The UNCITRAL Model Law and Indian Arbitration Law

The Arbitration and Conciliation Act, 1996 is drawn from the UNCITRAL Model Law on International Commercial Arbitration, adopted in 1985, and from the UNCITRAL Conciliation Rules of 1980. India did not enact the Model Law as such. It used the Model Law as the template for Part I and then made three kinds of change: it extended that Part to purely domestic arbitration, which the Model Law never contemplated; it added provisions of its own on time, costs and appeals; and it retained a wider ground of challenge for domestic awards. The result is a statute that follows the Model Law closely in its architecture and departs from it in its reach.

1. The Model Law and its Purpose

The United Nations Commission on International Trade Law adopted the Model Law on 21 June 1985, and the General Assembly recommended that States give due consideration to it with a view to the desirability of uniformity in the law of arbitral procedures. A model law is not a treaty. It binds no State and creates no obligation; it is a text offered for adoption so that the procedural law of arbitration becomes broadly the same wherever a commercial party finds itself. Its subject is international commercial arbitration only, and it deliberately leaves purely domestic arbitration to national law. The Model Law was amended in 2006, principally to relax the writing requirement for arbitration agreements and to provide a detailed regime for interim measures and preliminary orders. India has not adopted the 2006 revisions.

The Conciliation Rules of 1980 are a different kind of instrument: a set of rules the parties may adopt by agreement. India converted them into statutory provisions in Part III of the Act, which is why the conciliation chapter of the 1996 Act read as a procedural code rather than as a set of default rules.

The four international sources of the Act and the principal Indian additions

2. How the Model Law Appears in the Act

The correspondence is close enough that the Model Law is a legitimate aid to construction. The Supreme Court has repeatedly referred to it and to the analytical commentary prepared by the Secretariat when construing provisions of Part I.

3. Where India Departed

1. Part I applies to domestic arbitration. The Model Law is confined to international commercial arbitration. India applied the same procedural code to purely domestic references, which is the single largest departure and the source of several others, since a rule designed for sophisticated cross-border parties has to serve ordinary domestic disputes as well.
2. Patent illegality. Section 34(2A), inserted in 2015, permits a purely domestic award to be set aside if it is vitiated by patent illegality appearing on the face of the award, though not merely for an erroneous application of the law or on a re-appreciation of evidence. The proviso expressly denies this ground to an international commercial arbitration. The Model Law has no equivalent.
3. Interim relief before and after the arbitration. Section 9 permits an application to the court before or during the arbitral proceedings or at any time after the making of the award but before its enforcement, which is wider than Article 9.
4. Time limits. Section 29A requires a domestic award within twelve months of the completion of pleadings, with extension by consent and thereafter only by the court, which may reduce the fees of the tribunal for delay. Section 29B provides a fast track procedure. The Model Law prescribes no period.
5. Costs. Section 31A contains a costs regime, including the general rule that the unsuccessful party pays. The Model Law is silent on costs.
6. Appeals. Section 37 provides a right of appeal against specified orders. The Model Law leaves this to national procedural law.
7. Appointment by the court. Section 11 makes elaborate provision for appointment by the Supreme Court or the High Court or by an arbitral institution designated by them, with a limited examination of the existence of the agreement; Article 11 leaves the designation of the appointing authority to the enacting State.
8. Conciliation. Part III had no counterpart in the Model Law at all; it was drawn from the Conciliation Rules, and has since been replaced by the Mediation Act, 2023.

4. Judicial Use of the Model Law

5. The Model Law and the Conventions

The Model Law is procedural and the New York Convention is about enforcement, and the Act keeps them in separate Parts. Part I contains the procedural law for arbitrations seated in India; Part II gives effect to the New York Convention of 1958, to which India acceded in 1960 with the reciprocity and commercial reservations, and to the Geneva Convention of 1927 for the few awards still governed by it. The grounds for refusing enforcement of a foreign award in Section 48 follow Article V of the New York Convention, which is itself the model for Article 36 of the Model Law and for Section 34, so the three sets of grounds are closely parallel without being identical.

6. The Direction of Reform

The draft Arbitration and Conciliation (Amendment) Bill, 2024, circulated for public consultation in October 2024 after the report of the expert committee chaired by Dr. T.K. Viswanathan, proposes changes which would bring Indian law closer to current international practice: statutory recognition of the emergency arbitrator, which Indian law at present accommodates only by construction following Amazon.com NV Investment Holdings LLC v. Future Retail Ltd., (2022) 1 SCC 209; recognition of proceedings conducted by electronic means; adjustments to the provisions on interim relief and appeals; and the removal of the conciliation provisions consequent on the Mediation Act, 2023. The Bill remains a draft, and the law as it stands is the 1996 Act as amended in 2015, 2019 and 2021.

7. Related Topics and Provisions