Dominant features of the Arbitration & Conciliation Act, 1996

The dominant features of the Act of 1996 are that it recognises the autonomy of the parties in the conduct of arbitral proceedings. The law promotes transparency in the matter of decision-making by the arbitral tribunal by providing that the arbitral tribunal shall give reasons for its arbitral award.

The supervisory role of courts has been minimised and it becomes practically nil till the award is made. The old system of making the arbitral award a rule of court before it is enforced has been dispensed with. The arbitral award itself, once it becomes final, will be enforced as if it were a decree of the court, without going through the estwhile process of its becoming a rule of court.

The Act of 1996 allows resort to arbitration by parties for resolution of their disputes in any matter which is arbitable. However, where, by virtue of any other law (i.e.-a special statue providing for different remedy), a certain dispute or certain kinds of disputes cannot be submitted to arbitration, they cannot be referred to arbitration. The parties are given maximum freedom in the appointment of arbitrators. It also provides the basis for institutional arbitration in as much as the parties may agree to abide by the rules of procedure of an arbitral institution for the purpose of arbitration. A significant feature is the provision relating to the appointment of arbitrators by the Chief Justice of the Supreme Court ot India or the Chief Justice oj a High Court or their nominees when the parties are not in a position to agree on a procedure for appointment of arbitrators. Arbitrators are independent. In case of International disputes, the Chairman arbitrator is from a neutral country.

The arbitral tribunal has the competence to decide on its own jurisdiction and to consider objectio:ls vlith respect to the existence or validity of the arbitration agreement. The new la\v clearly provides that an arbitral tribunal will not be bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872, However, parties are at liberty to clgree on the procedure to be followed by the arbitral tribuntll in conducting the proceedings.

Under the Act of 1996, the arbitral award must contain reasons unless the parties have agreed that no reasons are to be given. This is a significant departure from, the provisions of the Arbitration Act, 1940, which contained no mandatory provision requiring the arbitrator to record reasons for his award and the court could not interfere with the findings of the arbitrator on the ground of non¬provision of reasons.

However, it also restricts the scope of judicial scrutiny of the award. It clearly defines the grounds on which an application for setting aside an award can be entertained by a court. These grounds are confined to lack of capacity of a party, invalidity of the arbitration agreement under the law, violation of principles of natural justice and the arbitrator exceeding the terms of reference.

The, scope for judicial review, therefore, even when the award is a speaking one, is limited. The only residuary ground which empowers the courts to go into the merits of the award is that the award is in conflict with the public policy of India.