The key behind arbitration is to allow parties to resolve disputes mutually,
particularly in the business sector, without arduous judicial proceedings, thus
reducing time and money and increasing efficiency, with minimal court
In India, where ad hoc arbitration is far more practical than
institutional arbitration, parties, councils and arbitrators are beginning to
recognize ad hoc arbitration as a fully scrutinized free procedure that leads to
lengthy dispute settlement and ultimately deprives the whole purpose of
arbitration. Provided this scenario and a regional approach to arbitration,
Although in India, especially in the past five years , different arbitration
institutions have been set up, ad hoc arbitration is still a preferred form of
Furthermore, a large number of Indian parties' international arbitrations are
held abroad and administered by foreign arbitral bodies. In order to facilitate
the arbitration of institutions in India, it is imperative that:
- Indian parties engaged in domestic and foreign arbitrations should be
encouraged rather than ad hoc arbitrations to become institutionally
- India should become a preferred arbitration centre for international
arbitrations, at least in matters involving Indian party.
This paper discusses some of the problems in the institutional arbitration
environments in India against this framework. We seek to raise a number of
important questions, which have to be asked to better understand why India has
not yet become an institutional arbitration centre.
In order to do this, there
will be an effort to explain the failure of many established arbitral
institutions in India. Certain collection of data from such arbitral bodies and
arbitration stakeholders may help us to understand these reasons.
Meaning of Institutional Arbitration
It is the arbitration mechanism where an existing arbitration institution or
entity carries out the entire arbitration under a set of rules. Appointment
arbitral organization is provided for in the arbitration agreements. In
particular, the parties provide that the dispute would be resolved through
institutional arbitration in the event of any dispute during the contractual
Nandan Biomatrix Ltd. v. D 1 Oils Ltd
 In this case it was agreed upon the
resolution of the dispute by institutional arbitration between the parties. The
problem emerged because the arbitral body did not have a clear name and
agreement to settle the conflict only by formal arbitration.
Arbitrator: Analogy To A Referee
- An alternative dispute resolution mechanism may be referred to
arbitration by the Arbitrator, where an independent third party arbitrates
as a referee.
- The arbitrator mediates the dispute at the arbitration hearing and even
in a game, the arbitrator sorts out the players differences.
- The arbitrator has the power to determine the dispute between the
parties; also the arbitrator has the power to decide the disputes between
- But, in contrast to the decision of a referee at a sport match, the
arbitrator's decision is final. The decision of the arbitrator determines
the outcome of the dispute.
- conclusively the arbitrator's position is more like a tribunal than an
arbitrator. The proceedings are nevertheless less formal than the Court.
Development of Arbitral Institutions in India
The high-level Committee's report examines in depth the trends of the
above-mentioned arbitral institutions and the reasons why the parties favour
such institutions. In a nutshell, why
this is probably the most important explanation why
arbitration institutions are the most common. All these institutions have new
and up-to - date regulations to provide more flexibility to parties. Which
include resources such as the review of the draft arbitration award and other
possible defects. The arbitrator panel has international know-how and
well-organized administrative personnel. For the entire process,
state-of-the-art infrastructure is available.
Adequate government support:
The committee's main reason was that its respective
governments immensely supported two of the top five arbitrary intuitions,
namely, the SIAC and the HKIAC. The governments have provided them with
sufficient financial and infrastructural assistance and have played an
significant part in internationally promoting them. The government support also
created Maxwell Chambers. In fact, this is an Indian problem.
Nevertheless a positive move forward in establishing arbitration in India is the
2018 New Delhi International Arbitration Centre (NDIAC) Bill introduced recently
in Lok Sabha. The Project also recommends that a Chamber be set up to take over
the current International Centre for Alternative Conflict Resolution.
Concept of Institutional arbitration and Ad-hoc arbitration
The parties should be informed that the process of arbitration is open to
decide. It depends on the circumstances and details of their dispute. In India,
parties have preferred ad hoc arbitration, while international arbitration is a
preferred means of settling disputes. It is necessary therefore to consider all
types because they have their own advantages and disadvantages.
Ad-Hoc Arbitration In Relation With Institutional Counterpart
The ad-hoc arbitration need not be entirely divorced from its institutional
Essential Issues To Be Looked Into While Choosing For Institutional Arbitration
- As the appointing authority: In ad hoc proceedings it is often necessary
to appoint unbiased or skilled arbitrators. For such situations, the ad hoc
arbitration parties will decide to select the arbitrators by selecting an
- To administer the proceeding: Additionally, ad hoc arbitration parties
can decide at any time to involve an institutional provider in the
administration of arbitration.
The choice of the institution suitable for dispute resolution arising from the
contract in institutional arbitration is the first question to be raised for the
agreement of the parties. Different considerations must be considered when
making such a choice:
- the dispute's nature & business value,
- administrative laws as these regulations differ,
- the institution's past record and reputation;
- institutional rules are in keeping with recent developments in
international trade arbitration.
There are many institutional arbitration administrators, some of which are
associated with a trade association and many of which are independent
- The London Court of International Arbitration,
- The Chartered Institute of Arbitrators (UK),
- The National Arbitration Forum (USA) and
- The International Court of Arbitration (Paris) etc.
Why to choose institutional arbitration over ad hoc arbitration in India
Institutional arbitration has benefits including:
- The availability of rules and procedures predetermined to ensure that
arbitration is released and concluded with dispatch;
- administrative assistance from the secretarial institutions or
- lists of arbitrators eligible, frequently broken down by skill areas;
- appointment by the institution of arbitrators should be appointed by the
- arbitration support and physical facilities;
- support to encourage reticent parties to arbitrate and
- an establish proven record-based format.
The parties, however, have essentially all rights, such as appointment of
arbitrators, etc., in formal arbitration. The institutions are also in a
position to enforce the parties their will. This is against the very spirit of
arbitration, and it can be argued that in the true sense it is not arbitration.
Although ad hoc arbitration will then be preferred, ad hoc arbitration is only
suited to disputes involving smaller claims, less stable parties and domestic
arbitration in today's modern and complex commercial environment, except where
States parties are involved, for reasons which are minimal.
In the context of Indian commercial disputes, it can be argued that
institutional arbitration is more appropriate, even if it is apparently
costlier, time consuming and more rigid than ad hoc arbitration, bearing in mind
that it provides established and updated rules for arbitration, support,
arbitration supervision & monitoring, award review and, above all, strengthens
the credibility of awards.
- Report of the High-Level Committee to Review the Institutionalization of
Arbitration Mechanism in India (2017) p. 3. (Further the Report)
- National Juridical Data Grid ( Feb. 10, 2017 ), http://njdg.ecourts.gov.in/njdg_public/main.php
- (1) Nandan Bio matrix Ltd. V D 1 Oils Ltd, (2009) 4 SCC 495