Arbitration in India: Arbitration and Conciliation Act 1996 Explained

# Arbitration in India: Arbitration and Conciliation Act 1996 Explained

Arbitration has emerged as one of the most significant alternatives to traditional court litigation for resolving commercial and civil disputes in India. With Indian courts facing substantial case backlogs — the National Judicial Data Grid reports millions of pending civil cases — parties increasingly turn to arbitration for faster, more flexible, and confidential dispute resolution.

The primary legislation governing arbitration in India is the **Arbitration and Conciliation Act, 1996**, which is based on the **UNCITRAL Model Law on International Commercial Arbitration, 1985**. The Act has undergone significant amendments in **2015**, **2019**, and **2021**, each aimed at making arbitration faster, more efficient, and aligned with international best practices.

This article provides a comprehensive overview of the arbitration framework in India — from the arbitration agreement to the enforcement of arbitral awards — along with key judicial pronouncements that have shaped the law.

> **Disclaimer:** This article is for general informational and educational purposes only. It does not constitute legal advice. Laws, rules, and judicial interpretations are subject to change. Readers are encouraged to consult a qualified legal professional for advice specific to their situation.

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What Is Arbitration?

**Arbitration** is a form of **alternative dispute resolution (ADR)** in which parties to a dispute agree to submit their disagreement to one or more private adjudicators (called **arbitrators**) instead of approaching a court. The arbitrator(s) hear both sides, examine evidence, and render a binding decision called an **arbitral award**.

The process is **consensual** — it arises from the agreement of the parties — but once the arbitration is commenced, the award is generally **binding and enforceable** in the same manner as a court decree.

The Supreme Court in *Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., (2010) 8 SCC 24* observed that arbitration is particularly suitable for commercial disputes involving complex technical or factual questions, where specialized expertise and speed of resolution are valued.

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Advantages of Arbitration Over Litigation

| Feature | Arbitration | Court Litigation |

|---|---|---|

| Speed | Faster (statutory time limit of 12 months under the 2015 amendment) | Can take years or decades |

| Flexibility | Parties choose the procedure, venue, language, and governing law | Bound by rigid procedural rules (CPC, Evidence Act) |

| Confidentiality | Proceedings are private (strengthened by the 2019 amendment) | Court proceedings are generally public |

| Expertise | Parties can select arbitrators with domain expertise | Judges are generalists |

| Enforceability | Awards enforceable as court decrees (Section 36); international awards enforceable under the New York Convention | Decrees enforceable under CPC |

| Finality | Limited grounds for challenge (Section 34); no appeal on merits | Multiple layers of appeal (first appeal, second appeal, SLP) |

| Cost | Can be cost-effective for large disputes; may be expensive for small claims | Court fees are typically lower, but overall cost is high due to duration |

| Party autonomy | High — parties control the process | Low — court controls the process |

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Structure of the Arbitration and Conciliation Act, 1996

The Act is divided into four parts:

- **Part I (Sections 2-43):** Governs domestic arbitration and international commercial arbitration where the seat (place) of arbitration is in India. This is the most extensively used part of the Act.

- **Part II (Sections 44-60):** Deals with enforcement of **foreign arbitral awards** under the **New York Convention** (Chapter I) and the **Geneva Convention** (Chapter II).

- **Part III (Sections 61-81):** Governs **conciliation** as a separate ADR mechanism.

- **Part IV (Sections 82-86):** Contains supplementary provisions.

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Types of Arbitration

Ad Hoc Arbitration

In **ad hoc arbitration**, the parties themselves manage the arbitration process without the supervision of any institution. The parties (or the arbitrator) determine the procedural rules, timelines, and logistics. This is the most common form of arbitration in India, particularly in domestic commercial disputes.

