ARBITRATION PROCEDURE

WHAT IS ARBITRATION

Arbitration is a type of Alternative Dispute Resolution (ADR) and it is used when the parties fail to settle their dispute through litigation. Contrary to litigation, in Arbitration, the parties are at freedom to choose their own tribunal (arbitrator(s)). The decision of the Arbitrator(s) is binding on both the parties and enforceable in the courts, unless otherwise is agreed by the parties. The main purpose of arbitration is to achieve fair resolution of the dispute by an impartial third party. Arbitration provides flexible, better-quality justice, less time consuming and less expensive resolution of the dispute. [i]

THE DIFFERENT STAGES OF ARBITRATION PROCEDURE

Chapter V of the Arbitration and Conciliation Act, 1996 deals with the Conduct of arbitral proceedings.[ii] Along with that Chapters VI, VII and VIII also plays important role in the arbitration procedure.

  1. FILLING AND INITIATION: [iii]An arbitration clause or agreement must be present in the contract of any civil matter, done by the two parties that if any dispute arises, it shall be solved through the arbitration method. If no previous arbitration clause is present in the contract, the parties are at freedom to make an arbitration clause or agreement to solve their dispute with consensus. If a dispute arises, the Section 21 of the Arbitration and Conciliation Act, 1996 states that the party against whom the default has been committed with send an arbitration notice to the respondent, commencing the arbitration between the parties.
  2. SELECTION OF ARBITRATORS: The parties, after receiving the notices and mutually agreeing to arbitration, are free to decide and appoint their Arbitrator(s) according to Section 10 and Section 11 of the Arbitration and Conciliation Act, 1996.
  3. STATEMENT OF CLAIM: In this step, the parties have to present a drafted statement of claim which shall contain the cause of dispute between the parties, the events leading to the dispute, the compensation claimed, facts supporting the claimant’s claim, issues raised and such. The defending party is to present a drafted counterclaim with the reply to the statement of claim. Both parties are required to provide with all necessary and relevant documents to the arbitration according to Section 23 of the Arbitration and Conciliation Act, 1996.
  4. HEARING: After the submission of the Statement of Claim and Counterclaim by the parties, the next step is the hearing of the parties and their evidences by the arbitral tribunal. The hearing stage can be divided in two steps:
    • Preliminary Hearing: In the preliminary stage, the respective arbitrators of the parties fix the schedule. Here, the issues are addressed and the information is exchanged between the parties. The next hearing date is also scheduled during this stage.
    • Hearing Stage: After the preliminary stage, the parties present their case to the arbitrator and they are needed to submit written arguments after the hearing, as per the directions of the arbitrator. The hearing process can take place in person, over telephone or by submitting documents according to the rules and regulations applicable.
  5. AWARD: The arbitral tribunal, after hearing the parties, shall pass their decision, known as ‘Award’, which shall be binding upon the parties. Even so, the parties have the right to appeal in the High Court against the arbitral award. There are two types of arbitration award:
    • Interim Award.
    • Final Award.
  6. EXECUTION OF AWARD: After the award has been passed by the arbitral tribunal, it has to be executed in favor of the parties and the party has to file for the execution and enforcement of the same.[iv]
  7. CHALLENGE IN COURT: According to Section 34 of the Arbitration and Conciliation Act, 1996, the other party has a right to challenge the awards in Court within 90 days of the passing of the award. Certain provisions are given in the Section 34 according to which the award can be set aside by the court given:
    • That the arbitration contract which the parties have been subjected to is not valid.
    • That the party had some type of incapacity.
    • That the matter contained was beyond the scope of arbitration.

CONCLUSION

It can be concluded that Arbitration is an important and time saving method of dispute resolution and hence the arbitration procedure plays a pivotal role in the resolution of dispute and so great care and attention has to be paid in the arbitration procedure.

SOURCES


[i] WIKIPEDIA, https://www.wikipedia.org/ (last visited Nov 7, 2021).

[ii] The Arbitration And Conciliation Act, 1996.

[iii]  MYADVO https://www.google.com/amp/s/www.myadvo.in/blog/steps-of-arbitration-in-india/amp/ (last visited Nov 7, 2021).

[iv] Subhodh Asthana, Arbitral Process under Arbitration and Conciliation Act, 1996, IPLEADERS, (Nov 8, 2021, 2 PM) https://blog.ipleaders.in/

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