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Arbitration and Reconciliation


• Arbitration is the mechanism to settle disputes
between parties to a contract, determined in a
quasi-judicial manner
• The Arbitration and Conciliation Act 1996
provides legal frame work for settlement of
disputes by mutual settlement out side the court.
• Central Government may make rules for carrying
out the provisions of this act subjected to the
approval of the Parliament.
• Arbitration is an arrangement agreed upon by the
parties concerned to refer the disputes to a third
party for settlement.
• The arbitration tribunal can be a panel of
arbitrators or a sole individual.
• Any written document or a clause in a
contract for referring the dispute to
arbitration shall be an arbitration agreement.
• The parties to the contract will decide the
constitution of arbitration tribunal and mode
of appointment as laid down in the contract
• The arbitrator has to be appointed within 30
days of such request by any party.
• In case of failure to comply the above, the
Chief Justice of the High Court shall appoint
suitable arbitrator as per the request of the
• If the appointed arbitrator fails to perform,
the court may replace him by a suitable
arbitrator as per the request of the party.
• The appointed arbitrator shall disclose any
circumstances likely to occur to give doubt about his
• The party to the dispute also can challenge the
appointment of the arbitrator on the above count.
• The mandate of an arbitrator ends without
proceedings starts or in the course of proceedings
– He is not able to perform
– He withdraws
– Parties agrees to terminate him
• Proceedings of the arbitration commences from
the date of receipt of communication by the
respondents, for reference of the matter to the
• The parties shall be treated equally and shall be
given full opportunity to present their case.
• The procedure, place of hearing, time limit for
production of documents / evidence etc can be
agreed upon by the parties or otherwise decided
by the arbitrator.
• The arbitration procedure need not follow the
Civil court procedures or evidence act, but
shall ensure the principles of natural justice.

• The tribunal shall decide its own jurisdiction.

• The parties can counter if the tribunal exceeds

its authority.
• The arbitral tribunal may appoint an
expert/institution to examine and to give
expert report.
• If the respondent fails to communicate his
defense or fails to appear for oral hearing /
fails to produce documents, tribunal shall not
treat it as admission by the defaulting party
but proceed with the evidences before it and
make award.
• The tribunal may direct the parties to deposit
an amount towards cost etc. as decided by it
during the course of proceedings.
• The tribunal shall fix the cost of arbitration,
the fee of arbitration, for witness,
administrative charges, fees for experts etc.
• It decides cost payable by the each party and
also decides the cost payable to one party by
the other.
• Arbitration award will be decided as per the
substantive law in force in India taking into
account the terms of contract and usage of
• If the parties arrive at a settlement agreement
and request the tribunal to give award
accordingly and if tribunal has no objection it
may give award accordingly which will have
the same effect of the award.
• The arbitral award is issued under the
signature of all or majority of arbitrators on
the basis of the decision or stating it as
mutually agreed upon by the parties. Signed
copy shall be delivered to all parties.
• The award is binding on all the parties. Award
is enforceable as if it were a decree of the
• On issuance of award arbitration proceedings
are terminated.
• The tribunal is empowered to issue
corrections to the Clerical errors set in the
award issued, without effecting the decision
• However the Court may set aside arbitral
award on application by the parties in time, if
– The party was under incapacity to participate in
the arbitral proceedings
– Arbitration agreement is invalid
– Non-receipt of proper notice of arbitral
proceedings, non adoption of proper procedure,
partiality shown by the Tribunal or exceeding the
Jurisdiction by the Tribunal on examining the case
in detail.
• The act provides a legal frame to encourage voluntary
compromise/conciliation of disputes arising out of legal
relationship connected with commercial disputes
• The party initiating conciliation invites in writing the
other party identifying the subject of the dispute.
• The conciliation proceedings shall commence when the
other party accepts in writing the invitation to
• If the other party rejects or does not reply within 30
days/within time limit stated in the offer there will be
no conciliation proceedings
Appointment of conciliators
• Conciliators shall be appointed by the parties
to the dispute
• It shall be a sole conciliator or a panel of
conciliators of 1 to 3
• In case of 3 one shall be identified as presiding
• Institutions may also be appointed as
• The conciliator shall request to the parties to give
the dispute, points of issues and their plea in
writing. Thereafter he may request them to give
more details/information as and when required.
• Conciliator is not bound by civil procedure
Court/Evidence Act etc.
• He is guided by the trade practices, fairness,
natural justice, rights and obligations of the
• He shall assist the parties in an
independent/impartial manner to reach a
amicable settlement
• He may call suggestions for settlement from each
• When it appears to the conciliators that element
of settlement exists, he will formulate draft terms
of settlement and send it to each party for their
• On receipt of their observation, he reformulates
the terms for possible settlements.
• Parties shall not resort to arbitral or judicial
proceedings when subject matter is under
• If the parties agree on a settlement they may
draw up and sign a written settlement
• When settlement is signed by the parties it is
authenticated by the conciliator and is binding
on the parties.
• This settlement agreement will have the same
status as of the arbitral award by mutual
• Fee for conciliation, cost of administration, fee
payable to expert opinion etc. are to be borne
by the parties equally unless parties agree to
pay in other ratio.
• Conciliator may also be asked to deposit the
probable cost in advance in equal share by the
parties concerned