PREAMBLE

WHEREAS the United Nations Commission on International Trade Law (UNCITRAL) has adopted the UNCITRAL Model Law on International Commercial Arbitration in 1985; AND WHEREAS the General Assembly of the United Nations has recommended that all countries give due consideration to the said Model Law in view of the desirability of uniformity of the law of arbitral procedures and the specific needs of international commercial arbitration practice; AND WHEREAS the UNCITRAL has adopted the UNCITRAL Conciliation Rules in 1980; AND WHEREAS the General Assembly of the United Nations has recommended the use of the said Rules in cases where a dispute arises in the context of international commercial relations and the parties seek on amicable settlement of that dispute by recourse to conciliation; AND WHEREAS the said Model Law and Rules make significant contribution to the establishment of a unified legal framework for the fair and efficient settlement of disputes arising in international commercial relations; AND WHEREAS it is expedient to make law respecting arbitration and conciliation taking into account the aforesaid Model Law and Rules; Be it enacted by Parliament in the Forty-seventh Year of the Republic of India as follows :

I. PRELIMINARY

1. Short title extent and commencement

(1) This Act may be called the Arbitration and Conciliation Act 1996.

(2) It extends to the whole of India : Provided that Parts I III and IV shall extend to the State of Jammu and Kashmir only in so far as they relate to international commercial arbitration or as the case may be international commercial conciliation.

Explanation : In this sub-section the expression "international commercial conciliation" shall

have the same meaning as the expression "international commercial arbitration" in clause (f)

of sub-section (1) of section 2 subject to the modification that for the word "arbitration"

occurring therein the word conciliation shall be substituted.

(3) It shall come into force on such date as the Central Government may by notification in the Official Gazette appoint.

Part I. ARBITRATION

I. GENERAL PROVISIONS

2. Definitions

(1) In this Part unless the context otherwise requires -

(a) "arbitration" means any arbitration whether or not administered by permanent arbitral institution;

(b) "arbitration agreement" means an agreement referred to in section 7;

(c) "arbitral award" includes an interim award;

(d) "arbitral tribunal" means a sole arbitrator or a panel of arbitrators;

(e) "court" means the principal civil court of original jurisdiction in a district and includes the High Court in exercise of its ordinary original civil jurisdiction having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit but does not include any civil court of a grade inferior to such principal civil court or any court of small causes;

(f) "international commercial arbitration" means an arbitration relating to disputes arising out of legal relationship whether contractual or not considered as commercial under the law in force in India and where at least one of the parties is -

(i) an individual who is a national of or habitually resident in any country

other than India; or

(ii) a body corporate which is incorporated in any country other than India;

or

(iii) a company or an association or a body of individuals whose central

management and control is exercised in any country other than India; or

(iv) the government of a foreign country;

(g) "legal representative" means a person who in law represents the estate of a deceased person and includes any person who intermeddles with the estate of the deceased and where a party acts in a representative character the person on whom the estate devolves on the death of the party so acting;

(h) "party" means a party to an arbitration agreement.

(2) This Part shall apply where the place of arbitration is in India.

(3) This Part shall not affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration.

(4) This Part except sub-section (1) of section 40 sections 41 and 43 shall apply to every arbitration under any other enactment for the time being in force as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement except in so far as the provisions of this Part are inconsistent with that other enactment or with any rules made thereunder.

(5) Subject to the provisions of sub-section (4) and save in so far as is otherwise provided by any law for the time being in force or in any agreement in force between Indian and any other country or countries this Part shall apply to all arbitrations and to all proceedings relating thereto.

(6) Where this Part except section 28 leaves the parties free to determine a certain issue that freedom shall include the right of the parties to authorise any person including an institution to determine that issue.

(7) An arbitral award made under this Part shall be considered as a domestic award.

(8) Where this Part -

(a) refers to the fact that the parties have agreed or that they may agree or

(b) in any other way refers to an agreement of the parties that agreement shall include any arbitration rules referred to in that agreement.

