Important Things To Know About Arbitration Process In India

Published on 07 Sep 2018 by Shivi

Taking a dispute to the court can be scary and can make people abandon even the idea of involving lawyers and the numerous formalities entailed in a court proceeding. As a measure to provide a substitute to litigation, Alternative Dispute Resolution methods are used to resolve legal disputes.

Alternative Dispute Resolution methods (ADR) is a process to resolve a legal dispute between two sides without involving the court and taking the dispute to a neutral third party who uses different modes of communication to reach an outcome. One such method of peaceful dispute resolution is Arbitration.

Meaning of Arbitration

Arbitration is one of the ADR mechanisms whereby the parties mutually-agree to involve a third-party to resolve any dispute. The third-party is known as an Arbitrator who hears the issues raised by both the sides, the remedy sought by them and comes to an amicable resolution of their dispute.

The decision of the Arbitrator is then binding upon the disputing parties, who acts as a judge during the entire arbitration process. The rules laid down under the Code of Civil Procedure also apply to arbitration proceedings, however, the ADR process is simpler and expeditious as compared to litigation.

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Advantages of Arbitration

Arbitration does not involve the stringent process followed in courts and is more feasible when the parties mutually decide to settle their dispute amicably. The many benefits of arbitration include:

  1. Flexible Process: The process followed in arbitration is far more flexible than court proceedings as the parties can mutually decide a date on which they wish to conduct the arbitration proceedings and also choose the Arbitrator who will preside over the process.

  2. Privacy: Arbitration ensures complete privacy of the matter as no judicial authority is involved and the process is conducted only between the disputing parties and the Arbitrator.

  3. Expeditious: The arbitration process takes lesser time as compared to legal proceedings in court as there are no multiple hearing or court dates.

Types of Arbitration

The different kinds of arbitration may take place at a domestic level i.e. within India as well as international level i.e. outside India. The various types of arbitration in Indiaare:

  1. Ad-hoc arbitration: Ad-hoc arbitration is voluntary arbitration whereby the parties agree to appoint an arbitrator, decide the place for arbitration as well as the process on their own. The number of arbitrators is not restricted as long as it an odd number.

  2. Institutional arbitration: Institutional arbitration is conducted in accordance with the rules of an institution like the Indian Council of Arbitration. The arbitration process and appointment of an arbitrator are based upon the rules and guidelines of the institution. In this type of arbitration, the arbitral tribunal is appointed to determine the dispute between the parties.

  3. Statutory arbitration: Statutory arbitration is conducted in accordance with different laws that lay down arbitration as the method to resolve disputes like the Cantonments Act, 1924, the Indian Electricity Act, 1910, the Land Acquisition Act, 1894.

READ: Arbitration: The Best Alternative Dispute Resolution Remedy

Arbitration And Conciliation Act, 1996

The Arbitration and Conciliation Act, 1996 lays down the procedure followed in the arbitration and conciliation proceedings and applicability of arbitral awards. The Act is based on the UNCITRAL model law on International Commercial Arbitration, 1985. The Act ensures that the supervisory role of a court in arbitration procedure is limited and the court can only come into the picture in case an appeal needs to be filed against the arbitral award.

Under the Arbitration Act, two parties can enter into a contract to conduct arbitration proceedings or include an arbitration clause in their agreement. In case any dispute arises, the affected party has three years to initiate the arbitral proceedings from the date the cause of actions arises.

The affected party needs to send a notice to the other party regarding the issue, the remedy/claim and the intention to initiate arbitration proceedings to settle the dispute. The arbitrator hears both the sides, records the claims of the parties and pronounces an arbitral award. The enforceability of an arbitral award must be according to the provisions of CPC.

Arbitration and other ADR processes not only save resources and the time of the parties dealing with a dispute but also helps the courts which are already overburdened with lakhs of pending cases. For disputes relating to employment or business, arbitration is the most preferred method of dispute resolution.

Legistify connects you with top arbitration experts who can provide you assistance in drafting an arbitration agreement and act as arbitrators. To consult the best arbitration advocates in India, you can contact us at [email protected] or call us at 846-883-3013.



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