Arbitration and Conciliation Act, 1996: Plain-Language Guide

The Arbitration and Conciliation Act, 1996 is India's central arbitration law. Part I primarily governs arbitrations seated in India; Part II governs enforcement of specified foreign awards; Part III presently governs conciliation; and Part IV contains supplementary provisions.

Limited court intervention—not no court intervention

Section 5 restricts judicial intervention to matters authorised by the Act. Courts nevertheless retain important functions, including interim protection, appointment in appropriate cases, assistance in taking evidence, extension of time, challenge, appeal and enforcement.

The arbitration agreement and referral

Section 7 requires a written arbitration agreement. Section 8 requires a judicial authority to refer covered parties to arbitration on a timely application unless it finds prima facie that no valid arbitration agreement exists. The precise parties, timing and documentary requirements matter.

Tribunal jurisdiction

Under Section 16, the tribunal may rule on its own jurisdiction and on objections to the existence or validity of the arbitration agreement. The plea is not required "before pleadings" in general; it must ordinarily be raised no later than submission of the statement of defence, subject to the statutory exceptions.

Time limits

For matters other than international commercial arbitration, Section 29A ordinarily requires an award within 12 months from completion of pleadings under Section 23(4). International commercial arbitrations are subject to an endeavour to dispose of the matter within 12 months from completion of pleadings, rather than the same mandatory consequence. Parties may extend the domestic period by six months; further extension is for the competent court.

Section 29B permits a fast-track process by written agreement and ordinarily contemplates a documents-based procedure and a six-month award period. It has no ₹1 crore ceiling.

Challenge and enforcement

Section 34 is not an appeal on the merits. Its grounds include incapacity, invalid agreement, lack of proper notice, excess of jurisdiction, procedural defects, non-arbitrability and public policy. Section 34(2A) additionally permits specified domestic awards to be set aside for patent illegality appearing on the face of the award, while excluding mere erroneous application of law or reappreciation of evidence.

A Section 34 application must ordinarily be filed within three months of receipt of the award, with a possible further period of 30 days on sufficient cause—but not thereafter. Under Section 36, filing the challenge does not automatically stay enforcement. The 2021 amendment also provides for an unconditional stay where the court finds a prima facie case that the arbitration agreement, contract or making of the award was induced or affected by fraud or corruption.

2015, 2019 and 2021 changes

The 2015 amendment strengthened arbitrator disclosure and independence rules, tribunal interim powers, time management, the costs regime, and enforcement without an automatic stay. The 2019 amendment introduced institution-related reforms, Part IA and changes to Section 29A. The relevant Part IA provisions were commenced in October 2023, but commencement of statutory text should not be confused with proof that the Arbitration Council of India has been fully established and is operational; that requires separate verification of notifications and appointments. The 2021 amendment added the fraud-or-corruption stay proviso and removed the Eighth Schedule.

Conciliation

Sections 61–81 continue to appear in the current operative text and provide a self-contained conciliation framework. A written settlement signed by the parties has the same status and effect as an arbitral award on agreed terms under Section 74. The Mediation Act, 2023 enacts future substitutions, but those changes must be read with the applicable commencement notification.

For awards made abroad, see enforcing a foreign arbitral award in India; for disputes under Indian contracts, see commercial and contract disputes.