**Advantages:** Lower institutional costs; greater flexibility.

**Disadvantages:** Requires cooperative parties; procedural delays if one party is obstructive.

Institutional Arbitration

In **institutional arbitration**, the arbitration is administered by an established arbitral institution that provides procedural rules, administrative support, case management, and a panel of arbitrators. Major arbitral institutions in India include:

- **Mumbai Centre for International Arbitration (MCIA)**

- **Delhi International Arbitration Centre (DIAC)**

- **Indian Council of Arbitration (ICA)**

- **International Centre for Alternative Dispute Resolution (ICADR)**

Internationally, institutions such as the **International Chamber of Commerce (ICC)**, **Singapore International Arbitration Centre (SIAC)**, and **London Court of International Arbitration (LCIA)** are frequently used by Indian parties in cross-border disputes.

The 2019 Amendment to the Arbitration Act established the **Arbitration Council of India (ACI)** to promote institutional arbitration, frame norms, and accredit arbitral institutions and arbitrators (Sections 43A-43M, though implementation has been phased).

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The Arbitration Agreement (Section 7)

The foundation of every arbitration is the **arbitration agreement**. Section 7 of the Act defines it as an agreement by the parties to submit to arbitration all or certain disputes that have arisen or may arise between them in respect of a defined legal relationship, whether contractual or not.

Key Requirements

- The agreement must be **in writing** (Section 7(3)).

- It is considered "in writing" if it is contained in a document signed by the parties, an exchange of letters, telegrams, or other means of telecommunication (including electronic communication) that provides a record, or 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 (Section 7(4)).

- The arbitration agreement can be a **clause within a contract** (an arbitration clause) or a **separate agreement** (a submission agreement).

Validity and Separability

A critical principle is that the arbitration agreement is treated as an agreement **independent of the underlying contract** (the **doctrine of separability** or **kompetenz-kompetenz**). Under **Section 16**, the arbitral tribunal is competent to rule on its own jurisdiction, including objections to the existence or validity of the arbitration agreement. The invalidity of the underlying contract does not automatically invalidate the arbitration clause.

The Supreme Court in *Reva Electric Car Company (P) Ltd. v. Green Mobil, (2012) 2 SCC 93* affirmed that an arbitration clause survives the termination or invalidity of the main contract.

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Reference to Arbitration (Section 8)

When a party to an arbitration agreement initiates court proceedings instead of arbitration, the other party may apply under **Section 8** for the court to refer the matter to arbitration. The court is **obligated** to refer the parties to arbitration if:

1. A party to the arbitration agreement applies **not later than** the date of submitting the first statement on the substance of the dispute.

2. The court is satisfied that a **valid arbitration agreement exists**.

The 2015 Amendment strengthened this obligation — the court must refer the matter to arbitration unless it finds that **prima facie no valid arbitration agreement exists** (Section 8(1), as amended).

The Supreme Court in *Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1* laid down a comprehensive framework for when courts should and should not refer disputes to arbitration under Section 8, holding that the court must undertake a prima facie examination of the arbitrability of the dispute and the existence of the arbitration agreement, but should not conduct a detailed factual inquiry.

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Appointment of Arbitrators (Section 11)

The process of appointing arbitrators is governed by **Section 11** and party autonomy. Parties are free to agree on a procedure for appointing the arbitrator(s). Common arrangements include:

- Each party appoints one arbitrator, and the two appointed arbitrators select the **presiding arbitrator** (common in three-member tribunals).

- A named arbitral institution appoints the arbitrator(s).

- A sole arbitrator is agreed upon by both parties.

Role of the Court

If the agreed procedure fails, or if there is no agreed procedure, a party may approach the **Supreme Court** (for international commercial arbitration) or the **High Court** (for domestic arbitration) for appointment of an arbitrator under **Section 11(6)**.

The 2015 Amendment required the Supreme Court and High Courts to **endeavour to dispose of the appointment application within 60 days** (Section 11(13)).

