tribunal
While commencement of the arbitral proceedings the parties or arbitrators or Chief
Justice is expected to constitute the arbitral tribunal. The Arbitral Tribunal has
compulsorily adhered to the terms and conditions laid down by the arbitration
agreement. The qualifications, procedure, other conditions which ensure
independent and impartial arbitrator must follow by the parties as well as the Chief
Justice. If the appointment is not in accordance with agreement, then the award is
liable to be set aside. However, if the arbitration agreement is disregarded to fulfil
the requirement of the law, such deviation is excused. Otherwise, in all other
circumstances the award would be set aside.
Subject matter not capable of arbitrated
As discussed above, arbitration is a suitable process for commercial disputes
whereas certain disputes cannot be referred for arbitration. In furtherance of the
rule, if a non-arbitrable dispute is referred and consequently an award is
pronounced, such award is liable to be set aside.
Award against public policy
Last but very controversial ground for setting aside is public policy. If award is
against public interest, then such award is liable to be set aside. The whole
controversy revolves around the definition of ‘public policy’. The Act itself
provides for the restricted definition in the form of an explanation. However, the
Court preferred to follow the wider definition provided under different legislation.
The wider definition provided an opportunity to challenge the arbitral award for all
frivolous grounds.
Appeals
In addition to the grounds for setting aside, the parties have opportunity of
redressal against the orders and decisions of the tribunal and Court in the form of
an appeal. The granting and refusing to grant interim measures by the Court could
be challenged through an appeal. Similarly, the decision of the Court to set aside or
refusing set aside an arbitral award also could be subjected to appeal.
Similarly, orders of the Arbitral Tribunal also could be challenged through an
appeal. The order of accepting the challenge of lack of jurisdiction could be
challenged in an appeal. However, rejecting challenge of lack of jurisdiction is not
subjected to appeal as parties have to co-operate the arbitral tribunal till the end of
proceedings and challenge the same ground for setting aside the arbitral award.
Under sec 17 the arbitral tribunal is also authorised to grant interim measures. Such
granting or refusing to grant interim measures could also be challenged through an
appeal.
[1] See sec 2(1)(d) and 2(1)(d) of Industrial Disputes Act, 1947
[2] Sec 4(1) of ibid
[3] Sec 11 of ibid.
[4] See Sec 12 of ibid
[5] See Sec 5(2) and (3) ibid.
[6] Sec 61 of Arbitration and Conciliation Act 1996
[7] Sec 62 of A and C Act
[8] Sec 7 of Arbitration and Conciliation Act, 1996
[9] Sect 8 of Arbitration and Conciliation Act, 1996
[10] Sec 16 of Arbitration and Conciliation Act, 1996
[11] Sec 18

Common questions

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The Arbitration and Conciliation Act, 1996, ensures procedural protections by granting parties the right to challenge the jurisdiction of the arbitral tribunal if disputes are non-arbitrable or beyond agreement scope, and by allowing challenges to the arbitral award on grounds such as incapacity, invalid agreements, lack of notice, and ultra vires awards . Moreover, it empowers the parties to select applicable laws for domestic and international arbitration, ensuring processes align with their mutual expectations and legal requirements . These procedural safeguards protect the integrity and fairness of arbitration proceedings, providing recourse and ensuring adherence to agreed terms. Appeals against certain orders further support fairness by allowing review of procedural and substantive decisions .

A conciliation officer's failure report outlines reasons for unsuccessful proceedings, which are crucial for the appropriate government to determine the next steps for handling the dispute. This report can lead to the dispute being referred to a Board of Conciliation or another authority. It provides a basis for assessing potential settlement viability or recognizing the need for more authoritative intervention, such as coercive or preventive measures under the Industrial Disputes Act . The gathering of such data encourages more informed governmental decisions regarding further dispute resolution mechanisms, ensuring appropriate measures are taken based on the dispute's specificities and past mediation efforts .