(9) Where this Part other than clause (a) of section 25 or clause (a) of sub-section (2) of section 32 refers to a claim it shall also apply to a counter-claim and where it refers to a defence it shall also apply to a defence to that counter-claim.

3. Receipt of written communications

(1) Unless otherwise agreed by the parties -

(a) any written communication is deemed to have been received if it is delivered to the addressee personally or at his place of business habitual a residence or mailing address and

(b) if none of the places referred to in clause (a) can be found after making a reasonable inquiry a written communication is deemed to have been received if it is sent to the addressee's last known place of business habitual residence or mailing address by registered letter or by any other means which provides a record of the attempt to deliver it.

(2) The communication is deemed to have been received on the day it is so delivered.

(3) This section does not apply to written communication in respect of proceedings of any judicial authority.

4. Waiver of right to object

A party who knows that -

(a) any provision of this Part from which the parties may derogate or

(b) any requirement under the arbitration agreement has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or if a time limit is provided for stating that objection within that period of time shall be deemed to have waived his right to so object.

5. Extent of judicial intervention

Notwithstanding anything contained in any other law for the time being in force in matters governed by this part no judicial authority shall intervene except where so provided in this Part.

6. Administrative assistance

In order to facilitate the conduct of the arbitral proceedings the parties or the arbitral tribunal with the consent of the parties may arrange for administrative assistance by a suitable institution or person.

II. ARBITRATION AGREEMENT

7. Arbitration agreement

(1) In this part "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship whether contractual or not.

(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

(3) An arbitration agreement shall be in writing.

(4) An arbitration agreement is in writing if it is contained in -

(a) a document signed by the parties;

(b) an exchange of letters telex telegrams or other means of telecommunication which provide a record of the agreement; or

(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.

(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.

8. Power to refer parties to arbitration where there is an arbitration agreement

(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall if a party so applies not later than when submitting his first statement on the substance of the dispute refer the parties to arbitration.

(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or duly certified copy thereof.

(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority an arbitration may be a commenced or continued and an arbitral award made.

9. Interim measures by Court

A party may before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36 apply to a Court -

(i) for the appointment of a guarding for a minor or a person of unsound mind for the purpose of arbitral proceedings; or

(ii) for an interim measure of protection in respect of any of the following matters namely :-

(a) the preservation interim custody or sale of any goods which are the subject-matter of the arbitration agreement;

(b) securing the amount in dispute in the arbitration;

(c) the detention preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party or authorising any samples to be taken or any observation to be made or experiment to be tried which may be necessary or expedient for the purpose of obtaining full information or evidence;

(d) interim injunction or the appointment of a receiver;

(e) such other interim measure of protection as may appear to the court to be just and convenient and the court shall have the same power for making orders as it has for the purpose of and in relation to any proceedings before it.

III. COMPOSITION OF ARBITRAL TRIBUNAL

10. Number or arbitrators

(1) The parties are free to determine the number of arbitrators provided that such number shall not be an even number.

(2) Failing the determination referred to in sub-section (1) the arbitral tribunal shall consist of a sole arbitrator.

11. Appointment of arbitrators

(1) A person of any nationality may be an arbitrator unless otherwise agreed the parties.

(2) Subject to sub-section (6) the parties are free to agree on a procedure for appointment the arbitrator or arbitrators.

(3) Failing any agreement referred to in sub-section (2) in a arbitration with three arbitrator each party shall appoint one arbitrator and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator.

(4) If the appointment procedure in sub-section (3) applies and -

(a) a party fails to appoint an arbitrator within thirty days from the receipt or a request to do so from the other party; or

(b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment the appointment shall be made upon request to a party by the Chief Justice or any person or institution designated by him.

(5) Failing any agreement referred to in sub-section (2) in an arbitration with a sole arbitrator if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made upon request of a party by the Chief Justice or any person or institution designated by him.

(6) Where under an appointment procedure agreed upon by the parties -

(a) a party fails to act as required under that procedure; or

(b) the parties or the two appointed arbitrators fail to reach an agreement expected of them under that procedure; or

(c) a person including an institution fails to perform any function entrusted to him or it under that procedure a party may request the Chief Justice or any person or institution designated by him to take a necessary measure unless the agreement on the appointment procedure provides other means for securing the appointment.

