Understanding the Types of Arbitration in India

Published on 22 Feb 2018 by Tushar

Arbitration is one of the means of 'alternative dispute resolution' (ADR). A conflict between the parties can be addressed outside the court.

In arbitration a matter is submitted to an 'arbitral tribunal' instead of a regular civil court or otherwise. The arbitral tribunal gives a decision on the dispute and this decision is binding on the parties in conflict.

In contrast to the traditional approach of a judicial proceeding which takes place in a Court; which has to go through a time-consuming process, and which usually leaves one party or both parties exhausted financially- An arbitration proceeding is an informal and non-judicial proceeding which can save a lot of time for the parties. Talk to the best arbitration lawyers in India to know more.

Arbitration is clearly on the rise, due to 4 main reasons-

  1. Speedy remedy;
  2. Swift process;
  3. Transparency between the judges and the parties;
  4. Effectiveness in solving any dispute which stemming out of a binding contract.

Types of Arbitration

There are three type of arbitration recognized in India

  1. Institutional arbitration
  2. Ad hoc arbitration
  3. Fast track arbitration

1. Institutional arbitration

  • An institutional arbitration is one in which a specialized institution with a permanent character intervenes and assumes the functions of aiding and administering the arbitral process, as according to the rules of that institution. You can consult with top arbitration lawyers in India to have a better understanding of arbitration process in India.
  • It is important to note that these institutions do not arbitrate the dispute, it is the arbitrators who arbitrate, and so the term arbitration institution is inept and only the rules of the institution apply. The arbitral award should be delivered within a period of twelve months.

2. Ad-hoc arbitration

  • Ad-hoc arbitration is a process in which no particular institution governs the conduct of the arbitration. It is upon the parties to decide the number of arbitrators but it should be odd in number so that a conclusion can be derived and the award can be delivered.
  • The parties have the liberty to choose the manner and criteria in which the arbitrators are to be appointed. This type of arbitrations is more flexible, cheaper and faster when compare to an institutional arbitration.
  •  It is most applicable as the unavailability of institutional arbitration and this being most convenient to the pockets it has become the preferable option in India

3. Fast track arbitration

As the other processes of arbitration are time-consuming and this process of arbitration comes as a remedy to the issue of time. Fast track arbitration is a method which is construed by time as the provision of the arbitration and conciliation act. Its procedure has been established in a way that it has discarded all the methods which consume time and by holding the simplicity they have upheld the purpose of such arbitration.

Procedural synopsis of different types of arbitration                  

Institutional arbitration

  1. The institutional arbitration it is usually decided upon by the parties that which arbitration institution would deal in case of a dispute by the established terms of the contract. The parties to the contract can also be well versed with the rules which will govern the proceedings of the arbitration tribunal.
  2. In India, the infrastructure to support such an institution has been in continues progression. Due to the foreign direct investment in the companies in India, the complexities have also increased demand for the institutional arbitration.
  3. In India, the first International institution for arbitration was inaugurated in Mumbai which is known as Mumbai centre for international arbitration in 2016.
  4. Due to the inaccessibility of this mean of arbitration, it is a very new concept which is growing with its demand as all the states in India do not have an established arbitrational institution.

Ad- hoc arbitration

This is the most exercised practice in India as this is supportable by the infrastructure we have in our country. This is a cost-effective medium upon which the dispute can be resolved.

  1. The number of appointed arbitrator should be odd in number if not one.
  2. The two arbitrator shall appoint the third arbitrator by their choice
  3. The parties have to choose their arbitrator on their own
  4. the applicable law and the procedure for conducting the arbitration
  5. The reward should be awarded within a period of twelve months

Fast track arbitration

  1. The time period to resolve the dispute is within six months of the initiation of the arbitration proceedings.
  2.  In fast track arbitration procedure the arbitrator simply relies on the written submissions and not the oral submission.
  3. If required then the arbitral tribunal can ask the parties to appear for the clarifications regarding the written submissions.
  4. A sole arbitrator is appointed in fast-track arbitration unlike the other formats of arbitration.

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Tags: Arbitration 

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