Arbitration and Conciliation Act, 1996,Step-by-Step Study Plan

Step 3: 17-09-2025

👋 Dear friends, ✨
👉 Get ready, friends! Time to decode India’s arbitration law with laughter, logic, and learning. 😅⚖️

Guruji’s Step-by-Step Study Plan 👇

PART I- ARBITRATION

CHAPTER I: General provisions

THE ARBITRATION AND CONCILIATION ACT, 1996: SEC 2

SEC 2: Definitions.—(1) In this Part, unless the context otherwise requires,—

(a) “arbitration” means any arbitration whether or not administered by permanent arbitral institution;

(b) “arbitration agreement” means an agreement referred to in section 7;

(c) “arbitral award” includes an interim award;

(ca) “Arbitral institution’’ means an arbitral institution designated by the Supreme Court or a High Court under this Act;

(d) “arbitral tribunal” means a sole arbitrator or a panel of arbitrators;

[(e) “Court” means—

(i) in the case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes;

(ii) in the case of international commercial arbitration, the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of courts subordinate to that High Court;]

(f) “international commercial arbitration” means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is—

(i) an individual who is a national of, or habitually resident in, any country other than India; or

(ii) a body corporate which is incorporated in any country other than India; or

(iii) an association or a body of individuals whose central management and control is exercised in any country other than India; or

(iv) the Government of a foreign country;

(g) “legal representative” means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased, and, where a party acts in a representative character, the person on whom the estate devolves on the death of the party so acting;

(h) “party” means a party to an arbitration agreement.

(i) Prescribed” means prescribed by rules made under this Act;

(j) Regulations” means the regulations made by the Council under this Act.

(2) This Part shall apply where the place of arbitration is in India.

Provided that subject to an agreement to the contrary, the provisions of sections 9, 27, and clause (b) of sub-section (1) and sub-section (3) of Section 37 shall also apply to international commercial arbitration, even if the place of arbitration is outside India, and an arbitral award made or to be made in such place is enforceable and recognized under the provisions of Part II of this Act.

(3) This Part shall not affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration.

(4) This Part except sub-section (1) of section 40, sections 41 and 43 shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except in so far as the provision of this Part are inconsistent with that other enactment or with any rules made thereunder;

(5) Subject to the provisions of sub-section (4), and save in so far as is otherwise provided by any law for the time being in force or in any agreement in force between India and any other country or countries, this Part shall apply to all arbitrations and to all proceedings relating thereto.

(6) Where this Part, except section 28, leaves the parties free to determine a certain issue, that freedom shall include the right of the parties to authorize any person including an institution, to determine that issue.

(7) An arbitral award made under this Part shall be considered as a domestic award.

(8) Where this Part—

(a) refers to the fact that the parties have agreed or that they may agree, or

(b) in any other way refers to an agreement of the parties,

that agreement shall include any arbitration rules referred to in that agreement.

(9) Where this Part, other than clause (a) of section 25 or clause (a) of sub-section (2) of section 32, refers to a claim, it shall also apply to a counterclaim, and where it refers to a defence, it shall also apply to a defence to that counterclaim.

🎭 Guruji Explains Section 2 (Definitions)

THE ARBITRATION AND CONCILIATION ACT, 1996: SEC 2.

(a) “Arbitration”

👉 Means any method of arbitration, whether run by a permanent institution or not.
🖼️ Illustration: Imagine two neighbours fighting over who owns the mango tree. Instead of going to court, they say, “Let’s call Ramesh uncle as judge.” That’s arbitration! 🍋⚖️

(b) “Arbitration Agreement”

👉 It’s the agreement under Section 7 that says disputes will be solved through arbitration.
🖼️ Illustration: When two friends start a vada pav shop, they write: “If fight comes, we won’t go to police station 🚔, we’ll solve through arbitration.” ✅

(c) “Arbitral Award”

