Introduction :

History and Evolution of Arbitration Law in India : Arbitration is one of the form of ‘alternate dispute resolution’ which also includes mediation, conciliation negotiations, Lok Adalat which offers different ways to resolve different disputes outside the usual court proceedings. 

History and Evolution of Arbitration Law in India can be divided in three different period.

a) Arbitration during Ancient India period.

b) Arbitration during British rule.

c) Arbitration under The Arbitration and Conciliation Act, 1996.

Arbitration during Ancient India period.

In India, before the British Rule, the alternate dispute resolution can be traced back to the vedic period in different ‘upnishads’. There has been mention of three different arbitral bodies named as “kulas” (one family members), “srenis” (people of same profession irrespective of caste and tribes), and “pugas” (associations of the people staying in the same area irrespective of caste and tribe), which resolved disputes within their respective communities. These bodies gradually developed in village councils or what we call as “panchayats”. These panchayats used to resolve different issues in village. The members of this ‘panchayat’ were called as ‘Panchas’ who used to be mainly senior in age or intelligent villagers. These panchayats used to solve different issues like family, property, criminal acts etc. and the decisions given by the panchayat used to be final and binding on parties to the dispute.

The ‘Manusmriti’, an ancient religious text, also mentions arbitration and negotiation as valid methods for resolving disputes.

The Hedaya, the guide on Muslim law also mentions ‘arbitration’ as a method of solving disputes amicably following the principals of justice. Arbitrators were required to possess the same qualification as ‘Kazee’.

Thus ‘arbitration’ in India was mainly followed under two laws i.e. ‘Hindu Laws’ and ‘Muslim Laws’.

Arbitration during British rule.

During the British rule in India, The East India Company introduced many rules and regulations to resolve the disputes. The first Act in India was introduced as early as in 1772 as ‘The Bengal Regulation of 1772’ which became the foundation of arbitration law in India sincec it introduced the legality of arbitration agreements to settle the disputes by arbitration and also provided for arbitration proceedings. After the Act of 1772, ‘The Bengal regulation 1781’ was introduced which provided that the courts  can recommend to the parties to submit to arbitration. Thereafter, The Bengal Regulation of 1787, 1793 and 1795were introduced which brought some procedural changes by empowering the court to refer suit to arbitration with the mutual consent of parties. Similarly, ‘The Bombay Regulations Act of 1799’and ‘TheMadras Regulation Act of 1802’ were introduced for the presidency towns of Bombay and Madras respectively. They were also similar to ‘The Bengal Regulation of 1772’. Bengal Regulation of 1802, 1814 and 1833 also brought some more changes in the procedure.

The 1st Legislative Council for India was formed in 1834. Legislative Council enacted the Indian Arbitration Act, 1899. It was based on model of English Arbitration Act of 1899 which applied only to three presidency towns, Madras, Bombay and Calcutta. Provision to mention the names of ‘Arbitrators’ in arbitration agreement was a important feature in this Act.

The Civil Procedure Code was enacted in 1908 in which second schedule was related to the arbitration which was repealed afterwards by enacting ‘The Arbitration Act, 1940’. (Afterwards arbitration provisions were again introduced in The Civil Procedure Code by amendments in 1999.)

Further The Arbitration (Protocol and Convention) Act, 1937 was introduced for implementing foreign arbitration agreements.

The first legislation on alternate dispute resolution was then introduced as ‘The Arbitration Act, 1940’ which replaced the earlier 1899 Act and also provisions in The Civil Procedure Code. This Act of arbitration was divided in three categories namely, arbitration without court intervention, arbitration with court intervention and arbitration insuits.

Arbitration under The Arbitration and Conciliation Act, 1996.

Earlier, before The Arbitration and Conciliation Act, 1996 was introduced, ‘The Arbitration Law, 1940’ was in force but taking into consideration scenario of economic reforms worldwide and also to internationalise the Arbitration Law in India it was felt necessary to make amendments and modifications to The Arbitration Act,1940 to make the law more responsive and effective for dealing with the settlement of disputes in respect of domestic as well as international commercial matters. And, at international level too, it was felt necessary for increasing arbitration and conciliation acceptance in trade and industry as the most important requirement.

‘United Nations Commission on International Trade Law (UNCITRAL) adopted the ‘Model Law’ with focus on International Commercial Arbitration in the year 1985. Subsequently, the General Assembly of the United Nations affirmed and all member countries were directed to give recognition to the UNCITRAL’s Model law  which was introduced with the intention of making arbitration procedure and practice in the matter of international commercial activities uniform and simple.

The United Nations Commission on International Trade also adopted a set of conciliation rules in the year 1980 which were recommended by the General Assembly of the United Nations to be followed by the member countries.

Both, the Model Law and the conciliation rules of ‘The United Nations Commission on International Trade’ had the object of uniform and universal application of arbitration and conciliation with respect to intthereto.”

Initially there were 86 sections divided in foernational commercial disputes and stay away from different legal procedures of different countries.

Like many other participating countries, the new law, “The Arbitration and Conciliation Act, 1996” (Act no 26 of 1996) was enacted in India with effect from 16^th August 1996 with long title, “An Act to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards as also to define the law relating to conciliation and for matters connected therewith or incidental

ur parts with three schedules.

The Act was amended in 2019 and also in 2021 and now, there are 87 sections besides the Long Title, Preamble and seven schedules in the Act. The Act has been divided in five parts.

Part I provides for Arbitration, Part I-A provides for Arbitration Council of India, Part II provides for Enforcement of certain foreign awards, Part III provides for Conciliation and Part IV provides for Supplementary Provisions.