ARBITRATION The meaning of ‘arbitration’ is that it's a process of removing an argument between two or more people by assisting them to agree to a suitable solution. Arbitration may be a a part of the choice Dispute Resolution process that provides advantages to parties who want to avoid the local courts which take long course of your time for resolution of disputes. it's actually a legal process for the settlement of dispute outside the courts, where the parties of a dispute refer it to at least one or more officers called arbitrator(s) by whose decision they comply with be bound. Arbitration is that the dispute settlement process between two agreeable parties to appoint an arbitrator to provide a binding solution on the dispute. It’s how to settle disputes outside the courts and saving time and resources both at an equivalent time. Arbitration is an efficient method of expediting solution and determination of disputes in these 21st century when there probable scarcity of your time.
Need for Arbitration There is vast need of arbitration in these times of advancement where liberalization and globalization of national and international business relations needed the invention of an inexpensive, flexible, favorable and time saving method of settlement of disputes without letting the parties to travel through the rigorous, time consuming and resource exhausting procedure of the regular justice delivery system.
Advantages of Arbitration
There are many advantages of arbitration which includes
• Minimizing of court intervention
• Reducing the prices of dispute redressals and resolutions
• Timely and expeditious disposal
• Enforcement of awards/adjustments through neutrality of arbitrator • Encourage foreign investment by recognizing the country’s having a sound legal framework • Effective conduct of sound foreign relations
All these have maximized the necessity for Arbitration in these times .
Applicable Legislation / Mechanism of Arbitration
The Indian law of the arbitration is vastly supported English Common Law. The Indian arbitration and everyone its process is governed and regulated and processed by the Arbitration and Conciliation Act 1996, which derives its fundamentals from the 1985 UNCITRAL model on International Commercial Arbitration and thus the UNCITRAL Arbitration Rules of 1976. The previous existing statutory provisions of Arbitration and regulation in India were established in three enactments namely:
• The Arbitration Act 1940 • The Arbitration (Protocol and Convention) Act 1937 • The Foreign Awards (Recognition and Enforcement) Act 1961
The above mentioned acts were repealed by the Arbitration and Conciliation Act 1996. Again within the year 2015, the Arbitration and Conciliation Act of 1996 further was amended by the Arbitration and Conciliation (Amendment) Act of 2015 to vary the face of arbitration in India. The Arbitration and Conciliation Act 1996 as amended in 2015 has its purview: a) Domestic Arbitration b) International Commercial Arbitration c) Enforcement of Foreign Arbitral Awards
Types of Arbitration
Ad hoc Arbitration:
The Conduct of arbitration, by the tribunal following the principles and regulation already mutually agreed between two or more parties
or following the principles given by tribunal just in case of non existence of agreement between parties. Ad hoc arbitration helps during a greater mode of control over arbitration process, flexibility to make a decision the settlements/ procedures and also ensures that it's cost effectiveness and takes less time. However the success of the unplanned arbitration is ensured barely just in case of mutual agreement between the parties.
Administration of institutional arbitration in accordance with the principles of process of an establishment. The same provides for the important provisions of arbitration like appointment of arbitrators, managing the arbitration procedure, identifying place for holding arbitration hearings. Much such Indian arbitration is run and brought care by the international arbitral institutions like Court of Arbitrations of the International Chamber of Commerce and therefore the Singapore International Arbitration Centers, and the London Court of International Arbitrations. There are 35 Arbitral Institutions in India for Domestic, International, PSUs, Trade and merchant associations and City specific chambers of commerce and industry. Such institutions have their own rules and regulations or are governed by the principles and regulations of UNCITRAL. This form of arbitration helps in getting a transparent set of arbitration rules, a transparent process to conduct arbitration, set of arbitrators to choose from, assistance from trained staff, this helps in assistance when parties lack proper knowledge regarding arbitral proceedings.
