Have you ever found yourself caught in a disagreement, perhaps with a service provider, a business partner, or even within your family, and thought, “There must be a way to solve this without ending up in court”? Well, you’re in luck, because there is a way, and it’s called arbitration. Imagine you and a friend can’t decide which movie to watch. Instead of arguing for hours, you ask a third friend to decide for you. This is, in a very basic sense, what arbitration is all about. Arbitration or resolution of disputes remains an integral trait of human relationship since time immemorial as also integral to social and economic order which a society creates. So is dispute inherent in all social and commercial relationships which a social order governs. Resolution of disputes is basic characteristic and perhaps the first option an ordered society looks upon.

Introduction to Arbitration

Arbitration is a method of resolving disputes outside the courts. The parties involved in a disagreement agree to have one or more persons (the arbitrators) make a decision on the dispute after hearing both sides. It’s like having a private judge, but more flexible and often less formal. Alternate dispute resolution mechanisms seek to draw litigants away from the web of conventional litigation in Courts. The manner in which arbitration is structured and implemented determines how effective it is in presenting an alternative to litigation.

Arbitration is an alternative dispute resolution for resolving disputes. Justice Romily in Collins u Collins[1], defines Arbitration as a reference to the decision of one or more persons of a particular matter in difference between the parties. In the broader sense, arbitration is the substitution, by the consent of the parties, for the Tribunal to be provided by the ordinary process of law; a domestic tribunal- as contra distinguished from a regularly organised court proceeding according to the course of law- depending upon the voluntary act of the parties disputant in the selection of judges of their own choice. Its objective is the final disposal in a speedy and inexpensive way of the matters involved so that they may not become the subject of future litigation between the parties. Arbitration is “a procedure to determine the legal rights and obligations of the parties judicially, with binding effects, which is enforceable in law, thus, reflecting in private proceedings the role of a civil court of law.”[2]

In simple words, Arbitration is that limb of alternative dispute resolution, which the contracting parties voluntarily chose at the time of entering into the Contract and agree to submit their dispute to one or more arbitrators, who make a binding decision on the dispute.

For choosing Arbitration as a mode of dispute resolution, instead of Court Litigation, the parties need to agree on an Arbitration Agreement executed between them, to refer their disputes to Arbitration, either pending or in the future.

Among the drawbacks of litigation is that parties are bound by the rigours of procedural law. Many of the rigours of litigation cause inordinate delay in the conclusion of proceedings and result in increased costs and unpredictability. Arbitration must fulfil its mandate by remedying the problems which beset more conventional forms of dispute resolution. Judges, lawyers, arbitrators and academicians must ensure that arbitration does not become a well packaged replica of litigation.

Arbitration is viewed as the best mechanism of dispute resolution on complex issues interlacing law and science and technology that require expert opinion and speedy adjudication. Commercial dispute resolution has evolved in its application before arbitral tribunals. Arbitration as a form of dispute resolution is sought after not only because of the procedural advantages it holds over traditional litigation but because it fosters better substantive outcomes for the parties.

How Does Arbitration Work?

The process starts when the parties agree to arbitration, usually through a clause in a contract or by a separate agreement. They then select an arbitrator, set the rules for the arbitration process, and present their cases. The arbitrator listens and then makes a decision, which can be binding or non-binding, depending on the initial agreement. The Arbitration proceeding’s journey toward resolving a dispute through arbitration introduces a variety of awards, such as interim, partial, final, default, additional, consent, and performance awards. Each of these awards plays a crucial role in the arbitration process, from providing temporary relief and addressing specific issues early on, to concluding the dispute entirely or enforcing agreed-upon settlements.

Types of Arbitration

• Commercial Arbitration: Used for business disputes.
• International Arbitration: For disputes between parties from different countries.
• Labor Arbitration: Focuses on employment disputes.

Benefits of Arbitration

• Speed: It’s typically faster than going to court.
• Cost: Often less expensive than litigation.
• Privacy: Arbitration proceedings are private.
• Expertise: Arbitrators can be chosen for their specific knowledge.

The Arbitration Process

This process involves several steps, including the selection of the arbitrator, the submission of statements by the parties, the arbitration hearing, and finally, the arbitrator’s decision.

Choosing an Arbitrator

Selecting an impartial and knowledgeable arbitrator is crucial. This person should have expertise in the subject matter of the dispute.

Arbitration vs. Litigation

Unlike litigation, arbitration is less formal, can be faster, and is not public. However, arbitration decisions are final and binding with limited grounds for appeal.

The Role of Law in Arbitration

Arbitration is governed by both the law of the place where the arbitration is held and any agreed-upon rules or procedures.

Preparing for Arbitration

Preparation includes gathering evidence, preparing statements, and understanding the arbitration agreement and process.

Common Misconceptions About Arbitration

Many believe arbitration always favors big businesses or that it’s as costly as litigation, which is not always true.

The Future of Arbitration

With the rise of global business and the need for efficient dispute resolution, arbitration is becoming increasingly popular.

How to Find an Arbitrator

Options include professional organizations, arbitration institutions, or referrals from legal professionals.

Costs Associated with Arbitration

Costs can vary based on the arbitrator’s fees, the complexity of the case, and the length of the process.

Arbitration Agreements

An arbitration agreement is a key document that outlines the process and any specific terms agreed upon by the parties.

Conclusion

Arbitration offers a flexible, efficient, and private way to resolve disputes. Whether you’re a business owner, an employee, or just someone trying to settle a disagreement, understanding arbitration can empower you to choose a path that avoids the complexity and formality of court proceedings.

FAQs About Arbitration

1. Is an arbitration decision final?
Yes, arbitration decisions are generally final and binding, with limited opportunities for appeal.
2. Can any dispute be resolved through arbitration?
While many disputes can be resolved through arbitration, there are exceptions, such as certain criminal matters and family law issues.
3. How long does arbitration take?
The duration of arbitration can vary, but it is generally faster than court litigation, often taking a few months.
4. Is arbitration expensive?
Arbitration can be less expensive than court litigation, but costs vary depending on the complexity of the case and the arbitrator’s fees.
5. Can I choose the arbitrator?
Yes, the parties involved in arbitration usually have a say in selecting the arbitrator, either directly or by specifying the criteria for selection.

References:

[1] 28 LJ Ch 186

[2] O’Callaghan v Coral Racing Ltd. (1998) All ER (D) 607