Arbitration in India
Arbitration laws have been enacted in India to provide an effective and fast dispute resolution framework, to improve the Indian dispute resolution system. The advantages of arbitration are speedy dispute resolution and cost-effectiveness.
- Fast Dispute Resolution
- Cost-Effectiveness
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What is a
Arbitration in India
Arbitration in India is a form of Alternative Dispute Resolution (ADR) where parties agree to have their disputes resolved by a neutral third party (the arbitrator) instead of through traditional court litigation. The primary legislation governing arbitration in India is the Arbitration and Conciliation Act, 1996, which has been amended in 2015 and 2019 to further streamline and expedite the process.
Recent developments:
- The Indian government has been actively working to improve the arbitration landscape and promote India as an arbitration-friendly jurisdiction.
- This includes proposals for further reforms to streamline the process and reduce court interference.
- The focus is on making arbitration more time-bound, cost-effective, and efficient.
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Arbitration in India
In India, there are two types of arbitration:
- Ad-hoc Arbitration: The procedures for arbitration have to be agreed upon by the parties and the arbitrator. This could be an issue in most cases, as there is a dispute between the parties and cooperation on arbitration might not happen. Also, ad-hoc arbitration could have legal or technical flaws and defects in the award, as the arbitration procedures are not standardized. Hence, the likelihood of court interference is higher in ad-hoc arbitration.
- Institutional Arbitration: The procedural rules are already established by the arbitration institution. Hence, the formulating of procedures and rules is not required, as the arbitration framework is already in existence. Also, arbitration institutions have experienced arbitrators and a committee to review all arbitral awards. Hence, the possibility for a court to set aside the award by an arbitration institution is minimal.
Arbitration Institutions in India
Some of the arbitral institutions in India are:
- Chambers of Commerce (organized by either region or trade)
- Indian Council of Arbitration (ICA)
- Federation of Indian Chamber of Commerce and Industry (FICCI)
- International Centre for Alternate Dispute Resolution (ICADR)
- LCIA India
Key aspects of arbitration in India:
- Voluntary process: Arbitration is a voluntary process, meaning parties must agree to it, typically through an arbitration clause in a contract.
- Private and confidential: Arbitration proceedings are private and confidential, unlike court proceedings.
- Binding decisions: The arbitrator's decision (award) is generally binding on the parties, similar to a court judgment.
- Arbitration Act: The Arbitration and Conciliation Act, 1996, governs both domestic and international arbitration in India.
- Institutional vs. ad-hoc Arbitration can be administered by an arbitral institution (e.g., the Indian Council of Arbitration) or be ad-hoc, where the parties and arbitrator(s) manage the process themselves.
Have a question? Check out the FAQ
Arbitration in India FAQ's
What is the arbitration system in India?
It is often used in commercial, civil, and international disputes. Unlike court proceedings, it is a private mechanism voluntarily chosen by the contracting parties, with the powers and functions of arbitrators being statutorily regulated under the Arbitration and Conciliation Act, 1996 (amended in 2015,2019 and 2021).
What is the Arbitration Act of India?
[16th August, 1996.] An Act to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards as also to define the law relating to conciliation and for matters connected therewith or incidental thereto.
What are two types of arbitration?
There are two different types of arbitration, institutional and ad hoc, the essential features of each are set out below:
- Institutional Arbitration
- Ad Hoc Arbitration
Who can be an arbitrator in India?
In India, any natural person who is of legal age and sound mind can be appointed as an arbitrator, provided they are not disqualified by law. While there are no strict, mandatory qualifications, parties often seek arbitrators with relevant expertise and experience in the subject matter of the dispute.
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