Arbitration

Arbitration is a form of alternative dispute resolution (ADR). It is a way to resolve disputes

outside the courts. The dispute will be decided by one or more persons (the "arbitrators",
"arbiters" or "arbitral tribunal").
These are often used for the resolution of
commercial disputes, particularly in the context of
international commercial transactions.
The arbitrator enforces his own point of view on the
contending parties and the opinions of the participants are not given any predominance.
The award of the arbitrator is binding and rests on equity and justice, i.e., there is no
scope for compromise.

Arbitration Process

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Duties of Arbitrator
 To administer oath to the parties and witness appearing.
 To act judicially and impartially.
 To put necessary interrogatories to any party
to the dispute.
 To determine by and to whom the costs of
reference and the award shall be paid.
 To award interest.
 To fix amount, mode and time of payment.
 Advantages
 Arbitration allows the parties to choose their own tribunal in contrast to litigation, where
one cannot "choose the judge".
 Arbitration is often faster than litigation in court.
 Arbitral proceedings and an arbitral award are generally non-public, and can be made
confidential.
 Arbitral proceedings are less formal than court.

 Arbitral proceedings and an arbitral award are generally non-public, and can be made
confidential.
 In arbitral proceedings the language of arbitration may be chosen, whereas in judicial
proceedings the official language of the country of the competent court will be
automatically applied.

Disadvantages
 Arbitration agreements are sometimes contained in ancillary agreements, or in small print in
other agreements, and consumers and employees often do not know in advance that they
have agreed to mandatory binding pre-dispute arbitration by purchasing a product or taking
a job.
 If the arbitration is mandatory and binding, the parties waive their rights to access the courts
and to have a judge or jury decide the case.
 If the arbitrator or the arbitration forum depends on the corporation for repeat
business, there may be an inherent incentive to rule against the consumer or
employee.
 There are very limited avenues for appeal, which means that an erroneous decision
cannot be easily overturned.
 Although usually thought to be speedier, when there are multiple arbitrators on the
panel, juggling their schedules for hearing dates in long cases can lead to delays.
 In some legal systems, arbitration awards have fewer enforcement options than
judgments; although in the United States arbitration awards are enforced in the same
manner as court judgments and have the same effect.
 Arbitrators are generally unable to enforce interlocutory measures against a party,
making it easier for a party to take steps to avoid enforcement of member or a small
group of members in arbitration due to increasing legal fees, without explaining to the
members the adverse consequences of an unfavorable ruling.

Arbitration Act
This is an act to consolidate and amend the law relating to arbitration. The act is
known as arbitration act of 1940. It extends to the whole of India except the state of
Jammu & Kashmir.
 Power of Arbitrator
The arbitrator or umpire shall, unless different intention is expressed in the agreement,
have power:
1. To administrate oath to parties & witness appearing.
2. To administer oath to parties and witnesses appearing before him;
3. To state a special case for the opinion of the court on any question of law or state
the award in the form of a special case for the opinion of the court;
4. To make the award conditional or in the alternative;
5. To correct in an award any clerical mistake or error arising from any accidental slip
or omission;
6. To administer any party interrogatories.

In addition to the statutory powers given above, there are some implied and incidental
powers, such as:
 Power to obtain legal assistance.
 Power to delegate authority limited to the performance of acts of ministerial
character
 Power to award interest
 Power to award costs
 Power to allow payment by instalments
 Power to allow amendment of the plaint.
Types of Arbitration
There are broadly 2 types of arbitration-
 Voluntary arbitration
Voluntary arbitration implies that the two contending parties, unable to compose their
differences by themselves agree to submit the conflict/dispute to an impartial authority,
whose decision they are ready to accept.
Essentials of Compulsory Arbitration
 The voluntary submission of dispute to an arbitrator.
 The subsequent attendance of witnesses and investigations.
 The enforcement of an award may not be necessary and binding.
 Voluntary arbitration may be specially needed for disputes arising under
agreements/contracts.
 Compulsory arbitration.
Compulsory arbitration, is one where the parties are required to accept arbitration
without any willingness on their part.
When one of the parties to an industrial dispute feels aggrieved by an act of the other, it
may apply to the appropriate government to refer the dispute to an adjudication machinery.

Essentials of Compulsory Arbitration

 the country is passing through grave economic crisis.
 industries of strategic importance are involved.
 parties are ill balanced.
 Compulsory arbitration leaves no scope for strikes and lockouts; it deprives both the
parties of their very important and fundamental rights.
 Other Types of Arbitration
 Ad-hoc Arbitration.
 Institutional Arbitration.
 Statutory Arbitration.
 Domestic or International Arbitration.
 Foreign Arbitration.