Key Judgment: Perkins Eastman v. HSCC

In *Perkins Eastman Architects DPC v. HSCC (India) Ltd., (2020) 20 SCC 760*, the Supreme Court held that a party to an arbitration agreement **cannot have the power to unilaterally appoint a sole arbitrator**, as this compromises the independence and impartiality of the arbitral process. This decision was significant because many government contracts contained clauses allowing one party (typically the government entity) to appoint the sole arbitrator, which was struck down as contrary to the principles of natural justice and the Act.

Qualifications and Independence

Under the **Seventh Schedule** of the Act (introduced by the 2015 Amendment), certain categories of persons are ineligible to serve as arbitrators due to relationships with the parties or the dispute. The **Fifth Schedule** lists grounds for doubting an arbitrator's independence or impartiality. An arbitrator must disclose circumstances likely to give rise to justifiable doubts about their independence (Section 12).

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Arbitral Procedure (Sections 18-27)

The Arbitration Act grants parties and the tribunal significant flexibility in determining the procedure.

Fundamental Principles

- **Equal treatment:** The parties must be treated with **equality**, and each party must be given a **full opportunity to present its case** (Section 18). This is a mandatory, non-derogable requirement.

- **Party autonomy:** The parties are free to agree on the procedure to be followed by the arbitral tribunal (Section 19(2)). Failing such agreement, the tribunal has the power to conduct the proceedings in the manner it considers appropriate (Section 19(3)).

- **No mandatory adherence to CPC or Evidence Act:** The arbitral tribunal is **not bound** by the Code of Civil Procedure, 1908, or the Bharatiya Sakshya Adhiniyam, 2023 (Section 19(1)). This is one of the key advantages of arbitration.

Key Procedural Provisions

- **Place (seat) of arbitration:** The parties may agree on the place of arbitration. Failing agreement, the tribunal determines it, having regard to the convenience of the parties (Section 20). The "seat" of arbitration determines the legal framework and the courts that exercise supervisory jurisdiction.

- **Language:** The parties or the tribunal determine the language of the proceedings (Section 22).

- **Statements of claim and defence:** The claimant must state the facts, the points at issue, and the relief sought. The respondent must state the defence. Documents and evidence may be annexed (Section 23).

- **Hearings and written proceedings:** The tribunal decides whether to hold oral hearings or conduct proceedings based on documents and written materials, unless a party requests a hearing (Section 24).

- **Expert evidence:** The tribunal may appoint experts and require parties to give the expert access to relevant information (Section 26).

- **Court assistance in evidence:** The tribunal or a party with tribunal approval may request the court to assist in taking evidence (Section 27).

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Interim Measures (Sections 9 and 17)

One of the practical strengths of the Indian arbitration framework is the availability of interim relief.

Section 9 — Court-Ordered Interim Measures

A party may apply to the **court** for interim measures before, during, or after arbitral proceedings (but before the award is enforced). Relief available under Section 9 includes:

- Preservation or interim custody of the subject matter of the arbitration.

- Securing the amount in dispute.

- Detention, preservation, or inspection of property or thing that is the subject matter of the dispute.

- Interim injunction or appointment of a receiver.

- Any other interim measure as the court deems just and convenient.

The 2015 Amendment added an important limitation: once the arbitral tribunal is constituted, the court should **not entertain a Section 9 application** unless the tribunal's remedy under Section 17 would be inefficacious (Section 9(3)).

Section 17 — Tribunal-Ordered Interim Measures

The arbitral tribunal itself may order interim measures at the request of a party. The 2015 Amendment significantly strengthened Section 17 by making tribunal-ordered interim measures **enforceable as court orders** (Section 17(2)). Before this amendment, there was no enforcement mechanism for Section 17 orders, severely limiting their utility.

The Supreme Court in *Amazon.com NV Investment Holdings LLC v. Future Retail Ltd., (2022) 1 SCC 209* upheld the enforceability of an emergency arbitrator's interim order under Section 17(1), reinforcing the efficacy of arbitral interim measures.