👉 Includes final or interim decision given by arbitrator.
🖼️ Illustration: Teacher punishes two fighting boys 👊👊. Teacher says, “You share the bench for today (interim award) and also apologize forever (final award).” 🏆

(d) “Arbitral Tribunal”

👉 Can be a single arbitrator or a panel.
🖼️ Illustration: In a colony cricket match dispute 🏏, if one umpire decides = sole arbitrator. If three uncles decide together = tribunal panel. 👨‍⚖️👨‍⚖️👨‍⚖️

(e) “Court”

👉 Depends on type of arbitration:

Domestic arbitration = District Civil Court / High Court (if original jurisdiction).

International arbitration = High Court only.
🖼️ Illustration: If local pani puri seller fights → go to district court. 🌶️
If Pepsi company vs Coca-Cola → go straight to High Court. 🏛️

(f) “International Commercial Arbitration”

👉 Dispute is international if one party is foreign:

Foreigner individual 🌍

Foreign company 🏢

Foreign association 🏛️

Foreign government 🏳️

🖼️ Illustration: If an Indian exporter sells mangoes to Dubai, and fight happens → that’s international arbitration. 🥭✈️

(g) “Legal Representative”

👉 Person who legally represents estate of a dead person.
🖼️ Illustration: Businessman dies 😢, his son takes over unfinished arbitration = legal representative. 👨‍👦

(h) “Party”

👉 Simply means party to the arbitration agreement.
🖼️ Illustration: In a marriage fight, only husband-wife are parties. Mother-in-law can’t suddenly join! 😅👩‍🦳

📌 Sub-sections (2) – (9) Explained

(2) Application of Act

👉 Applies where arbitration place = India 🇮🇳.
⚡ But certain sections (9, 27, 37(1)(a), 37(3)) also apply even if arbitration outside India.
🖼️ Example: Two companies fight in London 🍵, but they still run to Indian court for interim relief = allowed.

(3) Exclusions

👉 Some disputes can’t go to arbitration (like criminal cases or matrimonial fights).
🖼️ Example: You can’t say “Let’s arbitrate if murder happened!” ❌🔪

(4) Statutory Arbitrations

👉 If another law says “disputes go to arbitration”, this Act applies unless it clashes with that law.
🖼️ Example: Railway law has its own arbitration rules 🚂, but this Act fills the gaps.

(5) Universal Application

👉 Applies to all arbitrations in India, unless another law or international treaty says otherwise.
🖼️ Example: India–UK treaty may override parts of this Act. 🇮🇳🤝🇬🇧

(6) Party Autonomy

👉 Parties can empower any person/institution to decide certain issues.
🖼️ Example: Two shop owners can say, “Price dispute will be decided by Chamber of Commerce.” 🏬

(7) Domestic Award

👉 Any award under this Part = domestic award.
🖼️ Example: Even if arbitrator sits in Delhi or Chennai → still domestic. 🏠

(8) Agreement includes rules

👉 If agreement refers to institutional rules → that becomes part of agreement.
🖼️ Example: “We’ll follow ICA rules” → ICA’s rulebook becomes binding 📘.

(9) Claims include counterclaims

👉 Claim = includes counterclaim. Defence = includes defence to counterclaim.
🖼️ Example: Tenant says “Landlord harassing me” → landlord replies “You didn’t pay rent!” Both are valid claims. 🏚️

⚡ Guruji Summary with Analogy:
Think of Arbitration Act like a marriage counselor’s handbook. 👫

If couple fights = arbitration.

If they wrote agreement in advance = arbitration agreement.

Counselor’s decision = arbitral award.

If Indian couple fights → local court.

If one is NRI → High Court (international).

Dear Friends,

🚀 Step 3 done… Step 4 coming tomorrow! Guruji doesn’t deliver pizza, only wisdom 🍕

😂 Don’t run away! Guruji’s Step 4 will land tomorrow like a hot samosa from the kadai!