(7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justice or the person or institution designated by him is final.

(8) The Chief Justice or the person or institution designated by him in appointing an arbitrator shall have due regard to -

(a) any qualifications required of the arbitrator by the agreement of the parties; and

(b) other considerations as are likely to secure the appointment of an independent and impartial arbitrator.

(9) In the case of appointment of sole or third arbitrator in an international commercial arbitration the Chief Justice of India or the person or institution designated by him may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities.

(10) The Chief Justice may make such scheme as he may deem appropriate for dealing with matters entrusted by sub-section (4) or sub-section (5) or sub-section (6) to him.

(11) Where more than one request has been made under sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justices of different High Courts or their designates the Chief Justice or his designate to whom the request has been first made under the relevant sub-section shall alone be competent to decide on the request.

(12)(a) Where the matters referred to in sub-sections (4) (5) (6) (7) (8) and (10) arise in an international commercial arbitration the reference to "Chief Justice" in those sub-sections shall be construed as a reference to the "Chief Justice of India".

(b) Where the matters referred to in sub-sections (4) (5) (6) (7) (8) and (10) arise in any other arbitration the reference to Chief Justice in those sub-sections shall be construed as a reference to the Chief Justice of the High Court within whose local limits the principal civil court referred to in clause (e) of sub-section (1) of section 2 is situate and where the High Court itself is the court referred to in that clause to the Chief Justice of that High Court.

12. Grounds for challenge

(1) When a person is approached in connection with his possible appointment as an arbitrator he shall disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality.

(2) An arbitrator from the time of his appointment and throughout the arbitral proceedings shall without delay disclose to the parties in writing any circumstances referred to in sub-section (1) unless they have already been informed of them by him.

(3) An arbitrator may be challenged only if -

(a) circumstances exist that give to justifiable doubts as to his independence or impartiality or

(b) he does not possess the qualifications agreed to by the parties.

(4) A party may challenge an arbitrator appointed by him or in whose appointment he has participated only for reasons of which he becomes aware after the appointment has been made.

13. Challenge procedure

(1) Subject to sub-section (4) the parties are free to agree on a procedure for challenging an arbitrator.

(2) Failing any agreement referred to in sub-section (1) a party who intends to challenge an arbitrator shall within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section (3) of section 12 send a written statement of the reason for the challenge to the arbitral tribunal.

(3) Unless the arbitrator challenged under sub-section (2) withdraws from his office or the other party agrees to the challenge the arbitral tribunal shall decide on the challenge.

(4) If a challenge under any procedure agreed upon by the parties or under the procedure under sub-section (2) is not successful the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award.

(5) Where an arbitral award is made under sub-section (4) the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with section 34.

(6) Where an arbitral award is set aside on an application made under sub-section (5) the court may decide as to whether the arbitrator who is challenged is entitled to any fees.

14. Failure or impossibility to act

(1) The mandate of an arbitrator shall terminate if -

(a) he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay; and

(b) he withdraws from his office or the parties agree to the termination of his mandate.

(2) If a controversy remains concerning any of the grounds referred to in clause (a) of sub-section (1) a party may unless otherwise agreed by the parties apply to the court to decide on the termination of the mandate.

(3) If under this section or sub-section (3) of section 13 an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator it shall not imply acceptance of the validity of any ground referred to in this section or sub-section (3) of section 12.

15. Termination of mandate and substitution of arbitrator

(1) In addition to the circumstances referred to in section 13 or section 14 the mandate of an arbitrator shall terminate -

(a) where he withdraws from office for any reason; or

(b) by or pursuant to agreement of the parties.

(2) Where the mandate of an arbitrator terminates a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.

(3) Unless otherwise agreed by the parties where an arbitrator is replaced under sub-section (2) any hearings previously held may be repeated at the discretion of the arbitral tribunal.

(4) Unless otherwise agreed by the he parties an order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there has been a change in the composition of the arbitral tribunal.

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