The Term 'Arbitration' literally means "Settlement or determination of a dispute outside the court by a private individual". The person, who acts as a mediator between .the disputants to settle the dispute/matter is called Arbitrator'. While the term 'Conciliation' means `to concile or to bring together opposing sides". A person who brings the opponents into harmony is called "Concilator". In other words, conciliation is a process for settlement of a dispute outside the Courts by reference to a third party called " Conciliator". The law relating to arbitration and conciliation is governed by the Arbitration and Conciliation Act, 1996.

Historical Background : The law relating to Arbitration in India is based on the English Law of Arbitration. In England, the traders and merchants used to refer their disputes for settlement to persons called 'Arbitrators'. The Arbitration Act 1697 was the first statutory enact- ment passed in England to settle such disputes.Further, the Common Law Procedure Act, 1854 also made some provisions for arbitration with a view to make the award more binding and enforceable upon the parties. With the passing of the Arbitration Act, 1889, the English enactments relating to Arbitration were repealed.

In India, the first statutory enactment on Arbitration was, the Indian Arbitration Act, 1899. It was modelled on the Arbitration Act, 1889 of England. Before the passing of the Act of 1899, the Bengal Regulation of 1772 made certain provisions relating to arbitration law. The Regulations of 1781 and 1782 brought certain changes with regard to witnesses on oath and appointment of arbitrators. Regulation of 1787 empowered the Court to refer the disputed matters to arbitration with the consent of the parties. The operational part of the arbi- tration law was made more effective by the Bengal Regulation of 1793. It also laid down the procedure to be followed in conducting arbitration proceedings. The provisions of the Regulation of 1793 were extended to the territory of Banaras by the Regulation of 1795. These provisions were made applicable to Oudh by the Regulation of 1803. Further, the Madras Regulation of 1816 and the Bombay Regulation of 1827 conferred certain powers on the Panchayats to settle disputes by arbitration.

The Code of Civil Procedure also made provisions for the law relating to arbitration. Chapter VI of the Code Civil Procedure, 1859 provided for the law relating to Sections 89, 104 and Second Schedule made elaborate provisions relating to arbitration. (Sections Ito 16 of the Second Schedule deal with arbitration in suits. Sections 17 to 19 provide for mechanism to enforce an agreement for reference. Sections 17 to 19 provide for to enforce an agreement for reference. Sections 20 to 21 lay down the procedure to enforce in a court of law, an arbitration award made with out the intervention of a Court.)

The Indian Arbitration Act, 1899 continued to be applied in respect of the matters, which were not before a court of law for adjudication. In 1925, the Civil Justice Committee recommended several changes in the arbitration law. As a result, the Indian Legislature passed the Arbitration Act of 1940 by consolidating and redrafting the law on arbitration.

The Arbitration Act, 1940 was modelled on the Arbitration Act, 1934 of England. The British Parliament has been changing its Arbitration law from time to time so as to meet the changing conditions. As such, the English Arbitration Act, 1934 was modified by the Act of 1950 and was replaced subsequently by the Arbitration Act of 1979. The Indian Arbitration Act, 1940 remained in force until it was replaced by the new/ present Arbitration and Conciliation Act, 1996. Prior to the passing of the Arbitration and Conciliation Act, 1996, there were three Acts dealing with Arbitration Law in India viz., the Arbitration Act, 1940, the Arbitration (Petrocol and Convention) Act, 1937 and 'the Foreign Awards (Recognition and Enforcement) Act, 1961. The First one dealt with domestic arbitration, while the other two dealt with International Commercial Arbitration.

The law relating to International Commercial Arbitration drèw the attention of the United Nations Organisation and comprehensive uniform Model Arbitration Law at the International level was adopted by the United Nations Commission on International Trade Law (UNCITRAL) on 21st June, 1985. The U.N. General As- sembly, in its resolution dated 11-12-1985 recom- mended that all states should adopt the model law on International Commercial Arbitration. In pursuance of the Model Law, the Arbitration and Conciliation Act, 1996 was passed in India.