Binding arbitration is a means of resolving a dispute that is private, less formal, less costly and less time-consuming than traditional litigation. The parties agree to submit their dispute to an impartial arbitrator authorized to resolve the controversy by rendering a final and binding award. A matter may proceed to arbitration usually in a matter of months, instead of the several years it may take to have a case heard in court. The matter is heard in a conference room, as opposed to a courtroom. Courtroom rules of evidence are not strictly applicable, and there is usually no significant motion practice. Formal rules of discovery do not apply, although the arbitrator may allow for some discovery, such as production of relevant documents and depositions under oath. There is no requirement of written transcripts of the proceedings.
Dispute settlement is a primary feature of any legal system and one of the major requisites of a peaceful society or group is that the resolution of trouble cases by processes which are non-violent in character and arbitration is one such key to resolve disputes. Arbitration is the most comprehensive and cooperative way for resolving disputes arising from the domestic and international commercial relationships whereby the parties mutually agrees to reconcile the dispute by entering into an agreement. The parties have an option to incorporate the separate agreement or as a clause within the contract defined as “Arbitration Clause” which binds a party to a type of resolution outside the court. Most contract arbitration takes place since the parties included an arbitration clause obliged them to arbitrate any disputes "arising under or related to" the contract. If a provision like this isn't included in the contract, the parties can still arbitrate if they both agree to it.
The primary importance of including an arbitration clause in a contract before the dispute arises is that once the dispute does arise, one can force the dispute out of the court system, and so that can force the other side to arbitrate. It saves time, cost, and unnecessary harassment of the parties. Thus having a proper arbitration clause in a contract is very important. An arbitration clause is an essential part of a contract which states that all disputes between two parties who entered into a contractual relationship will be settled through the process of arbitration, rather than in the courts. This is very helpful for both the businesses and consumers by ensuring a cost-effective solution for dispute resolution. Businesses include arbitration clauses because it allows them to settle disputes quickly and quietly, without going through the often expensive and time-consuming legal system.
The arbitrator acts as a private judge, and will make a ruling that is binding on the parties. Any award or order as passed by the Arbitral Tribunal is enforceable in a court of competent jurisdiction.
You will be required to present your case by calling witnesses and presenting documentary evidence, and making arguments to persuade the arbitrator that he or she should rule in your favour.
There is difference of fee and costs in terms of Arbitration proceedings in Ad-hoc Arbitration and Institutional Arbitration. Ad-hoc Arbitration costs includes venue costs, food costs, steno costs and of course Arbitrator fees. The fee towards an Arbitrator has been defined and is taken care by the same but the Arbitrator fees can also be decided mutually between the Parties and the Arbitrator. In Institutional Arbitration, the best part is that their costs are covered in all aspects and the costs are very less compared to Ad-hoc arbitration.
The Arbitration and Conciliation Act has made it mandatory to complete all the Arbitration proceedings within 12 months from the date of its initiation and if not done, then by mutual consent the arbitration proceedings can be extended by 6 months but not thereafter as thereafter the approval of the Chief Justice is required or Court who has been given the power to do so.
The proceedings are private and not open to the public. There is no transcript of the proceedings unless one party chooses to incur the expense of obtaining a transcript. All persons permitted to be present, such as the parties and their representatives, and witnesses who have completed their testimony, are allowed to hear the testimony of other witnesses, which is given under oath. The final decision of the arbitrator is confidential, unless a party finds it necessary to enforce the decision in court.
There is no mandate to have a lawyer but even arbitration proceedings is like a legal proceedings where the Statement of Claim is filed, Defence is Filed, Interim Order applications and replies are filed and argument takes place, cross examination is done, evidence is filed and all this though it is simple but it is always better and advisable to have a lawyer to ensure you are read with the strategy to fight your case. Please note for any fight or project you have to prepare your strategy and each project requires expert.
Yes, you give up the right to have your dispute heard by a judge via Court once you agree to contractual arbitration. However, now a days even if there is no contractual arbitration and the aggrieved party is an MSME registered, then arbitration proceedings can be started which is termed as Statutory Arbitration.
