Meaning & Attributes of Arbitration

Landmark Case: Bharat Aluminium Co. v. Kaiser Aluminium Technical Services (BALCO) (2012) 9 SCC 552 — A Constitution Bench held that Part I of the A&C Act, 1996 applies only to arbitrations seated in India, modernising Indian arbitration and aligning it with international standards.

Meaning & Definition

Arbitration is the resolution of a dispute by a private tribunal chosen by the parties, whose decision (the “award”) is final and binding.

Section 2(1)(a), Arbitration and Conciliation Act, 1996: “‘arbitration’ means any arbitration whether or not administered by a permanent arbitral institution.”

In Simple Terms:

• Parties choose a neutral private judge (arbitrator).
• The arbitrator hears both sides and gives a binding award.
• The award is enforced like a court decree (Section 36).

Attributes / General Principles of Arbitration

• Consent-based: Parties must agree in writing (Section 7).
• Private Tribunal: Parties choose their arbitrator(s).
• Quasi-judicial: Arbitrator acts like a judge.
• Binding Award: Final, with limited grounds of challenge (Section 34).
• Confidentiality: Section 42A — proceedings are confidential.
• Procedural flexibility: Section 19 — parties decide procedure.
• Minimum court interference: Section 5.
• Independence & impartiality: Section 12 + Fifth & Seventh Schedules.
• Speed and finality: Section 29A — award within 12 months.
• Equal treatment: Section 18 — equal opportunity to both parties.
• Kompetenz-Kompetenz: Tribunal decides its own jurisdiction (Section 16).

Salient Features of the Arbitration & Conciliation Act, 1996

• Based on UNCITRAL Model Law on International Commercial Arbitration, 1985.
• Consolidates law on domestic, international, and foreign awards in one statute.
• Minimum court interference (Section 5).
• Separability of arbitration clause — survives even if the main contract is void (Section 16).
• Award is final and binding (Section 35), enforced as a decree (Section 36).
• Limited grounds for setting aside award (Section 34).
• Interim measures — by tribunal (Section 17) and court (Section 9).
• Recognises institutional arbitration (post-2019 Amendment).
• Time-bound disposal (Section 29A — 12 months; Section 29B Fast-Track — 6 months).
• Mandatory disclosure of conflict of interest (Section 12 + Schedules).
• Confidentiality (Section 42A — inserted by 2019 Amendment).

Structure of the Act

Key Section Numbers — Must Know