With everything changing, many people now prefer alternative dispute resolution mechanisms outside the court, with arbitration being one of them.
What is Arbitration?
Arbitration is an out of court and an alternative dispute resolution system (ADR). It is a private dispute resolution which the parties choose instead of the court resolution.
Who decides the dispute?
An arbitrator is appointed by mutual consent of both the parties. The dispute may be decided by one or more parties (such as arbitrators, arbitral tribunal, or arbiters). The arbitrator usually renders the arbitration award
Is the arbitration award binding and enforceable?
Yes. An arbitration award is binding on both the parties as well as enforceable in the court of law.
Characteristics of Arbitration
- It is through mutual consent of both the parties. An arbitration clause is inserted in the contract by the parties. Unilateral withdrawal from arbitration is not possible.
- The arbitrator is chosen by the parties. They can either choose a sole arbitrator or an arbitral tribunal. In case of arbitral tribunal, 3 members are chosen. One by each party and the presiding by the other two.
- The arbitrator hosen is neutral and the parties are free to choose the venue, language and laws applicable in case of a dispute, thereby eliminating the risk of a home court advantage to any of the party.
- It is a strictly confidential procedure as prescribed by the WIPO rules. The disclosure made during the process or even the existence of the whole process is kept private.
- Generally, the disputes and the decisions are not subject to appeal in the court. But gtey are admitted by the courts in extreme cases like that of fraud, etc.
Although arbitral awards mainly consist of the award or compensation or damages, there are various other remedies which can come into picture. It may include payment of a sum of money, a declaration on any matter which is a part of the procedure, and also in some cases remedies like injunctive relief, specific performance, cancelling, rectifying, or setting aside a deed or a document, etc. Although the arbitral tribunal ma have limited powers and may just decide the compensation of money, unless decided otherwise by the parties
Types of Arbitration
With changing times, different types of arbitrations have been developed. These include Judicial Arbitration (in the UK), Online Arbitration (admissible under the New York Convention and the E-commerce directive), bracketed or high-low arbitration (limits are set by the parties within which the arbitrator or tribunal must render the decision), binding and non-binding arbitration, pendulum arbitration and night ball arbitration.
Arbitration could also be distinguished under two heads: ad hoc arbitration and arbitration organized by permanent institutions. Under adhoc arbitration, the arbitrators are appointed on case by case basis and the rules vary, while in an arbitration organized in a permanent institution, the rules of that organization are more likely to prevail.
As people avoid the court resolution mechanism to save time, arbitration is o great help. There is a need to improve its ways and develop better and clear rules so that some people who doubt it develop a better understanding and it comes off as more acceptable to everyone.
By Maahi Mayuri
Visit our Instagram page @lawyergyan at this link.