Report No. 176
Consultation paper on review of working of the Arbitration and Conciliation Act, 1996
Arbitration & Conciliation Act , 1996
1.1 Broad framework of the Act of 1996 and certain drawbacks experienced in its working:-
The Arbitration & Conciliation Act, 1996 which came into force on 22.8.96 is an Act to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards (as also define the law relating to conciliation) and matters connected therewith or incidental thereto.
The Act is based on the Model Law (a set of 36 Articles) which was drafted by a working group of the UN and was finally adopted by the U.N. Commission on International Trade Law (UNCITRAL) on June 21, 1985. The Resolution of the UN General Assembly ___________________________
See at the end summary of proposals recommended that all countries give due consideration to the Model Law, in view of the desirability of uniformity of the law of arbitral procedures and the specific needs of international commercial practice. While the Model Law was thus drafted to govern all international arbitration, the Act of 1996 stated in its preamble that "It is expedient to make law respecting arbitration and conciliation taking into account the aforesaid Model Law and Rules."
And by sec.85 of the new Act, the old Arbitration Act, 1940 (relating to domestic arbitration) and also the Arbitration (Protocol and Convention) Act, 1937 and the Foreign Award (Recognition and Enforcement) Act, 1961, (relating to international arbitration) were repealed, thus enabling the Act of 1996 to govern both domestic and international arbitration.
Part I of the Act entitled 'Arbitration' is general (and contains chapters I to X) while Part II deals with 'Enforcement of Certain Foreign Awards (and Chapter I thereof deals with New York Convention Awards and Chapter II deals with Geneva Convention Awards). Part III of the Act of 1996 deals with Conciliation with which we are not concerned in this Paper.
Part IV deals with supplemental provisions. The Act of 1996 contains three Schedules.
The First Schedule refers to Convention on the Recognition and Enforcement of Foreign Arbitration Awards (see sec.44); the Second Schedule refers to the Protocol on Arbitration Clause (see sec.53) and the Third Schedule to the Convention on the execution of foreign Arbitration Awards.
Although the Model Law does not take the form of a treaty, legislators who decided to review their arbitration laws since 1985 have all given 'due consideration' to the UNCITRAL Model Law.
Some countries adopted certain provisions of the Model Law, but considered that they could extend, simplify or liberalise the Model Law. Examples include the Netherlands in 1986 and Switzerland in 1987. Because of the specificity of their legal systems, Italy and England decided not to follow the Model Law closely.
By March 31, 1999, a total of 29 countries (including Australia, Bahrain, Bermuda, Bulgaria, Canada, Cypres, Egypt, Finland, Germany, Guatemala, Hungary, India, Iran, Ireland, Kenya, Lithunia, Malta, Mexico, New Zealand, Nigeria, Oman, Peru, the Russian Federation, Scotland, Sweden, Sri Lanka, Tunisia, Ukraine, Zimbabwe along with Hong Kong, 8 American States and all 12 Canadian provinces and territories) adopted legislation based to some extent on the UNCITRAL Model Law. (see website for updating:
http//www.un.or.at/uncitral) (International Commercial Arbitration by Fouchasrd, Gaillard, Goldman, 1999, page 109, para 2.5)
The importance of this gradual process of harmonization is that court decisions applying Model Law, from all the countries that have adopted or adapted it, have been published since 1992. There is thus a growing body of case law concerning the interpretation of the Model Law (see CLOUT.
Available on Website
http://www.ur.or at/uncitral and CLOUT. XXII Y.B.Com. Arb. 297-300 (1997)(ibid p.109, para 2.5).