ARBITRATION LAW IN INDIA
Arbitration has established itself as one of the principal methods of dispute resolution over the years.
The Law of Arbitration deals with the hearing and determination of a dispute by an impartial person agreed to by both parties the act of deciding as an arbitrator. The process of arbitration is a legal technique for the resolution of disputes outside the courts, wherein the parties to a dispute refer it to one or more persons who are known as arbitrator by whose decision (award) parties agree to be bound and accepts decision formally.
Arbitration is recognised as the most effective method of solving commercial disputes, especially those of an international dimension. It can achieve equitable solutions more quickly than litigation, and at less cost; it allows parties to adopt whatever procedure they choose for the resolution of differences; it enables parties to decide where disputes shall be heard.
As a concept and as a process, arbitration is well embedded in commercial practices and social life. In India Arbitration Law was introduced by Bengal Regulations in 1772.After that The Indian arbitral system was governed by the Code of Civil Procedure 1908 until the Arbitration Act of 1940 came into force and it was later replaced by the Arbitration and Conciliation Act 1996 to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral award as also to define the law relating to conciliation. The Arbitration and conciliation Act 1996 is an effort to modernize the outdated Act, of 1940.
The Act is based on the 1985 UNICITRAL (United Nations Commission on International Trade Law) Model Law on International Commercial Arbitration and the UNCITRAL Arbitration Rules 1976. The Statement of Objects and Reasons of the Act recognises that India's economic reforms will become effective only if the nation's dispute resolution provisions are in tune with international regime.
There are two types of Arbitration:
1. Binding or voluntary Arbitration: In this Process the parties to the Dispute Voluntarily submit there Dispute to a third person i.e. Arbitrator. Whose decision they are ready to accept. In other words in voluntary arbitration, both sides in the dispute voluntarily agree to submit their disagreement to arbitration after it arises and after they have an opportunity to investigate their best options for resolving their claim.
2. Non-binding arbitration or non voluntary Arbitration: Non binding Arbitration which is also known as Compulsory arbitration is one where the parties are required to accept arbitration without any willingness on their part. The arbitrator makes a determination of the rights of the parties to the dispute but this determination is not binding on them. The award given is just an advisory opinion. Subsequent to a non-binding arbitration, it is up to the parties involved; they are free to pursue their claims either via the courts, or by a binding arbitration.
The Indian Arbitration and Conciliation Act, 1996 applies to both domestic arbitration in India and to international arbitration. Domestic Arbitration is defined as an alternative dispute resolution mechanism in which the parties get their disputes settled through the intervention of a third person and without having recourse to the court of law. While, the term 'international commercial arbitration relates to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in India and where at least one of the parties is:- (i) an individual who is a national of, or habitually resident in, any country other than India; or (ii) a body corporate which is incorporated in any country other than India; or (iii) a company or an association or a body of individuals whose central management and control is exercised in any country other than India; or (iv) the Government of a foreign country.
The dispute resolution through Arbitration has occupied great significance in India in the recent past though it was successfully practiced in the developed nations like United States etc. Indian authorities have been trying to promote arbitration and other such alternatives for resolving disputes given 31.1 million cases pending in courts. The arbitration proceeding are governed by the agreement signed between the parties to the agreement and the Indian Courts have a very limited role in the arbitration proceedings.
India has put in Place a strong legislation and a sound mechanism relating to arbitration laws. The system of Arbitration has been proved itself as an effective and efficient in itself to provide quick and efficient relief to the aggrieved Parties. Arbitration Process is one of the easiest and efficient modes which is used all over the world as more effective, less expensive and the fastest means of solving disputes between the parties.
The Law of Arbitration deals with the hearing and determination of a dispute by an impartial person agreed to by both parties the act of deciding as an arbitrator. The process of arbitration is a legal technique for the resolution of disputes outside the courts, wherein the parties to a dispute refer it to one or more persons who are known as arbitrator by whose decision (award) parties agree to be bound and accepts decision formally.
Arbitration is recognised as the most effective method of solving commercial disputes, especially those of an international dimension. It can achieve equitable solutions more quickly than litigation, and at less cost; it allows parties to adopt whatever procedure they choose for the resolution of differences; it enables parties to decide where disputes shall be heard.
As a concept and as a process, arbitration is well embedded in commercial practices and social life. In India Arbitration Law was introduced by Bengal Regulations in 1772.After that The Indian arbitral system was governed by the Code of Civil Procedure 1908 until the Arbitration Act of 1940 came into force and it was later replaced by the Arbitration and Conciliation Act 1996 to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral award as also to define the law relating to conciliation. The Arbitration and conciliation Act 1996 is an effort to modernize the outdated Act, of 1940.
The Act is based on the 1985 UNICITRAL (United Nations Commission on International Trade Law) Model Law on International Commercial Arbitration and the UNCITRAL Arbitration Rules 1976. The Statement of Objects and Reasons of the Act recognises that India's economic reforms will become effective only if the nation's dispute resolution provisions are in tune with international regime.
There are two types of Arbitration:
1. Binding or voluntary Arbitration: In this Process the parties to the Dispute Voluntarily submit there Dispute to a third person i.e. Arbitrator. Whose decision they are ready to accept. In other words in voluntary arbitration, both sides in the dispute voluntarily agree to submit their disagreement to arbitration after it arises and after they have an opportunity to investigate their best options for resolving their claim.
2. Non-binding arbitration or non voluntary Arbitration: Non binding Arbitration which is also known as Compulsory arbitration is one where the parties are required to accept arbitration without any willingness on their part. The arbitrator makes a determination of the rights of the parties to the dispute but this determination is not binding on them. The award given is just an advisory opinion. Subsequent to a non-binding arbitration, it is up to the parties involved; they are free to pursue their claims either via the courts, or by a binding arbitration.
The Indian Arbitration and Conciliation Act, 1996 applies to both domestic arbitration in India and to international arbitration. Domestic Arbitration is defined as an alternative dispute resolution mechanism in which the parties get their disputes settled through the intervention of a third person and without having recourse to the court of law. While, the term 'international commercial arbitration relates to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in India and where at least one of the parties is:- (i) an individual who is a national of, or habitually resident in, any country other than India; or (ii) a body corporate which is incorporated in any country other than India; or (iii) a company or an association or a body of individuals whose central management and control is exercised in any country other than India; or (iv) the Government of a foreign country.
The dispute resolution through Arbitration has occupied great significance in India in the recent past though it was successfully practiced in the developed nations like United States etc. Indian authorities have been trying to promote arbitration and other such alternatives for resolving disputes given 31.1 million cases pending in courts. The arbitration proceeding are governed by the agreement signed between the parties to the agreement and the Indian Courts have a very limited role in the arbitration proceedings.
India has put in Place a strong legislation and a sound mechanism relating to arbitration laws. The system of Arbitration has been proved itself as an effective and efficient in itself to provide quick and efficient relief to the aggrieved Parties. Arbitration Process is one of the easiest and efficient modes which is used all over the world as more effective, less expensive and the fastest means of solving disputes between the parties.
Comments