India is a country where judicial proceedings have a very rigid and complicated trajectory, since it has to follow such strict process in order to serve justice after scrutinizing all the evidences which no doubt plays a pivotal role as the aim is to serve complete justice, therefore the process neither can be challenged nor is tenable because the entire burden of Judicial system is on courts.

Notwithstanding the stringent process of judicial proceedings wherein all the matters are dealt with diligence lead to ample of matters being delay and thereafter pending in courts for which the benches seemed handicap and hence the situation was falling out of the hands of the judiciary and an urgent emergence of framing up of policy was required in order to maintain the status quo and also to deliver the process of proceedings in a timely manner which marked the advent of ADR (Alternate Dispute Resolution) wherein the matter were given an opportunity to be settled in a convivial and procedural manner by the parties. The process of ADR had 5 forms;

  • (a) Arbitration
  • (b) Negotiation
  • (c) Mediation
  • (d) Conciliation
  • (e) Ombudsman

Arbitration

Arbitration is one of the forms of Alternate Dispute Resolution which is the most common and effective method to settle the disputes arising for the commercial matters especially with respect to International Commercial Transactions. In the absence of Arbitration a lot of Business decisions were pending due to the delay in process of civil adjudication whereafter an act was enforced Arbitration and Conciliation Act, 1996 for the purpose of settlement of disputes under which a forum can be entailed and matter be settled outside court. The objective of the Act was to eliminate the delay with respect to time, the cost in the form of energy and money and also the stress which the parties had to face during the judicial proceedings. In various circumstances the Arbitrators can be appointed by the court it can either be on the request of the parties or if the court deems necessary it may appoint the Arbitrator.

Arbitration turned out to be a effective and efficient form of dispute resolution mechanism which was quick, economical and had procedural flexibility.

Process to Invoke Arbitration

Arbitration is a process which can either be a voluntary or mandatory act and the Arbitral Judgement can either be binding or non – binding on the parties. With the Advent and effectiveness of Arbitrations in the contemporary days all parties ensure to involve the clause of arbitration in the agreement wherein, in case of any dispute the parties will first settle the dispute through Arbitration which in some agreement is also termed as the final mechanism to settle dispute, though in no sense or any part of the Act (Arbitration and Conciliation Act, 1996) it connotes any of the parties can be withheld or restrained to not take the matter to the court, if no satisfactory result has been derived in the process of Arbitration.

Proceedings through Arbitrations were given a legal authority to settle disputes for commercial matters. Matters which are involved into the process of Dispute resolution or Arbitration are;

  • (a) Partnership matters
  • (b) All civil matters
  • (c) Constructions projects
  • (d) Insurance
  • (e) Time barred debts

These are some examples of the matter which can be settled through the process of Arbitration. Concerning the matters pertaining to national and societal importance which were refrained from the process of Arbitration which are namely;

  • (a) Tax Matters
  • (b) Testamentary Matters
  • (c) Industrial Disputes
  • (d) Trust
  • (e) Guardianship
  • (f) Matrimonial Matters
  • (g) Criminal Matters

Arbitration is deemed flexible as the parties involved in the dispute may appoint their own panel of Arbitrators with mutual consent and thereafter the proceedings will be undertaken, wherein the Arbitrators will carry on with the proceedings and thereafter will put forth his/her ideas and logic concerning the dispute. It is important to understand that the parties in dispute will either appoint a Sole Arbitrator or Panel of Arbitrators; in no circumstance the appointment of Arbitrators can be even in number and also as specified hereinabove “mere existence of Arbitration clause does not bar Jurisdiction of Civil Court”. In circumstances were a party or parties to dispute wish to take the matter to the court may file their application in the court whose jurisdiction the Arbitration is being processed which concludes us to understand that the parties must ensure before framing a clause in their agreement concerning the jurisdiction to predict the appropriate jurisdiction for Arbitration which must remain within the ambit of the concerned court. It is a rational process of adjudication which the Arbitrator must ensure wherein both the parties must be given opportunity to substantiate necessary evidences and right to be heard.

Arbitration is a process which works on the natural principal of justice involving logical or rational approach and Stare Decisis (judicial precedents) and the final judgement of the Arbitrator is known as Arbitral Award. Arbitral Award can either be final or interim in nature.

Arbitral Award is a process which must undergo through the below process;

  • (1) The Arbitral Award must be in writing as oral decision is not considered as an Award in Arbitration Act;
  • (2) A date must be entered when the Award has been passed;
  • (3) It must be made on a stamp paper;
  • (4) Award must be signed by the members of the Arbitration panel or Arbitrator. In Arbitration where a panel is involved the authenticity of the Award will rely on whether it has been signed by all the members or the majority of the panel members.
  • (5) Award must contain all the reasons and his findings concerning the Award of final decision. The requirement of reasons can be avoided only in two circumstances in if the Agreement allows the Arbitrator not to mention any reasons and in case where parties settle their dispute themselves and inform the Arbitrator.
  • (6) Reasons must be on the basis of evidences and conclusions.
  • (7) Place of Arbitration must be within the ambit the Jurisdiction of the concerned court

Disqualification of Arbitrator

Appointment of Arbitrator is a three way process which involves;

  • (a) Acceptance of the person to Act as an Arbitrator;
  • (b) Must be impartial and disinterested party;
  • (c) As per the mutual consent of the parties involved in dispute and deems his decision to be binding on both the parties.

Under no circumstance the Arbitrator can be directly or substantially be related to the matter of the parties or if so the Arbitrator must disclose this fact to the parties whereafter the parties will decide whether or not to appoint him or her as Arbitrator. In case the Arbitrator fails or prevents such information of being in cognizance of any of the parties involved in dispute, such Arbitration proceeding or such the person shall be disqualified to act as an Arbitrator.

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