University:
The University of Law
Course:
M110 | LLB (Hons) Law
Academic year:

2024
Views:

297

Pages:

49
Author:

Rounak Bajpai

ARBITRATION Arbitration is the process of bringing a business dispute before a disinterested third party for resolution. The third party, an arbitrator, hears the evidence brought by both sides and makes a decision. Sometimes that decision is binding on the parties. To arbitrate a matter is to bring it before an arbitrator. Arbitration is a form of alternative dispute resolution (ADR), used in place of litigation in the hope of settling a dispute without the cost and time of going to court. Arbitration is often confused with mediation, which is an informal process of bringing in a third party who goes between the disputing parties to help them settle a dispute. The mediation process is not binding on the parties, and the mediator does not hear evidence. At the end of the arbitration process, the arbitrator made the decision, which was binding on both parties. MEANING OF ARBITRATION The meaning of arbitration is securing an award on a conflict issued by reference to a third party. Under the process of arbitration, a dispute is submitted to an impartial outsider who makes a decision which is usually binding on both parties. In the process of arbitration, there is hearing and determination of a cause between parties in controversy by a person or persons chosen by the parties or appointed under statutory authority. The purpose of arbitration is adjudication, that is why there is no chance for compromise in awards. In the word of Kurt Brenn, the objective of arbitration is not compromise.... but adjudicating though parties are at liberty to compromise. A wise arbitrator will certainly promote such agreement but as a rule there is no place for compromise in the awards. In time of issuing decision, the arbitrator should take in to consideration the fact that the decision must be based upon some sound principle of natural justice, it must be workable, and it must be based upon a 'Split the difference' approach. In order to clear the concept of arbitration we should know the difference between arbitration and conciliation as well as the difference between arbitration and mediation. Arbitration can be distinguished from conciliation on the basis of that its decision is binding on the parties and its different approach and spirit. The main objectives of arbitration is adjudication and so there is no place for compromise in awards though the parties are long as it brings about an agreement between the contending parties, an arbitrator enforces his own point of view on the contending parties and the opinions of the disputants are not given any predominance. Moreover, arbitration produce justice and fair approach to a dispute. So, it is more judicial in character than conciliation Difference between Arbitration and mediation is that arbitration is a judicial process, but mediation has a legislative tint. The award of the arbitrator rests on equity and justice. There is no chance of compromise in arbitration but, in case of mediation compromise is the main essence. The award of arbitration is mandatory but in case of mediation, it is not so. Arbitration may sometime terminate the dispute Which is not happened in mediator. Arbitration is best suited to settlement of contractual rights, but mediation is suited to the adjustment of disputes. The Arbitration and Conciliation Act, 1996 is the prime legislation relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards and also to define the law relating to conciliation and for matters connected therewith or incidental thereto. It repealed the three statutory provisions for arbitration:(i) the Arbitration Act, 1940; (ii) the Arbitration (Protocol and Convention) Act, 1937; and (iii) the Foreign Awards (Recognition and Enforcement) Act, 1961. TYPES OF ARBITRATION: . Voluntary Arbitration: In case of voluntary arbitration the two contending parties unable to compose their difference by themselves or with the help of the mediator or conciliator, agree to submit the conflict / dispute between them to be resolved by an impartial authority, where they are ready to accept the decision of that authority. In case of voluntary arbitration before the dispute is referred for adjudication, the parties can and do themselves refer voluntarily the dispute to arbitration. To be voluntary arbitration, following elements are essentials. Voluntary submission of disputes to an arbitrator. Subsequent attendance of witness and investigations. Enforcement of an award may not be necessary and binding because there is no compulsion. The award may be favourable or unfavourable. Voluntary arbitration may be specially needed for disputes arising under agreements. Written : The arbitration agreement should be in written form of course, in the written arbitration agreement, there is no need of signatures of the parties. In the written agreement, the terms of arbitration should be minimum. The main purpose of the written arbitration agreement is to establish that the parties agreed to the settlemen t of disputes by arbitration. Present or Future Dispute : Without the existence of dispute, the arbitration is meaningless. Arbitration pre-supposes the existence or the possible existence of a dispute. In this connection, dispute implies assertion of a right by one party and denial of that right by the other party. Essential of a valid contract : To be a valid arbitration agreement, it should fulfil the all essential elements of a valid contract. Such as : offer and acceptance, face consent, legal relationship, complaint to control, lawful consideration, lawful object, not declared without vatic contract, arbitration clause is not binding.