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Arbitration Meaning And Kinds

  1. ad hoc arbitration
  2. Contractual arbitration
  3. Institutional arbitration
  4. Statutory arbitration
  5. Domestic arbitration
  6. International commercial arbitration

The dictionary meaning of Arbitration is hearing and determining a dispute between the parties by a person or persons chosen by the parties. It is an alternative to litigation in courts and is advantageous as it provides flexibility and confidentiality. According to section 2 (1)(a) of Arbitration and conciliation act 1996 "Arbitration" means any arbitration whether or not administered by permanent arbitral institutions.

The arbitration act of 1940 did not contain the definition of the term "Arbitration". The word arbitration as defined in the present act connotes the same meaning as contained in article 2(a) of the model Law of UNCITRAL.

According to Nacham of Breslov arbitration is the justice blended with charity.

According to Black's Law Dictionary, arbitration means a method of resolving disputes which includes two parties and neutral third party whose decision is binding on both parties.

In an English judgement named Collins vs. Collins (1858) 28 LJCh184:53 ER916 gave a wide definition of the concept of Arbitration which reads as follows :-

An arbitration is a reference to the decision of one or more persons either with or without an umpire a particular matter in difference between parties. It was further observes by the Court that proceedings are structured for dispute resolution wherein executives of the parties to the dispute meets in presence of a neutral advisor and on hearing both the sides and considering the facts and merits of the dispute an attempt is made for voluntary settlement.

According to Byrne's law dictionary:
The term "arbitration includes practically every question which might be deterred to arbitration. This under the English law, arbitration means the settlement of disputes by the decisions of one or more persons called arbitrator.

Types of Arbitration:
Broadly speaking there are four varities of Arbitration which may be restored to by the parties for the settlement of their disputes. They are:
  1. Ad hoc arbitration:
    May be sought as and when a dispute arose between the parties to a business transaction which could not be settled by negotiation in the shape of mediation or conciliation.
  2. Contractual arbitration:
    With the increase in trade and business and growth of economy, commercial transactions, increased leaps and bounds, therefore there were frequent occasions for clashes and disputes between the parties which needed to be resolved. In order to seek early settlement of disputes without approaching the court, the parties chose to insert an arbitration clause as an integral part of the contract to refer their existing or future disputes to a names arbitrator or arbitrators appointed by a designated authority. This has been called as contractual in-built Arbitration.
  3. Institutional arbitration:
    when an arbitral institution conducts arbitration, it is called institutional arbitration. When the parties agree in advance that in the event of future disputes or differences arising between them in course of their business of commercial transactions, they will refer the matter to be settled by arbitration by the named institution of which one or more of them are members.
  4. Statutory arbitration:
    There are certain areas where arbitration is statutorily imposed on the parties by law of the land and the parties have no option but to abide by such arbitration.

In Madhya pradesh rural road development authority vs L.G. Chaudhary engineers & contractor (2018)10SCC833

Court held that state law will prevail in terms of section2(4) of the arbitration act. The reference under the state law was valid and could be decided in accordance with the state.
  • Domestic arbitration:
    Arbitration taking place in India and following the procedural and substantive laws of Arbitration of India or something which is governed by part 1 of Arbitration act.
  • International Commercial arbitration:
    according to Section2(1)(f) international Commercial arbitration means an arbitration relating to disputes arising out of legal relationships, whether contractual or not considered as commercial under the law in force in India and where are least one of the parties is:
    1. An individual who is a national of or habitually resident in any country other than India; or
    2. A body corporate which is incorporated in any country other thar India ; or
    3. An association or a body of individuals whose central management and control is exercised in any country other than India

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