Arbitration Law: An Overview

Arbitration is a legal technique for the resolution of disputes outside the courts. It is a form of dispute settlement where parties can avoid resolving their dispute in public litigation. If both parties agree to arbitration, an independent and neutral arbitrator is appointed and the arbitrator gives a decision on the dispute. The arbitrator’s decision is binding on the parties.

Arbitration in law is not like mediation. That’s because a mediator cannot make a lasting, binding decision. But a neutral arbitrator has the authority to provide an award that resolves a dispute.

Arbitration has many advantages over litigation, such as:

·         It is faster and cheaper than going to court.

·         It is more flexible and informal than court procedures.

·         It allows the parties to choose their own arbitrator and the rules of arbitration.

·         It preserves the confidentiality and privacy of the parties and the dispute.

·         It reduces the risk of appeals and enforcement difficulties.

Arbitration law varies from country to country, depending on their legal systems and traditions. However, there are some common principles and features that apply to most arbitration laws, such as:

·         The principle of party autonomy, which means that the parties are free to agree on the terms and conditions of arbitration, such as the number and qualifications of arbitrators, the place and language of arbitration, and the applicable law and rules.

·         The principle of competence-competence, which means that the arbitrator has the power to decide on his or her own jurisdiction and validity of the arbitration agreement.

·         The principle of separability, which means that the arbitration agreement is independent of the main contract and survives its termination or invalidity.

·         The principle of finality, which means that the arbitrator’s award is final and binding on the parties and cannot be appealed or reviewed by courts, except on limited grounds such as fraud, corruption, or violation of public policy.

In India, arbitration law is governed by the Arbitration and Conciliation Act, of 1996, which was amended in 2015, 2019, and 2021. The Act is based on the UNCITRAL Model Law on International Commercial Arbitration 1985 and the UNCITRAL Conciliation Rules 1980. The Act applies to both domestic and international arbitration and conciliation in India. The Act also provides for the enforcement of foreign arbitral awards in India under the New York Convention 1958 and the Geneva Convention 1927.

Some of the key features of the Arbitration and Conciliation Act, of 1996 are:

·         It defines an arbitration agreement as an agreement by the parties to submit their disputes to arbitration.

·         It empowers courts to refer parties to arbitration where there is an arbitration agreement.

·         It allows courts to grant interim measures before or during arbitration proceedings.

·         It provides for the appointment, challenge, removal, and substitution of arbitrators.

·         It lays down the procedure and rules for conducting arbitration proceedings.

·         It sets out the grounds and procedure for setting aside or modifying arbitral awards.

·         It establishes an Arbitration Council of India (ACI) to promote and regulate arbitration in India.

Arbitration law is a dynamic and evolving field that responds to the changing needs and expectations of parties involved in disputes. Arbitration offers an alternative and effective way of resolving disputes without resorting to courts. Arbitration law aims to facilitate and support arbitration as a fair, efficient, and reliable method of dispute resolution.

FAQ on Arbitration Law

What is arbitration? 

Arbitration is a method of resolving disputes outside the court by one or more persons who are appointed as arbitrators by the parties. The arbitrators decide the outcome of the dispute based on the evidence and arguments presented by the parties. The arbitration process is governed by the agreement of the parties and the applicable law or rules.

What are the advantages of arbitration? 

Some of the advantages of arbitration are:

It can be faster, cheaper and more flexible than litigation.

It can preserve the confidentiality and privacy of the parties and the dispute.

It can avoid the complexity and uncertainty of multiple jurisdictions and laws.

It can allow the parties to choose their own arbitrators, rules, language and seat of arbitration.

It can produce a final and binding award that is generally enforceable in most countries.

What are the UNCITRAL Arbitration Rules? 

The UNCITRAL Arbitration Rules are a set of procedural rules for conducting arbitration that were prepared by the United Nations Commission on International Trade Law (UNCITRAL). The UNCITRAL Arbitration Rules are widely used for international commercial arbitration, as well as for other types of arbitration, such as investment arbitration. The UNCITRAL Arbitration Rules provide a comprehensive and balanced framework for the conduct of arbitral proceedings, covering issues such as the initiation of arbitration, the appointment and challenge of arbitrators, the exchange of pleadings and evidence, the conduct of hearings, the making of awards and the costs of arbitration.

How to respond to a request for arbitration? 

A request for arbitration is a document that initiates an arbitration proceeding by one party (the claimant) against another party (the respondent). The request for arbitration typically contains information such as:

The names and contact details of the parties and their representatives

The description of the dispute and its factual and legal background

The relief sought by the claimant

The reference to the arbitration agreement or clause

The proposal for the number and method of appointment of arbitrators

The proposal for the applicable rules of law and the language of the arbitration