The possible outcomes of conciliation proceedings are either successful settlement or failure to reach an agreement. In the case of a successful conciliation, a settlement agreement is reached, and the conciliation officer reports the outcome along with a memorandum of settlement to the appropriate government . If the proceedings fail, the conciliation officer submits a detailed report outlining steps taken, dispute context, and reasons for failure . This failure report assists the government in deciding whether to refer the dispute to a Board of Conciliation or another authority, based on the suggestion of potential settlement possibilities or the need for further intervention .

Public policy considerations can lead to the setting aside of arbitral awards if they are deemed to contravene broader societal norms or legal principles. Although the Arbitration and Conciliation Act aims to restrict challenges based on public policy by providing a specific definition, courts often apply a broader interpretation drawn from various legislations . This broader interpretation allows for challenges on grounds deemed frivolous or overreaching, impacting awards by aligning arbitral outcomes with national and international legal standards, thus preserving public interest. However, the flexibility also opens avenues for potentially undermining definitive awards, requiring a balance between legal rigidity and societal norms .

The composition and appointment process of an arbitral tribunal must adhere to the terms of the arbitration agreement. The tribunal's independence and impartiality are essential for upholding the award's validity. If the tribunal's composition or appointment deviates from agreed terms, the award could be set aside, unless such deviation fulfills legal requirements . An improperly constituted tribunal may cast doubt on the arbitrators' impartiality and the proceedings’ fairness, leading to the potential setting aside of the award during judicial review .

A conciliation officer under the Industrial Disputes Act, 1947 is empowered to mediate and promote settlement of industrial disputes, having the ability to conduct inspections and gather information (though this information shouldn't be used directly for conciliation proceedings as they aren't a deciding authority). They also have powers akin to those of a Civil Court to summon witnesses and demand document production, except they cannot enforce these powers against the actual parties to avoid derailing proceedings . Their role is deemed vital, especially in public utility services, where conducting proceedings is mandatory to avoid service disruptions caused by strikes or blockades .

Party agreement is crucial in defining the scope and applicability of conciliation under the Arbitration and Conciliation Act, 1996. The process starts when parties mutually agree to conciliate and appoint one or more conciliators. This emphasis on agreement underscores the voluntary nature of conciliation, distinguishing it from arbitration which often relies on pre-existing agreements. The parties' agreement determines the dispute's suitability for conciliation and the applicable procedural nuances, tailoring to their specific needs and fostering an environment conducive to amicable settlements . Such mutual decision-making reflects the essence of ADR as an 'appropriate' rather than an 'alternative' dispute resolution technique, emphasizing customized approaches to conflict management .

The legal fiction of the independent existence of arbitration clauses means that even if a contract is declared void, the arbitration agreement within it remains valid to enforce the arbitral award. This addresses potential complications where an arbitral tribunal might declare the main contract void, risking the invalidation of the arbitration agreement as well. By declaring arbitration clauses as independent, the Act ensures that arbitration agreements retain their enforceability, facilitating the resolution of disputes and upholding the validity of awards derived from such clauses . This legal fiction is critical in maintaining the integrity and functionality of the arbitral process amidst challenges to contract validity .

The Arbitration and Conciliation Act, 1996, effectively repealed existing arbitration laws by introducing comprehensive legislation. Part I of the Act repealed the Arbitration Act of 1940, Part II repealed the Arbitration (Protocol and Convention) Act of 1937 and the Foreign Awards (Recognition and Enforcement) Act of 1960. Part III of the Act dealt with conciliation processes, which were previously referenced under other laws such as the Industrial Disputes Act of 1947 and the Family Courts Act of 1986. This comprehensive overhaul marked a significant shift in aligning arbitration and conciliation under a singular, unified legal framework .

The conciliation process under the Arbitration and Conciliation Act, 1996, commences when disputing parties agree to engage in conciliation and appoint a neutral conciliator. The process is initiated when one party sends a written invitation to the other, which includes a brief of the dispute and major issues involved. The process formally begins when the other party accepts this invitation in writing . This ensures mutual consent and differentiates conciliation from arbitration, which requires a pre-existing written agreement. Such an agreement signifies a cooperative intent to resolve disputes amicably without resorting to litigation .

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