Option 2 ARBITRATION – Corporate Debt Recovery
(Kindly refer to the link in the title to access the full Act)
This option is available only if there is an Arbitration Clause in the contract signed between the parties.
The Indian Arbitration and Conciliation Act, 1996 is the statute governing arbitration law in India. Erstwhile passing of this 1996 Act, the provisions on arbitration law were contained in Arbitration Act, 1940 the Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and Enforcement) Act, 1961. There was a strong need felt for restructuring the 1940 Act which dealt only with regards to the Domestic Arbitration. Likewise, the 1940 Act was repealed and the present Act was introduced in patronage of rise of India as a Global Economic Power and to further embrace provisions regarding International Commercial Arbitration, Foreign Awards, Conciliation, etc. The Arbitration and Conciliation Act, 1996 is based on the 1985 Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law (UNCITRAL).
The principal benefit of the Arbitration and Conciliation Act, 1996 is that there is least intervention and reduced supervisory role of courts in the Arbitration Award and Arbitral Proceedings. By means of abundant flexibility with regards to the number of Arbitrators, venue, language, etc. The Act also provides that the Arbitral Tribunal is not bound to follow the Code of Civil Procedure, 1908 or the Evidence Act, 1872 and leaves it to the parties to agree on the procedure to be followed. This alternative dispute mechanism has witnessed virtuous response. The parties prefer also due to its low cost, lesser formalities, expeditious and flexible means of dispute resolution.