Process of arbitration in India The arbitration process in India, very almost like the tactic in other countries as put forth by the Geneva Protocol on Arbitration Clauses, begins with a piece of writing or arbitration agreement. The arbitration agreement could also be a clause during a contract or an agreement between parties stating that any dispute are getting to be mentioned arbitration proceedings and it must contain the next information: matter of dispute, timing of dispute, number of arbitrators, qualifications of arbitrators, jurisdiction and composition of tribunal. When a dispute arises and a piece of writing is present
in an agreement between the parties, the party against whom a wrong has been committed must send an arbitration notice to the other party so on start the tactic of arbitration and this is often subsequent step. Once the notice has been received, both parties will got to appoint an arbitrator/s as per the specifications mentioned within the article or agreement. The parties to a dispute have the freedom to choose the quantity of arbitrators, as long as it’s not an honest number, but if variety isn't laid out in the article or arbitration agreement, only one arbitrator are getting to be appointed Also, if parties like better to appoint three arbitrators but don't specify the procedure for his or her appointment, each party will choose one arbitrator and therefore the two party chosen arbitrators will choose the third arbitrator who are getting to get on the panel. If one among the parties fails to appoint an arbitrator within the stipulated period, the other party can approach the designated Arbitral Institutions.
Following the appointment of arbitrators, the party who was wringed must file a handout of claim which mentions the small print regarding the dispute: events leading up to the dispute, reasons for the dispute, and compensation or relief claimed. the other party even have the choice of filing a counterclaim as a reply to the statement of claim.
After the statement of claim and counterclaim are filed, the arbitration tribunal will hear the parties and assess the evidence put forth to them. After both parties are heard and all the evidence has been examined, the arbitrators will pass a choice and this decision is known as an arbitral award. An arbitral award is final and enforceable during a court of law.The party in whose side the award has been passed must be filing for the enforcement of the award for the award must be executed.
Since the arbitration process allows certain freedoms to the parties and thus the arbitrators, the procedure isn't governed by the Civil Procedure Code and there's also limited interference by the courts. So, arbitration can definitely be a more favourable option for dispute resolution in most cases counting on the topic matter of the dispute. The Arbitration and Conciliation (Amendment) Act, 2015 gives the liberty to the parties to appoint an arbitrator both mutually.
The Act provides that the parties are liberal to determine the number of arbitrators, as long intrinsically number shall not be an honest number. However, if the parties fail to undertake to to so, the arbitral tribunal shall contains a sole arbitrator.1
The procedure to appointment arbitrator(s) is provided under Section 11. a private person of any nationality could even be an arbitrator, unless otherwise agreed by the parties. The aforesaid section also sees the contingency wherein the parties are unable to appoint an arbitrator mutually. In such a situation, the appointment shall be made, upon request of a celebration , by the Supreme Court or a private or institution designated by such Court, within the case of a world Commercial arbitration or by supreme court or a private or institution designated by such Court, just just just in case of a domestic arbitration.
Before the appointment of arbitrator is formed , the concerned Court or the person or institution designated by such Court is required to hunt a disclosure in writing from the potential arbitrator under Section 12(1) of the Act and also give due regard to any qualifications required for the arbitrator by the agreement of the parties and thus the credentials of the disclosure and considerations as are likely to secure the appointment of an independent and impartial arbitrator.
It may be noted that under Section 12(1) of the Act, an obligation has been cast upon the potential arbitrator to form an express disclosure on (a) circumstances which are likely to provide rise to justifiable doubts regarding his independence or impartiality; or (b) grounds which can affect his ability to finish the arbitration within 12 (twelve) months.
The purpose of the provision is to provide the appointment of an unbiased, impartial arbitrator.
Fifth Schedule to the Act contains inventory of grounds giving rise to justifiable unclear able doubts on the independence or impartiality of an arbitrator. The Seventh Schedule lays the grounds making a private ineligible to be appointed as an arbitrator.
Arbitration in India is controlled by the law of arbitration in India which states that the for adopting the arbitration as a dispute resolution mechanism an agreement thereto effect should be signed between the disputing parties. The parties can either
choose a separate arbitration agreement to be signed between them or include a touch of writing within the foremost contract between the parties.
Arbitration process in India is some things which are followed to end a business dispute. The Arbitration and Conciliation Act 1996 is that the key governing law of arbitration in India.
The Act provides for the procedure of arbitration process in India and steps of arbitration. The act has four parts:
Part I sets some general provisions on domestic arbitration. Part II sets the enforcement of foreign awards (Chapter 1 deals with NY Convention awards and Chapter II with awards under the 1927 Geneva Convention). Part III sets rules with conciliation and Part IV sets out certain supplementary provisions.