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The Arbitral Award (Sections 28-31)

Substantive Law (Section 28)

- In **domestic arbitrations**, the tribunal must decide the dispute in accordance with the **substantive law of India** (Section 28(1)(a)).

- In **international commercial arbitrations**, the tribunal applies the rules of law designated by the parties, and failing such designation, the rules of law the tribunal considers appropriate (Section 28(1)(b)).

- In all cases, the tribunal must take into account the **terms of the contract** and **relevant trade usages** (Section 28(3)).

Making of the Award (Section 29A — Time Limit)

The **2015 Amendment** introduced **Section 29A**, which mandates that the arbitral tribunal must make the award **within 12 months** from the date the tribunal enters upon the reference (i.e., the date when all arbitrators complete their mandate). This can be extended by **6 months** by the consent of the parties. Beyond 18 months, extension requires an order of the court.

If the award is not made within the prescribed time, the mandate of the arbitrator(s) terminates unless the court extends the period (Section 29A(4)). The court may also impose costs, reduce fees, or substitute arbitrators while granting an extension (Section 29A(5)).

Form and Content (Sections 29-31)

- The award must be **in writing** and signed by the arbitrators (Section 29).

- The award must state the **reasons** upon which it is based, unless the parties agree that no reasons are to be given or the award is on agreed terms (Section 31(3)).

- The award must state the date and **place (seat) of arbitration** (Section 31(4)).

- The tribunal may award **interest** from the date of cause of action to the date of payment (Section 31(7)).

- The tribunal must fix the **costs** of arbitration (Section 31(8), as substituted by the 2015 Amendment).

Settlement During Arbitration (Section 30)

If the parties settle the dispute during arbitral proceedings, the tribunal may record the settlement as an **arbitral award on agreed terms**. Such an award has the same status and effect as any other arbitral award on the substance of the dispute.

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Challenge to the Arbitral Award (Section 34)

An arbitral award can be challenged (set aside) **only** on the limited grounds specified in **Section 34**. This is a critical feature — the scope of judicial review of an arbitral award is intentionally narrow to preserve the finality and efficiency of arbitration.

Grounds for Setting Aside (Section 34(2))

An award may be set aside if the party making the application furnishes proof that:

1. A party was under some **incapacity**, or the arbitration agreement is **not valid** under the applicable law.

2. The party was **not given proper notice** of the appointment of the arbitrator or the proceedings, or was otherwise unable to present its case.

3. The award deals with a dispute **not falling within the terms** of the submission to arbitration (however, the portion of the award dealing with matters within the scope may be saved).

4. The composition of the tribunal or the arbitral procedure was **not in accordance** with the agreement of the parties (or, failing such agreement, the Act).

The court may also set aside the award if it finds that:

5. The subject matter of the dispute is **not capable of settlement by arbitration** (not arbitrable) under Indian law.

6. The award is in conflict with the **public policy of India** (Section 34(2)(b)(ii)).

The "Public Policy" Ground

The meaning of "public policy" has been the subject of extensive judicial interpretation. The **2015 Amendment** clarified (in the Explanation to Section 34(2)(b)(ii)) that an award is in conflict with public policy only if:

- It was induced or affected by **fraud or corruption**.

- It contravenes the **fundamental policy of Indian law**.

- It is in conflict with the **most basic notions of morality or justice**.

Crucially, the 2015 Amendment added **Section 34(2-A)**, which provides that the court shall **not** set aside an award merely on the ground of an **erroneous application of the law or reappreciation of evidence** (for domestic arbitrations). This significantly limits the scope of judicial interference.

