What is Arbitration?
Another method of settling disagreements between parties without going to court is alternative dispute resolution, which is sometimes known as a suitable or amicable dispute settlement. While courts make the final decision in a matter, ADR settles the conflict successfully, quickly, and peacefully. One of the most well-known types of ADR is arbitration.
It is frequently employed in conflicts of a business nature. The arbitration may be requested by parties that have included an arbitration provision in the contract. The fact that one party cannot unilaterally withdraw from arbitration distinguishes it significantly from mediation. To ensure that no party gains an unfair advantage, the parties can choose the court, the language used in the proceedings, and the applicable legislation.
What are the kinds of Arbitration?
The arbitration tribunal is contacted in disputes rather than in civil or criminal matters. The disagreement is settled by the tribunal, and the final judgment is final and binding on all parties. To ensure the disagreements are settled quickly, no legal action is taken. According to the relevant jurisdiction, the various forms of arbitration include the following:
A. Domestic Arbitration
Both parties to domestic arbitration must be Indian citizens, and the procedures are held in India. Domestic arbitration is not given a defined meaning under the Arbitration and Conciliation Act, 1996. The parties had agreed to use domestic arbitration to settle any problems that could arise in India, according to a simple reading of Section 2(2). The procedures must take place on home soil and be in place of Indian procedural and substantive law.
B. International Arbitration
As the name implies, international arbitration takes place outside of the country’s borders due to a condition incorporated in the parties’ contract or a cause of action arising from a foreign factor related to the dispute or the parties. The law that applies will depend on the circumstances that lead to the filing of the lawsuit, whether it be international or Indian law.
C. International Commercial Arbitration
Under Section 2(1)(f), international commercial arbitration is defined as arbitration that occurs as a result of a dispute arising from a commercial contract in which one of the parties resides abroad or is a foreign national, or in which the majority of the members of the core management committee of an association, business, or group of people are foreign nationals.
D. Ad-hoc Arbitration
Ad-hoc arbitration occurs when disputing parties agree to arbitrate their differences. Due to its affordable fees and suitable facilities, it is the most popular type of arbitration in India. Arbitration is done outside of institutional processes, meaning it doesn’t adhere to an arbitral institution’s norms. The regulations and the process to be followed are at the discretion of the parties. Both domestic and international business conflicts may be arbitrated using this method. The jurisdiction is crucial since most disputes are settled under the legislation that is relevant to the arbitration venue.
E. Fast track Arbitration
Fast-track arbitration can be considered an efficient way to deal with issues brought on by lengthy and cumbersome arbitration processes in other kinds of arbitration. It supports the primary goal of arbitration, which is to quickly resolve a dispute and does not require any lengthy procedures. Fast-track arbitration is granted a six-month time limit under the Act’s provision. Unlike other types of arbitration, the arbitrator simply considers written submissions, and one arbitrator is sufficient to settle the case.
F. Institutional Arbitration
Institutional arbitration allows the parties to choose the arbitral institution they want in the arbitration agreement itself. One or more arbitrators may be selected from a panel of arbitrators from which the parties or the institution’s governing body may have previously reached an agreement. Parties can choose an arbitrator to handle a particular matter under Part I of the Act.
The institution picks one or more arbitrators who possess the abilities and experience deemed relevant in a specific case when the parties do not appoint an arbitrator themselves. On the other hand, if the parties wish to designate one themselves they might choose from the list supplied by the institution.
A. Tulsi Narayan Garg v. Road Development Authority
State of Karnataka v. Shree Rameshwara Rice Mills Thirthahalli held that a party to an agreement cannot be an arbitrator in his own dispute, was upheld by a three-judge panel consisting of Hon’ble Mr. Justice N.V. Ramana, Hon’ble Ms. Justice Indira Banerjee, and Hon’ble Mr. Justice Ajay Rastogi.
The Bench noted that the initiation of recovery proceedings against the contractor by the concerned state authority at this stage is not justified and cannot be regarded as legally sustainable in law if the demand raised by a state authority has been contested by the contractor and is still pending adjudication.
B. Brahmani River Pellets v. Kamachi Industries Limited
A three-judge panel made up of Hon’ble Mr. Justice N.V. Ramana, Hon’ble Ms. Justice Indira Banerjee, and Hon’ble Mr. Justice Ajay Rastogi upheld the decision made in the case State of Karnataka v. Shree Rameshwara Rice Mills Thirthahalli11, which stated that a party to an agreement cannot arbitrate his own dispute.
The Bench stated that because the contractor has contested the state authority’s demand and the matter is still pending adjudication, the state authority’s decision to initiate recovery proceedings against the contractor at this time is unjustified and cannot be regarded as legally sustainable in law.
According to the Supreme Court, the parties in the current case had agreed that Bhubaneshwar would serve as the “forum” for the arbitration procedures. Therefore, the parties intended to preclude the jurisdiction of any other courts. Therefore, the Supreme Court decided that the High Court of Madras lacked the authority to consider whether Section 11(6) of the Arbitration & Conciliation Act, 1996 applied.
Today, it is certain that India has made great strides in recognizing, promoting, and putting various alternative dispute resolution (ADR) techniques into practice. The dedication of the Indian government to turning India become a centre for arbitration and other ADR procedures is demonstrated by the several revisions made to the Arbitration and Conciliation Act, 1996 to meet the demands of the constantly changing international business community. However, India still has a long way to go before it is the preferred country by international commercial organizations for the simplicity of arbitrating business disputes and using other ADR techniques.