Historical Background of Arbitration

The earliest evolution of arbitration in India can be traced back to Brihadaranyaka Upanishad under the Hindu Law. It provided for various types of arbitral bodies which consisted of three primary bodies namely:

1. The local courts
2. The people engaged in the same business or profession
3. Panchayats.

• The members of the Panchayats known as Panchas, were that times arbitrators, which used to deal with the disputes under a system.
• However thereafter the first legislative council for British India was formed and India got its first enactment on Arbitration known as the Indian Arbitration Act, 1899 but the Act was applicable to only presidency towns i.e., Calcutta, Bombay, and Madras. This Act was fundamentally based on the British Arbitration Act, 1889.
• Thereafter came the Arbitration Act, 1940 which applied to the whole of India including Pakistan and Baluchistan. However, post independence the same was modified via ordinance.
• Due to various shortcomings in the 1940 Act like lack of provisions prohibiting an arbitrator from resigning any time during an arbitration proceeding, the rules providing for filing awards differed from one High Court to another, the act was replaced by the Arbitration and Conciliation Act, 1996 that ratified the problems in 1940 Act.