Key Judgment: BALCO v. Kaiser Aluminium

The landmark decision in *Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552* (**the BALCO judgment**) transformed Indian arbitration law. The Supreme Court held that **Part I of the Arbitration Act** (including Section 34) applies only where the **seat of arbitration is in India**. For foreign-seated arbitrations, Indian courts have no jurisdiction under Part I. This overruled the earlier position in *Bhatia International v. Bulk Trading S.A., (2002) 4 SCC 105*, which had held that Part I applied to all arbitrations unless expressly excluded.

The BALCO judgment brought Indian arbitration law in line with international standards and the concept of "seat theory."

Time Limit for Challenge

An application to set aside an award must be filed **within 3 months** from the date of receipt of the award. The court may grant a **further 30 days** but **not thereafter** (Section 34(3)). This strict limitation ensures that challenges are made promptly.

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Enforcement of the Arbitral Award (Section 36)

Once the time for filing a challenge under Section 34 has expired (without a challenge being filed), or if the challenge has been rejected, the arbitral award becomes **enforceable as a decree of the court** under **Section 36**.

The 2015 Amendment clarified that merely filing a Section 34 application does **not automatically stay** the enforcement of the award. The party challenging the award must seek a **separate stay** from the court, and the court applies the same principles as Order XLI, Rules 1 and 5 of the CPC (relating to stay of money decrees). This was a significant pro-enforcement reform.

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Appeal (Section 37)

Appeals from court orders in arbitration matters are limited. Under **Section 37**, an appeal lies from the following orders (and no others):

1. An order **granting or refusing** to grant interim measures under Section 9.

2. An order **setting aside or refusing to set aside** an arbitral award under Section 34.

3. An order **granting or refusing** to grant interim measures by the tribunal under Section 17.

There is **no second appeal** from an order passed under Section 37. However, a party may approach the Supreme Court under **Article 136 of the Constitution** (Special Leave Petition).

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International Commercial Arbitration (Part II)

**Part II** of the Act governs the enforcement of **foreign arbitral awards** in India. India is a signatory to the **New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958**, and Chapter I of Part II implements this Convention.

Enforcement of Foreign Awards (Sections 44-49)

A party seeking enforcement of a foreign award must apply to the **High Court** with jurisdiction. The court will enforce the award unless the opposing party proves one of the limited grounds for refusal under **Section 48** (which mirror Article V of the New York Convention):

- Incapacity of parties or invalidity of the arbitration agreement.

- Lack of proper notice or inability to present the case.

- The award deals with matters beyond the scope of the submission.

- The composition of the tribunal or procedure was not in accordance with the agreement or the law of the country where arbitration took place.

- The award has not yet become binding, or has been set aside or suspended by the court of the seat.

- The subject matter is not arbitrable under Indian law.

- Enforcement would be contrary to the public policy of India.

The Supreme Court in *Shri Lal Mahal Ltd. v. Progetto Grano Spa, (2014) 2 SCC 433* held that the "public policy" ground for refusing enforcement of a foreign award under Section 48 has a **narrower scope** than the "public policy" ground under Section 34 for domestic awards. A foreign award can be refused enforcement only if it is contrary to the fundamental policy of Indian law, the interests of India, or justice or morality (and not for mere errors of law).

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2015 and 2019 Amendments: Key Changes

Arbitration and Conciliation (Amendment) Act, 2015

The 2015 Amendment was a watershed reform, aimed at reducing judicial intervention and making arbitration faster and more effective:

- **Section 29A:** Introduced a **12-month time limit** for making the award (extendable by 6 months with party consent).

- **Section 34(2-A):** Court cannot set aside an award for erroneous application of law or reappreciation of evidence.

- **Section 36:** Filing a Section 34 application does not automatically stay the award's enforcement.

- **Section 9(3):** After tribunal constitution, courts should entertain Section 9 applications only if tribunal remedy is inefficacious.

- **Section 17:** Tribunal-ordered interim measures made enforceable as court orders.

- **Fifth and Seventh Schedules:** Introduced standards for arbitrator independence, impartiality, and ineligibility.