Parts I and II are the foremost important and are supported the UNCITRAL Model Law and thus the NY Convention respectively.
Let us understand what's arbitration in India? Arbitration is controlled by the law of arbitration in India which states that for adopting the arbitration as a dispute resolution mechanism an agreement thereto effect should be signed between the disputing parties. The parties can either choose a separate arbitration agreement to be signed between them or include a touch of writing within the foremost contract between the parties. Arbitration agreement or the article should clearly state that the dispute are getting to be resolved through arbitration only. Further, it should specify the amount of arbitrators to be appointed and thus the way of their appointment. Arbitrators in India are to be appointed in only odd numbers. Arbitrator in India possesses to be an unbiased independent third party who resolves the disputes between the conflict party in an impartial manner.
The Arbitration and Conciliation Act is broadly supported the UNCITRAL Model Law and was enacted to consolidate, define and amend the law in regard to domestic arbitration, international commercial arbitration and thus the enforcement of foreign arbitral awards.
The Indian courts are adopting a arbitration methods of approach and enforcing valid arbitration agreements. The reasons and objects of the Arbitration and Conciliation Act also recognises the principle of non-intervention by courts within the arbitration process. However, the Indian courts will refuse to enforce an
arbitration agreement where it finds clear that - no valid agreement exists or the dispute isn't arbitral.
The parties are liberal to choose the number of arbitrators, as long as this is often not an honest number. Appointment of the arbitrator is that the foremost vital step within the arbitration process. If the parties fail to specify the number of arbitrators, the tribunal will contain one arbitrator. When the parties fail to agree on a procedure for appointing a three-member tribunal, each party will nominate one arbitrator and thus the two party-appointed arbitrators will then appoint the presiding arbitrator. If a celebration fails to appoint an arbitrator within the stipulated period, the other party can apply to the Supreme Court or the Supreme Court seeking the appointment of the arbitrator.
Indian Arbitration and Conciliation Act provides with no specific guidance to the way and method during which the parties must communicate with the tribunal. In practice, all substantive communications are in writing. The parties can agree on the language(s) to be utilized within the arbitration process. Within the absence of such agreement, the tribunal can determine the language(s).
The Arbitration and Conciliation Act does not need any unanimous agreement from the tribunal. Unless otherwise agreed by the parties, any decision of the tribunal is often made by a majority of all its members. If the parties and thus the tribunal agree, the presiding arbitrator could even be authorized to form choice questions of procedure. just in case of disagreement, a dissenting arbitrator can issue a separate opinion, but the Arbitration and Conciliation Act prescribes no rules on the form of such a opinion .
Arbitration Clause - An agreement or the clause specifically stating that if the dispute arises between the parties they are going to resolve it through the tactic of arbitration.
Arbitration notice - just in case a dispute has arisen and thus the party has opted to follow the procedure of arbitration then the party against whom the default has been done will send an arbitration notice for invoking arbitration procedure between parties.
Appointment of Arbitrator- After receiving the notice by other parties both the parties will appoint the arbitrators within the way as laid call at the arbitration agreement or article.
Statement of Claim- Next step in an arbitration proceeding in India is to draft a handout of claim. Statement of claim contains the dispute between the parties, events which cause the dispute and thus the compensation claimed from the defaulting party. The opposite party can file a handout of counterclaim in conjunction with reply to the statement of claim. Get the statement of your claim, reply to the statement of claim or counterclaim through top arbitration lawyers.
Hearing of Parties - The Arbitral tribunal will hear both the parties and their evidence.
Award - After hearing the parties, the arbitral tribunal will pass the selection .choice of the tribunal is known as ‘Award’ and is binding on the parties. However, an appeal against the arbitral award are often filed before the supreme court.
Execution of Award - Once the award has been gone the tribunal it's to be executed. The party in whose favor the award has been passed possesses to file for execution or enforcement of award with the assistance of an honest arbitration lawyer.
Arbitration process in India doesn't follow the procedure of the Civil Procedure Code and thus the arbitrator also the arbitration proceeding doesn't need to follow the procedures enlisted within the Civil Procedure Code, 1908(1).
ADR BY Dr. SC. Tripathi
Law of Arbitration and Conciliation by Avtar Singh
SK SAHIL AHAD