ARBITRATION – A NEW AVENUE FOR ACHIEVING JUSTICE

INTRODUCTION

Alternative dispute resolution (ADR) is the umbrella term for all methods of conflict settlement that take place outside the courtroom (ADR). All methods and processes for resolving conflicts that take place outside of any regulating authority are brought together by ADR. The most well-known ADR strategies are mediation, arbitration, conciliation, negotiation, and transaction. In terms of alternative dispute resolution, arbitration is the most effective and popular method. Arbitration is a different approach offered for resolving disputes in civil affairs. It is a method through which a dispute is resolved by private individuals appointed rather than the judicial officers formally appointed to the country’s courts and tribunals. These are individuals who serve in a quasi-judicial capacity and are known as arbitrators.

FUNDAMENTAL ELEMENTS OF ARBITRATION

  • Arbitration occurs voluntarily:
  • Arbitrators are picked by the parties:
  • Arbitration’s impartiality
  • Arbitration is a confidential process.
  • The arbitrator’s decision is final and enforceable against the parties.

SEVERAL DIFFERENT JURISDICTION-BASED ARBITRATION TYPES IN INDIA:

DOMESTIC ARBITRATION

Domestic arbitration refers to the type of arbitration that takes place in India, requires that both parties be Indian nationals, and requires that the dispute be settled in accordance with Indian substantive law.

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. Based on the specifics of the case’s details and circumstances, in addition to the contract between the relevant parties, either Indian or foreign law may apply. If any one of the disputing parties has their primary place of residence outside of India or if the issue is international in nature, that suffices to meet the definition of international arbitration.

INTERNATIONAL COMMERCIAL ARBITRATION

International commercial arbitration is defined as arbitration that happens as a result of a dispute emerging from a contractual relationship governed by Indian law and where at least one of the parties is-

  • A citizen or regular resident of a nation other than India
  • A business entity that must be incorporated in a foreign nation, or
  • An organization or group of people with their primary administration and control in a nation other than India or
  • the administration of a nation other than India.

ARBITRATION ON THE BASIS OF PROCEDURE:

  • Ad-hoc arbitration:Ad-hoc arbitration occurs when both parties decide to arbitrate their dispute by themselves, without the assistance of a neutral organisation. The motions are carried out in accordance with the parties’ agreement. It is possible for the arbitration to take place domestically, internationally, or abroad.
  • Institutional arbitration: Institutional arbitration entails the disputing parties’ consent to having their issue resolved by an arbitral panel. The proceedings under this shall be governed by the terms of the arbitral tribunal and not by the wishes of the parties. Arbitration might take place locally, nationally, or worldwide.
  • Fastrack Arbitration: This arbitration depends on time. Fastrack arbitration upholds the simplicity that is the goal of arbitration by conducting the proceedings in such a way that all time-consuming, needless steps are abandoned.

ARBITRATION AGREEMENT

Parties may resort to arbitration solely if they include an arbitration agreement or an arb clause in their formal agreement. The agreement or arbitration clause must be in writing, involving two or more parties, and must have intended it, given their assent, and signed it.

The parties’ arbitration agreement states the following:

  • The tribunal’s location and bench,
  • The sterilization procedures for carefully selecting the arbitrators,
  • The sheer number and profile of arbitrators,
  • Arbitration-specific verbiage,
  • Arbitral approach,
  • Name and address of Arbitration institution,
  • The way arbitral proceedings have to be conducted.

ARBITRAL AWARD

An arbitral award is a ruling on the actual merits by an arbitration tribunal, similar to a verdict in a court of justice. It is alluded to as an “award” even if all of the claimant’s claims fail or the award is non-monetary. 

TYPES OF ARBITRAL AWARDS:

  1.   Interim award – This judgement resolves any issues that arise from the primary dispute. It is a temporary solution to placate one party and is subject to the final decision.
  2.   Additional award – Under Section 33[1] of the Arbitration and Conciliation Act, Upon informing the other parties, parties may request that the arbitral tribunal issue a supplementary award to cover any claims that they feel were ignored by the arbitral tribunal while they were present in the proceedings.
  3.   Settlement awards – These are made following a resolution agreement between the parties. Under Section 30[2] of the Arbitration and Conciliation Act, the arbitral tribunal may use negotiation, conciliation, or mediation to resolve the conflict between the parties.
  4.   Final award – All of the disputes’ issues are ultimately resolved by this award. It is binding on the parties and is final unless reversed by a court.