- **Costs regime:** Sections 31(8) and 31-A introduced a structured costs regime, including the general rule that costs follow the event (the unsuccessful party bears costs).

Arbitration and Conciliation (Amendment) Act, 2019

The 2019 Amendment built on the 2015 reforms:

- **Arbitration Council of India (ACI):** Established under Sections 43A-43M to promote institutional arbitration, frame norms for accreditation of arbitral institutions, and maintain a panel of accredited arbitrators.

- **Confidentiality (Section 42-A):** Introduced a statutory confidentiality requirement — the arbitrator, the arbitral institution, and the parties must maintain **confidentiality** of all arbitral proceedings except for the award (where disclosure is necessary for implementation or enforcement).

- **Immunity of arbitrators (Section 42-B):** No suit or legal proceeding shall lie against an arbitrator for any act or omission done in good faith during the discharge of duties.

- **Qualification of arbitrators (Eighth Schedule):** Prescribed qualifications, experience, and norms for accreditation of arbitrators (though the Eighth Schedule was subsequently omitted by the 2021 Amendment Ordinance).

- **Time limit for completion of pleadings:** Statements of claim and defence must be completed within **6 months** from the date the arbitrator(s) receive notice of their appointment (Section 23(4)).

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Key Judgments in Indian Arbitration Law

The following judgments have significantly shaped arbitration jurisprudence in India:

1. **Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 (BALCO):** Part I of the Arbitration Act applies only where the seat of arbitration is in India. Indian courts have no jurisdiction to set aside or grant interim measures in foreign-seated arbitrations under Part I.

2. **Perkins Eastman Architects DPC v. HSCC (India) Ltd., (2020) 20 SCC 760:** A party to the arbitration cannot have the power to unilaterally appoint a sole arbitrator. Such clauses violate the equal treatment principle and are invalid.

3. **Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1:** Laid down the framework for determining arbitrability and the scope of judicial examination under Section 8 (reference to arbitration). Courts should conduct a prima facie examination, not a detailed factual inquiry.

4. **ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705:** Expanded the "public policy" ground under Section 34 to include "patent illegality appearing on the face of the award." This was subsequently limited by the 2015 Amendment (Section 34(2-A)).

5. **Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49:** The Supreme Court held that patent illegality must go to the root of the matter, and that the court should not re-examine the merits of the dispute or substitute its own view.

6. **Amazon.com NV Investment Holdings LLC v. Future Retail Ltd., (2022) 1 SCC 209:** Upheld the enforceability of emergency arbitrator orders, reinforcing the efficacy of interim arbitral relief.

7. **Ssangyong Engineering and Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131:** Clarified the scope of "fundamental policy of Indian law" and "patent illegality" as grounds for setting aside an award, holding that these terms must be interpreted narrowly to give effect to the pro-enforcement policy of the 2015 Amendment.

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When Is Arbitration Appropriate?

While arbitration offers many advantages, it is not suitable for every dispute. Arbitration is generally appropriate when:

- The parties have a **pre-existing arbitration agreement** (in a contract or otherwise).

- The dispute is **commercial in nature** — involving contracts, joint ventures, construction, technology, finance, or intellectual property.

- **Speed and confidentiality** are priorities.

- The dispute involves parties across **different jurisdictions** (international commercial arbitration).

- The subject matter benefits from adjudication by a **domain expert** rather than a generalist judge.

Arbitration is generally **not appropriate** (or not permissible) for:

- **Criminal matters.**

- **Disputes involving rights in rem** (real rights affecting third parties, such as certain tenancy disputes, insolvency matters, or disputes under the Guardians and Wards Act). See *Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532*.

- **Matters of public interest** or where a statutory tribunal has exclusive jurisdiction.

- **Fraud allegations of a serious nature** that require detailed trial (though the court must examine this on a prima facie basis per *Vidya Drolia*).

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Frequently Asked Questions

What is the difference between arbitration and mediation?