The Arbitrator will be someone that both parties agree to or as per the terms being agreed between the Parties. If the agreement gives any right to sole party to appoint arbitrator, then only that party can appoint arbitrator subject to compliance of Arbitration and Conciliation Act and if the agreement gives both the parties right to appoint the arbitrator or it is silent, then the arbitrator will be appointed as per the provisions of Arbitration and Conciliation Act. [Here, we prefer that during drafting of any contract, take the help of Lawyer to ensure the clause on agreement is fair].
If you have signed a contract already containing an arbitration clause, you should read and follow the requirements in the contract. Please note that issuance of Section 21 under the Arbitration and Conciliation Act is mandatory.
You can file an appeal before the competent court subject to the deposit of money if ordered against the person who was defendant or opposite party in the arbitration proceedings.
Yes, if either of the Parties wants an adjournment of hearing, they should make an application in writing to the Arbitral Tribunal giving reasons for seeking adjournment in advance of the dates as agreed to act upon to enable the Arbitral Tribunal to act on it. The Arbitral Tribunal at its discretion may grant the adjournment subject to such conditions as deemed fit by the Arbitral Tribunal.
Yes, if after the appointment of an arbitrator, the Parties settle the dispute amicably then the Arbitrator will record the settlement of the dispute in the form of an arbitration award on agreed terms.
An Award shall be given in writing and made in three originals duly dated and signed by the Sole Arbitrator or in case of a Panel of Arbitrators by all the three arbitrators.
The arbitrator may include interest on the claim amount for which the award is made at a particular rate of interest and period as the arbitrator deems reasonable.
Yes, the aggrieved party can make an application to the appropriate court to set aside the award given by a Sole Arbitrator or Panel of Arbitrators, under the provisions of the Arbitration and Conciliation Act, 1996.
The award becomes a decree when the time for making an application to set aside the award has expired i.e. after expiry of 3 months from the date of receipt of award or the application for setting aside the Award having been made, has been refused by the appropriate court. In such a case the award shall be enforced as if it were a decree of the Court under the provisions of the Arbitration and Conciliation Act 1996.
A mediator normally has no authority to render a decision. It's up to the parties themselves -- with the mediator's help -- to work informally toward their own agreement. An arbitrator, on the other hand, conducts a contested hearing between the parties and then, acting as a judge, rends a legally binding decision. Arbitration resembles a court proceeding: Each side calls witnesses, presents evidence and makes arguments. Although arbitration has traditionally been used to resolve labor and commercial disputes, it is growing in popularity as a quicker and less expensive alternative to going to court.
It is the duty of the arbitrators to appoint a time and place for hearing the parties and making their award. They must give the parties three days’ notice and if no cause is shown for a continuance, they must proceed to hear and determine the matters referred to them and make their award in writing. The arbitrator must sign this document with a copy thereof delivered to each of the parties, their agents, or attorneys and the fact and date of such delivery endorsed on the original.
Yes foreign award is valid in India and binding upon the persons between whom it is made. The foreign award has to satisfy the following conditions as provided under Section 44 of the Arbitration and Conciliation Act, 1996 to be acceptable in India:-
- The legal relationship between the parties must be commercial;
- There must be an agreement providing for arbitration between the parties; and
- The award must be made in a convention country. A convention country is one which has been notified by the government of India as such and to which the New York Convention applies. New York Convention is an agreement between countries for the recognition and enforcement of foreign awards made in the signatory country
There can be various reasons for refusal to enforce a foreign award even though it is from a convention country. Some of the reasons for the refusal are as follows: a) The award is on a matter which is not commercial under the laws of India. b) The arbitration agreement entered between the parties is invalid under the law of the country where it was made. c) The parties to the arbitration were under some incapacity while entering into the agreement. d) The defendant was not given notice of the appointment of arbitrator or was unable to present his case. e) The matter sought does not fall within the scope of submission to the arbitration. f) The composition of the arbitral tribunal was not in accordance with the agreement. g) The award was suspended by competent authority of the country where it was made. h) The subject matter of arbitration is not capable of settlement under the Indian law. i) The enforcement of the award would be opposed to public policy of India.
Any foreign award which passes the test as provided under Section 44 of the Arbitration and Conciliation Act, 1996 (the Act) is considered to be valid as per Indian law and is eligible for being executed by Indian Courts subject to satisfaction of the appropriate Court. Once the court is satisfied that the award fulfils the conditions as laid down in the Act, the award is deemed to be a decree of the Court and can be put into execution directly