The form and content of arbitral awards are governed by Section 31[3] of the Arbitration and Conciliation Act which was enacted in 1996:

  1. An arbitral award must be delivered in writing and must include the signatures of all arbitral tribunal members.
  2. Most of the members of the arbitral panel must sign in cases involving more than one arbitrator, but only if an explanation for any absent members is provided.
  3. Unless the parties have agreed otherwise, or the award is an arbitral award on agreed terms pursuant to Section 30[4], the grounds for the arbitral award must be explained.
  4. The arbitral award must identify the date and location of the arbitration, as established by section 20[5] and the award is presumed to have been made at that location.
  5. A signed copy of the arbitral award must be handed to each party after it is made.
  6. The arbitral tribunal may issue an interim arbitral award on any subject matter for which it may issue a final arbitral award at any point during the arbitration procedures.
  7. If an arbitral award requires monetary payment, the arbitral tribunal may add interest (at a fair rate) to the whole or any part of the amount payable for the whole or any part of the period between the date the dispute began and the date the award was made.

 (b) Unless otherwise specified in the decision, amounts ordered by an arbitral award to be paid accrue interest at a rate of 18% annually from the date of the award until the due date for payment

  1. Unless the parties have mutually agreed differently, the arbitral panel shall decide on the arbitration’s fees. Following subsection (b), the arbitral tribunal shall:
    1. the party entitled to reimbursement for expenses,
    2. the party liable for the expenses,
    3. the cost amount or method for calculating the cost amount, and,
    4. the mechanism for paying the costs.

GROUNDS ON WHICH AWARDS CAN BE SET ASIDE

A party may request the annulment of an arbitral tribunal’s award under Section 34[6] of the Arbitration and Conciliation Act if they are not satisfied. The application must be submitted within three months of the day the arbitral award was rendered. The reasons are:

  • The parties’ incapacity.
  • The absence of an arbitration agreement.
  • Failed to follow the proper procedure.
  • A failure of the arbitral tribunal to use its authority.
  • An improperly constituted arbitral tribunal.
  • It is not possible to refer the dispute to arbitration.
  • It is unconstitutional.
  • Fraud or corrupt behaviour.

If a participant is not satisfied with the decision made by the tribunal, he or she may appeal to the court, according to Section 37[7] of the Act. However, once an appeal has been filed, there are no provisions for a subsequent appeal.

CONCLUSION

The fact that its tribunal is a quasi-judicial body and is useful in both domestic and foreign contexts is a result of the delay that the traditional court process causes for the relief delivery system and the usefulness of the third-party justice delivery system. Most civil disputes are now resolved through arbitration with the parties’ consent and will, which makes it considerably more likely that the disputes will be resolved successfully. New institutions are offering their services to India as arbitration cases increase there, which could help in the future to alleviate the unwelcome state of court burden.

Author(s) Name: Shreya Dhyani (Galgotias University)

References:

[1] Shivam Goel, Section 33 of the Arbitration & Conciliation Act, 1996: Correction and Interpretation of Award; Additional Award, Tilak Marg, (January 15, 2023, 7:34), https://tilakmarg.com/opinion/section-33-of-the-arbitration-additional-award/.

[2] The Arbitration and Conciliation Act, 1996, s.30

[3] India Code, https://www.indiacode.nic.in/show-data?actid=AC_CEN_3_46_00004_199626_1517807323919&orderno=20, (January. 15, 2023)

[4] Ibid 2

[5] The Arbitration and Conciliation Act, 1996, S. 20

[6] LEXFORTI, Analysis: Section 34 of Arbitration and Conciliation Act (January 15, 2023, 7:46 PM) https://lexforti.com/legal-news/section-34-arbitration-act/.

[7] India Dispute Resolution Centre, What is Section 37 of Arbitration and Conciliation Act, (January 15, 2023, 7:50PM) https://theidrc.com/content/adr-faqs/what-is-section-37-of-arbitration-and-conciliation-act.

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