Arbitration is an **adjudicatory** process where the arbitrator renders a **binding decision** (the award). Mediation is a **facilitative** process where a neutral mediator helps the parties negotiate a **voluntary settlement**. If mediation fails, the parties retain the right to litigate or arbitrate. The **Mediation Act, 2023** now provides a standalone framework for mediation in India.

Can a court refuse to refer parties to arbitration under Section 8?

Yes, but only in limited circumstances. Under the 2015 Amendment, the court must refer parties to arbitration if a valid arbitration agreement exists, unless it finds **prima facie** that no valid arbitration agreement exists. Courts have also declined reference where the dispute is non-arbitrable (e.g., certain tenancy matters, insolvency proceedings) as per the framework in *Vidya Drolia*.

What happens if one party does not participate in the arbitration?

If a party fails to participate without sufficient cause, the arbitral tribunal may continue the proceedings and make the award based on the evidence before it (**Section 25**). The non-participating party cannot later challenge the award solely on the ground that they chose not to participate, provided they were given proper notice and opportunity.

Can an arbitral award be challenged on the ground of factual error?

Under the 2015 Amendment, **Section 34(2-A)** expressly provides that the court shall not set aside an award merely on the ground of an erroneous application of the law or by reappreciation of evidence (in domestic arbitrations). Factual errors, unless they amount to "patent illegality" going to the root of the matter or a violation of fundamental policy, are not grounds for setting aside the award.

Is an arbitral award enforceable internationally?

India is a signatory to the **New York Convention**, and Indian arbitral awards can be enforced in other signatory countries (over 170 countries). Similarly, foreign awards from New York Convention countries can be enforced in India under Part II of the Act. However, India has made a **reciprocity reservation**, meaning only awards from countries notified by the Central Government as "reciprocating territories" are enforceable.

How are arbitrator fees determined?

The **Fourth Schedule** to the Act (introduced by the 2015 Amendment) prescribes a fee model linked to the **sum in dispute**. Parties and arbitrators are free to agree on a different fee structure, but the Fourth Schedule serves as a baseline. Institutional arbitration fees are determined by the respective institution's rules and schedule.

Can consumer disputes be resolved through arbitration?

Consumer disputes may be referred to arbitration if there is a valid arbitration agreement. However, the Supreme Court in *Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 SCC 751* held that an arbitration clause in a consumer contract does not bar a consumer from approaching the consumer commission under the Consumer Protection Act, as the consumer remedies are in addition to and not in derogation of other remedies available.

What is the role of the "seat" of arbitration?

The **seat** (also called the juridical seat or place) of arbitration determines the **legal framework** governing the arbitration and identifies the **courts that exercise supervisory jurisdiction** (for appointment of arbitrators, interim measures, and challenge of awards). The BALCO judgment established that Part I of the Arbitration Act applies only when the seat is in India. The "venue" of hearings, if different from the seat, does not determine jurisdictional questions.

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Conclusion

Arbitration in India has undergone a significant transformation through the 2015 and 2019 amendments to the Arbitration and Conciliation Act, 1996. The introduction of statutory time limits, narrowed grounds for judicial interference, enforceability of tribunal-ordered interim measures, and a confidentiality framework have brought the Indian regime closer to international best practices.

For businesses and individuals entering into contracts, the inclusion of a well-drafted arbitration clause — specifying the seat, governing law, number of arbitrators, arbitral institution (if applicable), and language — is a critical preventive measure that can save significant time and cost if disputes arise. The choice between ad hoc and institutional arbitration, and between a sole arbitrator and a three-member tribunal, should be made with reference to the nature, value, and complexity of the potential dispute.

This article provides a general overview based on the Arbitration and Conciliation Act, 1996 (as amended) and judicial precedent as of the date of publication. Statutory provisions, judicial interpretations, and institutional rules are subject to change. Readers should consult the latest text of the Act and seek professional guidance tailored to their specific circumstances.