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Reforming arbitration law

GS Paper 2

 Syllabus: Govt policies and interventions


Source: ET

 Context: The government has set up an expert panel led by former law secretary T K Vishwanathan to recommend reforms in the Arbitration and Conciliation Act, 1996.

3 methods of dispute resolution:

  • Traditional Dispute Resolution: Involves proceedings before an appropriate court of law according to the procedure established.
  • Alternate Dispute Resolution (ADR): These are more flexible and party-centric and include negotiation, mediation, conciliation and arbitration, and
  • Hybrid Methods of Dispute Resolution


What is arbitration and conciliation?

  • Under arbitration, the parties concerned, instead of approaching courts, opt for private dispute resolution through arbitrators.
    • The decision of arbitrators is binding.
  • Conciliation is a (non-binding) process in which a third party helps the parties in dispute to resolve it by way of agreement. The person authorised to do so is called a Conciliator.


Need to evolve alternative mechanisms:

  • To reduce the burden of the Courts.
  • To provide speedy access to justice along with the revival and strengthening of traditional systems of dispute resolution.


Legal backing to the alternative mechanisms:

  • ‘Section 89’ in the Code of Civil Procedure, 1908, opened the passage of statutory reference to ADR, either by the Courts or the parties themselves.
  • The Arbitration and Conciliation Act, 1996: The legislative intent of the Act is to bring domestic as well as international commercial arbitration in consonance with –
    • The UNCITRAL Model Rules,
    • The New York Convention and the Geneva Convention.


Salient provisions of the Arbitration and Conciliation Act, 1996:

  • It consolidates and amends the law relating to –
    • Domestic arbitration,
    • International commercial arbitration and enforcement of foreign arbitral awards, and
    • Define the law relating to conciliation.
  • The Act provides the procedure to be followed in arbitration proceedings, arbitral tribunal, the conduct of the tribunal along with the arbitral awards to be made in a dispute.
  • The decision is binding on the parties and given in the form of an arbitral award in an arbitration agreement.
  • It also prescribes the procedure of appeal to courts in case of discrepancies.


The main objective of the Act:

  • To make provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration.
  • To minimise the supervisory role of the courts in the arbitral process.
  • To permit an arbitral tribunal to use mediation, conciliation or other procedures during the arbitral proceedings in the settlement of the disputes.


The main issue faced by the dispute resolution environment in India:

  • Increased court intervention in the whole process.
  • Thus, arbitration has no longer remained a truly party-driven, cost-effective and time-bound process.


Why is the T K Vishwanathan committee constituted?

  • As a continuous endeavour to promote ease of doing business, the Department of Legal Affairs is considering the need to further reform the Arbitration and Conciliation Act 1996.
  • This will help India become a hub for international arbitration and reduce the burden on courts.


The terms of reference for the committee:

  • To evaluate and analyse the operation of the present arbitration ecosystem of the country, including the working of the Arbitration Act.
  • To highlight the Arbitration Act’s strengths and weaknesses and challenges vis-a-vis other important foreign jurisdictions.
  • To recommend a framework of model arbitration system which is efficient, effective and economical and caters to the requirements of the users.
  • To devise a strategy for developing a competitive environment in the arbitration services market for domestic and international parties.


Insta Links:

Bills & Acts – Arbitration Laws in India