ARBITRATION

SREDHA BABY
 Arbitration is a private process where disputing parties agree that one
or several individuals can make a decision about the dispute after
receiving evidence and hearing arguments.
 Arbitration is different from mediation because the neutral arbitrator
has the authority to make a decision about the dispute.
 The arbitration process is similar to a trial in that the parties make
opening statements and present evidence to the arbitrator. Compared
to traditional trials, arbitration can usually be completed more quickly
and is less formal. For example, often the parties do not have to follow
state or federal rules of evidence and, in some cases, the arbitrator is
not required to apply the governing law.
 After the hearing, the arbitrator issues an award. Some awards simply
announce the decision (a "bare bones" award), and others give
reasons (a "reasoned" award).
 The arbitration process may be either binding or non-binding. When
arbitration is binding, the decision is final, can be enforced by a court,
and can only be appealed on very narrow grounds. When arbitration is
non-binding, the arbitrator's award is advisory and can be final only if
accepted by the parties.
 Its principal characteristics are:
 Arbitration is consensual
Arbitration can only take place if both parties have agreed to it. In the case of
future disputes arising under a contract, the parties insert an arbitration
CHARACTERISTICS clause in the relevant contract.
 The parties choose the arbitrator(s)
Under the WIPO Arbitration Rules, the parties can select a sole arbitrator
together. If they choose to have a three-member arbitral tribunal, each party
appoints one of the arbitrators; those two persons then agree on the
presiding arbitrator.
 Arbitration is neutral
In addition to their selection of neutrals of appropriate nationality, parties
are able to choose such important elements as the applicable law, language
and venue of the arbitration.
 Arbitration is a confidential procedure
The WIPO Rules specifically protect the confidentiality of the existence of
the arbitration, any disclosures made during that procedure, and the award.
 The decision of the arbitral tribunal is final and easy to enforce
Under the WIPO Rules, the parties agree to carry out the decision of the
arbitral tribunal without delay
Advantages
 Cost. Generally, arbitration proceedings will result in quicker
dispute resolution than in the court system. This, in turn, results in
lower overall costs.
 Informality. Arbitration proceedings are far less formal than a
trial. Unlike trials, which must be held in a courtroom, parties can
agree to have arbitrations in any convenient setting of their
choosing.
 Privacy. Arbitration proceedings are generally held in private, and
parties can agree to keep the final resolution confidential. This is
especially appealing if the subject matter of the dispute involves
private or embarrassing information.
 Control. Parties have the ability to maintain greater control over
the dispute resolution process through arbitration.
Disadvantages
 Inability to Appeal. As a general and practical rule, the arbitrator’s
decision cannot be appealed. Only in certain limited situations,
such as when the arbitrator exceeded his or her authority or upon
proof of corruption, fraud or undue influence, will an arbitrator’s
decision be reviewed by a district court.
 Lack of Formal Discovery. Although the lack of a full fledge
formal discovery process in arbitration proceedings may result in
decreased costs, it can also mean that the parties (or one party in
particular) may not have all of the information necessary to fully
evaluate the case.
 Discretion of the Arbitrator. An arbitrator may make his or her
decision without issuing any written opinion or explanatory
statement.
 Rising Costs. Although arbitrations are typically going to be less
expensive than litigation, the cost of arbitration is on the rise,
making arbitration often more expensive than other ADR
proceedings.
  An act to consolidate the law relating to
ARBITRATION Domestic arbitration
AND International and commercial arbitration and

CONCILIATIO Enforcement of foreign arbitral awards

N ACT. 1996
 It extends to the whole world
  Formulation of arbitration agreement
 “Arbitration agreement” means an agreement to submit to
arbitration all or certain disputes in respect of a defined legal
relationship, whether contractual or not which have arisen or
which may have arise between them.
 An arbitration agreement may be in the form of an arbitration
clause in a contract or in the form of a separate agreement.
ARBITERATION
 An arbitration agreement shall be in writing
AGREEMENT  An arbitration agreement is in writing if it is contained in-
A document signed by the parties
An exchange of letters, telex, telegrams or other means of
telecommunication which provide a record of the agreement or
An exchange of statements of claim and defense in which the
existence is alleged by one party and not denied by the other
  The earliest evolution of arbitration in India can be traced back to Brihadaranyaka
Upanishad under the Hindu Law. It provided for various types of arbitral bodies
which consisted of three primary bodies namely:
 The local courts
 The people engaged in the same business or profession
 Panchayats.
 The members of the Panchayats known as panchas, were that times arbitrators,
which used to deal with the disputes under a system.
 However thereafter the first legislative council for British India was formed and
IN INDIA India got its first enactment on Arbitration known as the €˜Indian Arbitration Act,
1899 but the Act was applicable to only presidency towns i.e., Calcutta, Bombay,
and Madras. This Act was fundamentally based on the British Arbitration Act, 1889.
 Thereafter came the Arbitration Act, 1940 which applied to the whole of India
including Pakistan and Baluchistan. However, post independence the same was
modified via ordinance.
 Due to various shortcomings in the 1940 Act like lack of provisions prohibiting an
arbitrator from resigning any time during an arbitration proceeding, the rules
providing for filing awards differed from one High Court to another, the act was
replaced by the Arbitration and Conciliation Act, 1996 that ratified the problems in
1940 Act.
A FEW TYPES OF ARBITRATIONS IN INDIA ON THE BASIS OF
JURISDICTION

