KNC501/KNC601 Constitution of India, Law and Engineering

Chapter 10: Arbitration: As an alternative to resolving disputes in the normal courts

Unit 1

Unit 2

Unit 3

Unit 4

Unit 5

Appendix

Kinds of Arbitration

In arbitration a dispute is submitted to the arbitral tribunal and not to a regular civil court or otherwise. The arbitral tribunal must give a decision on the dispute and this decision is thus binding on the parties in the dispute since they have no grounds to appeal.

When contrasted with the traditional approach of a judicial proceeding which ordinarily happens in a Court; and has to go through a lengthy process, and which usually leaves one party or both parties exhausted financially. An arbitration proceeding is not formal and does not involve judicial proceeding which can save a lot of time for the parties.

A few types of Arbitrations in India on the basis of Jurisdiction

1. Domestic Arbitration

Domestic arbitration is that type of arbitration, which happens in India, wherein both parties must be Indians and the conflict has to be decided in accordance with the substantive law of India. The term domestic arbitration has not been defined in the Arbitration and Conciliation Act of 1996.

2. International Arbitration

When arbitration happens within India or outside India containing elements which are foreign in origin in relation to the parties or the subject of the dispute, it is called as International Arbitration. 

The law applicable can be Indian or foreign depending upon the facts and circumstances of the case and the contract in this regard between the respective parties. To fulfil the definition of International Arbitration it is sufficient if any one of the parties to the dispute is domiciled outside India or if the subject matter of dispute is abroad.

3. International Commercial Arbitration

  1. International Commercial Arbitration is defined as the substitution of many burning questions for a smouldering one. Nani Palkhiwala has stated that International Commercial Arbitration is a 1987 Honda car, which will take you to the same destination with far greater speed, higher efficiency and dramatically less fuel consumption
  2. International Arbitration is considered to be commercial if it related to disputes arising out of a legal relationships irrespective of their contractual nature and are considered as commercial under the law in force in India and where at least one of the parties is-
  • A national of, or habitual resident in, any country other than India or
  • A body corporate which has to be incorporated in any foreign country, or
  • An association or a body of individuals whose core management and control in a country which is not India or
  • The government of a country other an India. In International Commercial Arbitration the arbitral tribunal is bound to decide the conflict according to the rules of law chosen by the parties as applicable to the substance of the dispute; any designation by the parties of the law or legal system of a given country can be interpreted, unless it has been expressed otherwise, one which directly refers to the substantive law of that country and does not refer to its conflict of laws rules.

Types of arbitrations that are primarily recognized in India on the basis of procedure and rules:

  1. Institutional arbitration
  2. Ad hoc arbitration
  3. Fast track arbitration

1. Institutional Arbitration:

When an arbitral Institution conducts arbitration, it is called Institutional Arbitration. The parties have the choice of specifying, in the arbitration agreement, to refer the differences to be determined in accordance with the rules of as elected arbitral Institution. One or more arbitrators can be appointed from a pre-selected panel by the governing body of the institution or the disputants themselves can select their panel but it has to be restricted to the limited panel. parties, that agreement shall include any arbitration rules referred to in that agreement.

2. Ad-hoc Arbitration:

If the parties agree among themselves and arrange for arbitration, it is called Ad hoc Arbitration without having an institutional proceeding. It can either be domestic, international or foreign arbitration.

3. Fast Track Arbitration:

Even the other processes of arbitration can be lengthy and tedious and thus this process of arbitration works like a remedy to the issue of time. Fast track arbitration is a method, which is time dependent in the provision of the arbitration and conciliation act. Its procedure is established in a way that it has abandoned all the methods, which consume time, and uphold the simplicity which is the originally the prime purpose of such arbitration.

Author – Dilip Kumar Rawat

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