The modern concept about Arbitration has greatly changed. On the one hand the parties are given the liberty to enter into an Arbitration agreement of their choice, they also have the liberty to agree to an arbitrator or arbitrators of their choice mutually acceptable to them and also have the liberty to agree to the procedure as to how the arbitrator or arbitrator are to be selected or appointed in case of any existing or any future disputes, but once they agree to go to an Arbitration, the said agreement becomes binding on both the parties and the arbitrators get the Jurisdiction to decide finally all the disputes which the parties have agreed to refer to them for settlement. Thus where as ordinarily the disputes between the parties are decided by a court of law, whose Jurisdiction and power to decide is governed by the law of the land and not by the volition of the parties, the parties by the law of Arbitration have been given the choice to get their disputes and or particular disputes, the nature whereof is defined within the mutual agreement, to be decided by the person or persons or a body of their own choice.The whole intent behind accepting Arbitration as a mode of settlement of disputes is to make it easy, convenient and expeditious remedy to be available to the parties instead of going to a court of law and the long drawn procedures and formalities applicable in case of settlement of disputes which apply to the courts.In India we had our own Arbitration Act 1940, which was mostly following the British Law on the subject. Similarly most of the countries had their own laws of Arbitration, which varied largely and created lots of problems with the increase of international trade and commerce and the agreements relating there to usually provided for Arbitration to solve the Disputes.The United Nations commission on International Trade Law (UNCITRAL) had adopted the UNCITRAL model law on International commercial Arbitration in 1985. The general assembly of United Nation also recommended that all countries should give due consideration to the said model Law in view of the desirability of uniformity of the law of Arbitral procedures and the specific needs of the international commercial Arbitration practice. India was a signatory party to the said UNCITRAL. Furthermore we in India did not have any legislation with regard to conciliation proceedings and there was a recommendation by the general assembly of the United Nations for use of the rules as recommended by them in context of international commercial disputes and where the parties sought amicable settlement of the disputes by recourse to conciliation proceedings.
In the context aforesaid a bill was introduced in the parliament to consolidate and amend the law relating to domestic Arbitration, International commercial Arbitration and enforcement of foreign arbitral award; as also to define the law relating to conciliation and for matters connected there with or incidental there to.
At first an ordinance was issued, since the parliament was not in session and thereafter the act was passed.