 Domestic arbitration is that type of arbitration, which happens in

India, wherein both parties must be Indians and the conflict has to
be decided in accordance with the substantive law of India. The
Domestic term €˜domestic arbitration€™ has not been defined in the
Arbitration and Conciliation Act of 1996. However when reading
Arbitration Section 2 (2) (7) of the Act 1996 together, it is implied that
€˜domestic arbitration€™ means an arbitration in which the
arbitral proceedings must necessarily be held in India, and
according to Indian substantive and procedural law, and the cause
of action for the dispute has completely arisen in India, or in the
event that the parties are subject to Indian jurisdiction.
  When arbitration happens within India or outside India containing
elements which are foreign in origin in relation to the parties or
International the subject of the dispute, it is called as International Arbitration.
The law applicable can be Indian or foreign depending upon the
Arbitration facts and circumstances of the case and the contract in this regard
between the respective parties. To fulfill the definition of
International Arbitration it is sufficient if any one of the parties to
the dispute is domiciled outside India or if the subject matter of
dispute is abroad.
  International Commercial Arbitration is defined as the substitution
of many burning questions for a smoldering one. Nani Palkhiwala
has stated that International Commercial Arbitration is a 1987
Honda car, which will take you to the same destination with far
greater speed, higher efficiency and dramatically less fuel
consumption[ii] International Arbitration is considered to be
commercial if it related to disputes arising out of a legal
International relationships irrespective of their contractual nature and are
considered as commercial under the law in force in India and
Commercial where at least one of the parties is-
 A national of, or habitual resident in, any country other than India
Arbitration or
 A body corporate which has to be incorporated in any foreign
country, or
 An association or a body of individuals whose core management
and control in a country which is not India or
 the government of a country other an India.
TYPES OF ARBITRATIONS THAT ARE PRIMARILY RECOGNIZED
IN INDIA ON THE BASIS OF PROCEDURE AND RULES:

 When an arbitral Institution conducts arbitration, it is called

Institutional Arbitration. The parties have the choice of specifying,
in the arbitration agreement, to refer the differences to be
determined in accordance with the rules of as elected arbitral
Institution. One or more arbitrators can be appointed from a pre-
Institutional selected panel by the governing body of the institution or the
disputants themselves can select their panel but it has to be
arbitration restricted to the limited panel. Arbitration and Conciliation Act
1996 provides that where in Part I except section 28, the parties
are free to determine a certain issue, that liberty encompasses the
right the parties have to authorize any person including an
institution, to determine that issue. The Act also explicitly provides
that where Part I €˜refers to the fact that the parties have agreed
or that they may agree, or in any other way refers to an
agreement of the parties, that agreement shall include any
arbitration rules referred to in that agreement.
  If the parties agree among themselves and arrange for arbitration,
it is called Ad hoc Arbitration without having an institutional
proceeding. It can either be domestic, international or foreign
arbitration. Russell on Arbitration says that, The expression Ad
Ad-hoc Hoc, as in Ad Hoc Arbitration or Ad Hoc Submission is used in
two quite different senses:
arbitration An agreement to refer an existing dispute, and/or an agreement to
refer either future or existing disputes to arbitration without an
arbitration institution being specified to supervise the
proceedings, or at least to supply the procedural rules for the
arbitration. This second sense is more common in international
arbitration.
  Even the other processes of arbitration can be lengthy and tedious
Fast track and thus this process of arbitration works like a remedy to the
issue of time. Fast track arbitration is a method, which is time
arbitration dependent in the provision of the arbitration and conciliation act.
Its procedure is established in a way that it has abandoned all the
methods, which consume time, and uphold the simplicity which is
the originally the prime purpose of such arbitration.