Author: Janhavi Pradhane, Shahaji Law College
Introduction
Alternative Dispute Resolution (ADR) offers methods to resolve disputes outside of court, including arbitration, mediation, conciliation, and negotiation. These methods follow principles of justice and speedy trial as per Article 39A of the Indian Constitution and Section 89 of the Code of Civil Procedure. A key legislation governing ADR in India is the Arbitration and Conciliation Act, 1996, providing for private resolution with the decision being binding, aiming for efficient and cost-effective solutions.
Definition:
1. Arbitration:
Section 2(1)(a) of the arbitration and conciliation act 1996 defines the term Arbitration as follows :
“arbitration means any arbitration whether or not administered by a permanent arbitral institution.”
2. Arbitrator:
“The term arbitrator is not defined in the arbitration and conciliation acts, but arbitrator is a person who is appointed to determine differences and disputes between two or more parties by their mutual consent,”
Essentials
Section 8 of the Arbitration Act Following are the essential ingredients covered under Section 8 of the Act –
There must be a valid arbitration agreement between the parties.
The matter must be brought before judicial authority and the matter referred to should be a subject matter of arbitration.
The parties must have an arbitration agreement in place beforehand. This agreement or arbitration clause should be used by the parties before they submit their first statement about the dispute to a court or judicial authority.
The application made by the party to refer the matter to arbitration shall produce original arbitration agreement or its duly certified copy.
Types of arbitration
The following are the different types of arbitration as per the jurisdiction of the case:
1. Domestic arbitration
Domestic arbitration happens when both parties are Indian, and the arbitration proceedings take place within India.In the Arbitration and Conciliation Act, 1996 there is no specific definition given to domestic arbitration. A mere reading of Section 2(2) can lead us to infer that domestic arbitration is when the parties have agreed to resolve any disputes that arise in India. The proceedings must be held in the domestic territory and must be in lieu of the procedural and substantive law in India.
2. International arbitration
International arbitration takes place outside the domestic jurisdiction, typically due to a clause included in the agreement between the parties or because the dispute involves a foreign element, either in the nature of the issue or the parties involved. Depending on the specific circumstances that prompted the case, either foreign law or Indian law may apply to resolve the dispute.
3. International commercial arbitration
Section 2(1)(f) defines international commercial arbitration as arbitration arising from disputes related to commercial contracts where one of the parties is either a foreign national, resides in a foreign country, or where the core management of an entity, such as an association or a body of individuals, is controlled by foreign nationals.
Under Indian law, the presence of a foreign party brings the dispute under the scope of Part I of the Act, categorizing it as international commercial arbitration. However, this provision applies only when the arbitration occurs within Indian territory. If the arbitration is conducted outside India, Part I would not be applicable. Notably, the 2015 Amendment Act excluded “companies” from the definition of international commercial arbitration.
4. Ad-hoc arbitration
Parties mutually agree to resolve disputes through arbitration without institutional proceedings. This approach is common in India due to its reasonable costs and adequate infrastructure. In ad-hoc arbitration, parties have the flexibility to choose their own rules and procedures, making it applicable for both international commercial transactions and domestic disputes. Jurisdiction plays a crucial role, as disputes are resolved according to the law of the arbitration seat. If the seat of arbitration is in India, the Arbitration and Conciliation Act applies. Under Section 6 of the Act, the arbitral tribunal or parties can seek administrative assistance. Additionally, Section 11 specifies that arbitrator fees are determined by the arbitral institution as per Schedule 4. If the parties are unable to agree on the number of arbitrators, a single arbitrator is appointed by the Chief Justice of the Supreme Court or High Court.
5. Fast track arbitration
Fast-track arbitration was introduced through the Arbitration and Conciliation (Amendment) Act, 2015, with the aim of expediting the resolution of disputes between parties within a shorter timeframe. The main purpose of fast track arbitration was to make commercial/trade disputes simpler and expeditious for the parties. This can be seen as an effective solution to solving the problems faced because of delays and time-consuming proceedings in other forms of arbitration.
As per Section 29B of the Act, a dispute can be resolved through fast-track arbitration, if parties agree before or at the time of the appointment of an arbitrator. Parties referring matters under fast track arbitration can appoint only a sole arbitrator on the consent of the parties. The arbitrator, under fast track procedure, can only make use of the written submissions filed by the parties and there shall be no oral hearings until and unless necessary.
6. Institutional arbitration
– Parties can select an arbitral institution in their arbitration agreement. The institution or parties appoint one or more arbitrators from a predetermined panel. Part I of the Act allows freedom to appoint arbitrators for specific issues. Institutions select arbitrators based on required skills and experience if parties do not appoint. This approach is common among global business organisations for its structured procedure and efficient dispute resolution. Prominent arbitration centres include the Chartered Institute of Arbitrators (UK), London Court of International Arbitration, National Arbitration Forum (USA), Singapore International Arbitration Centre, and International Court of Paris.
Conclusion
Arbitration is a key form of Alternative Dispute Resolution (ADR) that resolves disputes outside court, offering efficiency, privacy, and cost-effectiveness. Governed by the Arbitration and Conciliation Act, 1996, it includes various types: domestic, international, commercial, ad-hoc, institutional, and fast track arbitration. Each type is suited for different circumstances, providing flexibility and tailored solutions for both national and international disputes. Arbitration ensures quick, binding resolutions, promoting justice and speeding up dispute resolution processes.
FAQS
What is arbitration?
Arbitration is an alternative dispute resolution method where disputes are resolved outside the court by one or more arbitrators whose decision is binding on the parties. It provides a private, efficient, and cost-effective way to settle disputes.
2. What is an arbitrator?
An arbitrator is a person appointed by mutual consent of the parties to resolve disputes and differences between them. The arbitrator acts as a neutral third party and provides a binding decision.
3. What is domestic arbitration?
Domestic arbitration involves disputes between Indian parties, with proceedings held in India under Indian laws. It is not explicitly defined in the Arbitration and Conciliation Act, 1996, but is inferred from Section 2(2).
4. What is international commercial arbitration?
International commercial arbitration is arbitration involving commercial disputes where one of the parties is a foreign national, resides in a foreign country, or the management is controlled by foreign nationals. It is governed under Part I of the Arbitration Act if conducted within Indian territory.
