India is one of the fastest growing Economy of the World. Arbitration is the
most preferred dispute resolution method today in business contracts. The law
offers a choice upon the parties to enter into commercial transactions knowing
well that in case, of a dispute, they will refer their dispute to this simple,
quick, convenient and cost-effective process saving them from tedious and
complicated adversarial procedures of a court.
The Arbitration and Conciliation Act, 1996 covers both Domestic and
International Arbitration. This statute deals with domestic arbitrations as also
elements which also govern International Arbitration.
Key Elements of an Arbitration Agreement are as follows:
An arbitration as an Alternative Dispute Resolution Mechanism can be
resorted to only with the consent of the parties. The consent has to be borne
out from within an arbitration agreement. This mutual agreement clearly
specifies the desire of the parties to arbitrate their dispute. In other words,
they clearly note that in the event of a dispute between them they would not go
to the court, instead they will proceed to arbitrate their dispute. This
agreement takes the form of a binding contract.
As per section 7 of the the Arbitration and Conciliation Act, 1996, "arbitration
agreement" means an agreement by the parties to submit to arbitration all or
certain disputes which have arisen or which may arise between them in respect of
a defined legal relationship, whether contractual or not. The reference in a
contract to a document containing an arbitration clause constitutes an
arbitration agreement if the contract is in writing and the reference is such as
to make that arbitration clause part of the contract.
- Presiding Authority:
The individual or Group of persons adjudicating the dispute are better known
as the arbitral tribunal. It is akin to a judge that presides over a court
of law. The presiding person is known as the arbitrator, who is in charge of
deciding the disputes between the parties. Just like the judge an arbitrator
too has several responsibilities set out in the code.
The arbitrator is under oath to perform its duties. He/She is bound in Law
to take decisions and conduct proceedings in a neutral and impartial manner.
One of the key features of an Arbitration Agreement is the fact that the
parties are free to choose their presiding authority. This legislative
clause not only inspires confidence in the arbitrators but also the process
and the decisions taken. The Act also has provisions for removing
arbitrators, if it is found that they are not working in a neutral and
Institutional Arbitration Centres like IDRC have inhouse panel of India's most
experienced Panel of esteemed Arbitrators/Mediators which include Former Hon'ble
Chief Justices of India, Judges of Supreme Court, Chief Justices of High Court,
Judges of High Court and District Courts, Queens Counsels of London, Former
Secretaries to Govt. of India, CMDs and Directors of PSUs, Senior Advocates,
Chartered Accountants, domain experts and many more.
- Seat of arbitration:
The seat of arbitration determines the specific place
whose courts would exercise jurisdiction over the offshoots of the arbitration
proceeding. In absence of such an agreement, Arb & Conc. Act, 1996 solely
operates within the territory of India.
- Party autonomy and procedure:
Arbitration as a method of dispute resolution
provides to the parties the choice to select applicable laws, especially if the
arbitration is an international commercial arbitration. Additionally, there is
an enormous flexibility to choose the procedure that shall be applicable. The
Rules of the arbitration can be self - governed, however, the said rules have to
be in the spirit of Public Interest of India.
- Finality of outcome:
Arbitral awards passed are not amenable to Appeal.
However, an arbitral award can only be set aside if the said award suffers from
defects as provided under Section 34 of Arb & Conc. Act, 1996 such as invalid
arbitration agreement, party's incapacity to enter into an agreement,
independence and impartiality of an arbitrator, unfair procedure or breach of
public policy of India etc.