The concept of arbitration in India was present since 1940. It came into limelight after the effects of the former Prime Minister P.V. Narasimha Rao, when he found out the irregularities in past enactments on arbitration. He studied the international models like the United Nations Commission on International Trade Law (UNCITRAL) and Model on Commercial International Arbitration. Under which to satisfy the state’s needs, the Arbitration and Conciliation Act, 1996 was designed. The Act, of 1996 includes guidelines mentioned in the UNCITRAL Model on International Commercial Arbitration and the rules for Conciliation. It also incorporates the methods for conciliation which is one of the strategies for Alternative Dispute Resolution. There are four ways for ADR – Arbitration, Conciliation, Mediation, and Negotiation. The Act, itself an independent code as it includes both the substantive and procedural law for arbitration in India, setting out the laws related to the procedure. The procedure can be designed by the parties under the consideration of the appointed arbitrator.
Manner of Conducting Arbitration
- “Ad hoc” where parties are responsible and designed the arbitration proceedings,
- “Institutional Arbitration” where parties agree on the terms and proceedings set out by the arbitration institution. Institutions such as the Indian Institute of Arbitration and Mediation, Delhi; Indian Council of Arbitration, etc.
Salient Features of the Arbitration and Conciliation Act 1996
- Agreement of Arbitration: The root of any arbitration is the arbitration agreement design and signed by the parties following the conflict arisen or may arise in the future. The arbitration agreement is the most essential without which arbitration proceedings cannot be conducted, as it includes brief information about the following: subject matter, time of conflict, name, number and qualification of the arbitrators, the jurisdiction of the institution. It can be done through telegram, documents, letters, etc. 
- Appointment of Arbitrators: The parties are free and have the right to appoint an arbitrator as per their consideration. If the listed parties fail in appointing the arbitrator with joint consent then each party appoints one arbitrator within 30 days and the two appointed arbitrators appoint the third (presiding arbitrator) within 30 days. If the two arbitrators fail to appoint the third then the parties can request the Chief Justice to appoint the third arbitrator.
- Conduct of Arbitration Proceeding: The parties are free to choose the procedural law as arbitration is not bound under the boundaries of the Code of Civil Procedure or any other enactment. If, they are not jointly don’t agree with the procedure decided previously then Arbitration Tribunal can acknowledge the law.
- Flexible in nature: Arbitration is well known for its flexibility as hereby, parties in the dispute are free and have the right to choose the conduct of the dispute. They can make it as per their comfort. The Arbitration Tribunal is also free to consider the weight of any evidence presented. However, the place and language both are determined by the parties as per the designed and signed agreement, if they fail in doing so then the Tribunal can determine the same.
- Oral and Written Proceedings: Later, the submission of the documents and defenses. The parties can decide whether they want oral or written proceedings as per their comfort. Oral hearings can only consider if both the parties in dispute agree on the same. In failing to choose the proceeding manner the Arbitration Tribunal can determine it.
- Dispute Settlement during Arbitration: If parties in conflict settle the dispute with mutual consent during the on-going process of the arbitration then such shall be accepted by the Tribunal and termed the same as the Arbitral Award. Arbitration Tribunal also encourages mutual settlement.
Conciliation is one of the modes of Alternative Dispute Settlement. It promotes outside court dispute settlement, whereby parties to the conflict try to settle with the help of an unbiased conciliator. Conciliation is flexible, confidential and a volunteer process, in which parties are free to decide the adapt laws as per their requirement.
Part III of the Arbitration and Conciliation Act, 1996 deals with conciliation. The motive of conciliation is to promote outside court settlements. Conciliation helps the parties to agree or mutual settlement, in accordance to which parties have to sign the written document on the settlement agreement. On which the conciliator also signs after acceptance made by the parties. After the signing of the settlement agreement by the parties, it will treat the same as an arbitration award.
Salient features of the Conciliation
- Flexible in nature: The parties in conflict are free and have the right to choose the procedure, time, language, and place as per their requirement.
- Confidential: Conciliation is well-known for its confidentiality. As the parties agree and want the confidential, where to keep the business secrets a secret.
- Time and Cost-effective: because of the flexible nature conciliation ensures a time and cost-effective manner. As parties can decide the time period and manner for the settlement.
- Conciliator: The parties in conflict are free to appoint the conciliator. The conciliator doesn’t require any specific background, he can be chosen based on language, experience, profession, or any other relatable aspect. The conciliator has to be unbiased and act independently.