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WHAT IS ARBITRATION ?


ARBITRATION
(Under arbitration and conciliation act, 1996)


INTRODUCTION

The Indian law of arbitration is contained in the Arbitration and Conciliation Act 1996 (Act).1 The Act is based on the 1985 UNCITRAL Model Law on International Commercial Arbitration and the UNCITRAL Arbitration Rules 1976.The Act is a composite piece of legislation. It provides for domestic arbitration; international commercial arbitration; enforcement of foreign award and conciliation (the latter being based on the UNCITRAL Conciliation Rules of 1980).
Arbitration is most commonly used in the resolution of commercial disputes and is distinct from mediation and conciliation.



MEANING

Sec 2(1)(a) of A&C act ,1996 defines Arbitration.
Arbitration, a form of alternative dispute resolution (ADR), is a way to resolve disputes outside the courts. The dispute will be decided by one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), which renders the "arbitration award". An arbitration award is legally binding on both sides and enforceable in the courts.


ARBITRATION AGREEMENT



Sec 2(1)(b) & Sec 7 of A&C act ,1996 defines Arbitration Agreement
Arbitration agreements are generally divided into two types:[
1.      Agreements which provide that, if a dispute should arise, it will be resolved by arbitration. These will generally be normal contracts, but they contain an arbitration clause.

2.     Agreements which are signed after a dispute has arisen, agreeing that the dispute should be resolved by arbitration (sometimes called a "submission agreement")

ARBITRAL TRIBUNAL

Sec2(1)(d)of A&C act ,1996 defines Arbitral Tribunal

The arbitrators which determine the outcome of the dispute are called the arbitral tribunal. The composition of the arbitral tribunal can vary enormously, with either a sole arbitrator sitting, two or more arbitrators, with or without a chairman or umpire, and various other combinations.


INTERNATIONAL ARBITRATION



Sec2(1)(f)of A&C act ,1996 definesInternational Arbitration

International arbitration is arbitration between companies or individuals in different states, usually by including a provision for future disputes in a contract.
·        International arbitration is similar to domestic court litigation, but instead of taking place before a domestic court it takes place before private adjudicators known as arbitrators.                                                                                                                   
·       It is consensual, neutral, binding, private and enforceable means of international dispute resolution, which is typically faster and less expensive than domestic court proceedings.
·        Controversies between sovereign states that are not settled by diplomatic negotiation or conciliation are often referred, by agreement of both parties, to the decision of a third disinterested party, who arbitrates the dispute with binding force upon the disputant parties. Such arbitration between states has a long history; it was used between city-states in ancient Greece and also in the Middle Ages, when the pope often acted as the sole arbitrator.



DOES THE SAME ARBITRATION LAW GOVERNS THE BOTH DOMESTIC AND INTERNATIONAL PROCEEDING?

India has a composite piece of legislation governingboth domestic and International arbitration. The act has two main parts. The First part deals with any Arbitration (domestic as well as International) so longas the seat of the arbitration is in the India. Part Second deals mostly with the enforcement of foreign awards.

 The recent amendment is that any application to the court in the International commercial arbitration will lie to the High court, whereas in case of the domestic arbitration it will lie to the court which has original jurisdiction in relation to the matter.


CLASSIFICATIONS OF ARBITRATION.

1. Commercial Arbitration is the most common of disputes. Just as it sounds, it is a dispute between two commercial enterprises.
2. Consumer Arbitration surrounds disputes between a consumer and a supplier of goods or services.
3. Labour Arbitration involves the settlement of employment related disputes. This form or arbitration can be divided into two main categories: Rights Arbitration and Interest Arbitration.



ADVANTAGES OF ARTBITRATION

Supporters of arbitration hold that it has a multitude of advantages over court action. The following are a sample of these advantages.
·        Choice of Decision Maker
·        Efficiency
·        Privacy
·        Convenience
·        Flexibility
·        Finality
·        Cost
·        No Appeal. 


PROCESS/ STEPS IN AN ARBITRATION

The following is a list of the main steps in arbitration, however it should not be viewed as an exhaustive list.
1.     Initiating the Arbitration – A request by one party for a dispute to be referred to arbitration.

2. Appointment of Arbitrator (Sec 11 of A & C Act)– Arbitrators may be appointed by one of three ways:

 (1) Directly by the disputing parties,
(2) By existing tribunal members (For example, each, each side appoints one
arbitrator and then the arbitrators appoint a third),
(3) By an external party (For example, the court or an individual or institution
nominated by the parties).

3.     Preliminary Meeting – It is a good idea to have a meeting between the arbitrator and the parties, along with their legal counsel, to look over the dispute in question and discuss an appropriate process and timetable.

4.     Statement of Claim and Response – The claimant sets out a summary of the matters in dispute and the remedy sought in a statement of claim. This is needed to inform the respondent of what needs to be answered. It summarizes the alleged facts, but does not include the evidence through which facts are to be proved.

The statement of response from the respondent is to admit or deny the claims. There may also be a counterclaim by the respondent, which in turn requires a reply from the claimant. These statements are called the ‘pleadings’. Their purpose is to identify the issues and avoid surprises.

5.  Discovery and Inspection – These are legal procedures through which the parties investigate background information. Each party is required to list all relevant documents, which are in their control. This is called ‘discovery’. Parties then ‘inspect’ the discovered documents and an agreed upon selection of documents are prepared for the arbitrator.

6.     Interchange of Evidence – The written evidence is exchanged and given to the arbitrator for review prior to the hearing.

7.     Hearing – The hearing is a meeting in which the arbitrator listens to any oral statements, questioning of witnesses and can ask for clarification of any information. Both parties are entitled to put forward their case and be present while the other side states theirs. A hearing may be avoided however, if the issues can be dealt with entirely from the documents.

8.     Legal Submissions – The lawyers of both parties provide the arbitrator with a summary of their evidence and applicable laws. These submissions are made either orally at the hearing, or put in writing as soon as the hearing ends.

9.       Award – The arbitrator considers all the information and makes a decision. An award is written to summarize the proceedings and give the decisions.
                                                                                                                                                            


CONCLUSION

 India has in place a modern, an efficient Arbitration Act. There have been some decisions which are not in tune with the letter or spirit of the Act. Hopefully, these would be addressed by the judiciary in the near future and continuing popularity of arbitration would be served by a truly efficient ADR mechanism.




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