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CS Professional · Arbitration, Mediation and Conciliation · Introduction to Conciliation and its Importance for MSMEs

Verma Auto Parts, a micro enterprise, makes a reference to the Facilitation Council on 1 March. Conciliation by the Council ends without settlement on 20 April, and the Council then takes up the dispute for arbitration. Which statement correctly reflects the MSMED Act, 2006 and the Arbitration and Conciliation Act, 1996?

The Council's arbitration proceeds as if under an arbitration agreement referred to in Section 7(1) of the 1996 Act, so no fresh agreement is needed. Section 18(5) also requires every reference to be decided within ninety days from the date of making it.

  1. AArbitration needs a fresh written arbitration agreement signed by both parties
  2. BThe arbitration proceeds as if it were under an arbitration agreement referred to in Section 7(1) of the 1996 Act, and each reference is to be decided within ninety days from the date of making itCorrect
  3. CThe reference must be decided within thirty days of the reference
  4. DThe 1996 Act does not apply to the arbitration, which is governed only by the MSMED Act

Explanation

Section 18(3) provides that, where conciliation fails, the Council arbitrates or refers the dispute, and the 1996 Act applies as if the arbitration were under an agreement referred to in Section 7(1). No fresh agreement is needed. Section 18(5) requires every reference to be decided within ninety days from the date of making the reference, not thirty.

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