Overview of the types of arbitration in India

There are 4 major types of arbitration in India:- 

Institutional Arbitration

A specialized institution takes over the process of arbitration and the role of an arbitrator. Every institution is governed by its own set of rules and framework.  This framework can include rules pertaining to the appointment of the arbitrator, filing of documents and procedures for making applications among other rules. There exists a separate and customized form of administration for institutionalized arbitration. The most significant advantage that an institutionalized arbitration serves is the assistance given by its administrative setup helps in processing the stages of arbitration in a time-bound manner. However, the institution generally charges a certain percentage of the claimed amount as their fee. An example of institutionalized arbitration is Hong Kong International Arbitration Centre (HKIAC), International Chamber of Commerce (ICC) etc. If the  

Ad Hoc Arbitration

An ad hoc arbitration is not governed by any institutional process. In an ad hoc style of arbitration, the parties have the full autonomy to decide the attributes of the arbitration between them. These attributes may include aspects like appointing the arbitrator, rules that are applicable between for the arbitration proceedings, filing of documents etc. If the parties approach the idea of arbitration with an open mind and cooperate, ad hoc arbitration can prove to be quicker and faster.  It can also be cheaper as compared to Institutional Arbitration due to the fact that there is no administrative fee that is being charged. Although ad hoc arbitration provides a great deal of autonomy to the parties, there might be a situation disagreement between the parties. Some of these situations can be negated by agreeing to the use of arbitration rules. On fixing the type of applicable rules and procedure, the time spent in deliberation can be reduced and thereby cost or legal fee can also be reduced. 

An example of such rules of the framework that can be adopted by the parties in an ad hoc arbitration set up is the United Nations Commission on International Trade Law Arbitration Rules (UNICITRAL). 

Consult a lawyer now

Domestic Arbitration 

In domestic arbitration, the arbitration proceedings take place in India, the subject matter of the dispute and the facts of the disputes all arise in India and are governed by India Law or when the parties are subject to the jurisdiction of Indian Law. Domestic Arbitration is governed by provisions of Part-I of the Arbitration and Conciliation Act. The applicability of Part-I to the International Commercial Arbitration is disputed. 

International Arbitration 

International Arbitration can take place either in India or outside India depending on the terms in the Arbitration agreement guiding the seat of Arbitration. However, it is essential that the Arbitration must have foreign elements to it which could range from the parties to the subject matter of the dispute.  The law that will be applicable to such arbitration could be with Indian law or any foreign law depending on the Arbitration Agreement and the applicable Conflict of Law rules. With the amendment in 1996, the definition of international arbitration in the Arbitration and Conciliation Act was amended. 

What are the advantages of arbitration over litigation?

There are several advantages of arbitration over litigation which are mentioned as follows:-

Arbitration saves time: Approaching the dispute resolution with the help of arbitration saves considerable time as the clients do not have to wait for the dates like they have to do in the case of court facilitated adjudication. Additionally, the process of arbitration does not have the provision of appealing and thus, once the award has been passed, it becomes final and binding. This again works towards saving the time of the parties. 

Flexibles rules: Unlike a traditional system of dispute resolution which is governed by rules of procedure and formalities, arbitration provides much more scope for experimenting with the rules of procedure that the parties desire to apply upon mutual consent.  These rules of procedure would include the pre-stage hearing, document exchange, interrogation of witnesses and every other detail. All these details must be mandatorily included in the arbitration agreement. 

Get Legal Advice Now

Less expensive as compared to Litigation: Arbitration ends up being less costly as compared to litigation owing to the fact that the time period of the entire process is shortened as compared to a court adjudicated process. Additionally, in a trial through court, a lot of expenses have to be made at different stages of the trial that includes interrogation with the witnesses, depositions etc. 

Choice of Arbitrator: In a court driven adjudication, the parties do not have the choice to pick the judge or the jury. Additionally, the judges keep changing depending on the availability and that hampers with the delivery of judgment. However, during arbitration, the parties have the liberty to choose the arbitrator and this improves the quality of the process. 

Is arbitration better than going to court? 

Yes, arbitration is better than going to the court because it makes the process of dispute resolution quicker, smoother and saves time. Additionally, it gives the scope for choice of arbitrators to the clients and makes the process more efficient. 

What is the purpose of arbitration? 

The purpose of arbitration is to provide an alternative mode of dispute resolution to people who want to avoid the long struggle in Courts and quicken the process. Additionally, arbitration aloes help avoid souring of relations between parties and resolve the dispute amicably. 

Is binding arbitration fair?

The clause of binding arbitration is often incorporated in the consumer or employer-employee contract by the businesses and the employers as a mandatory process. By such incorporation, the employee or the consumer waives the right to sue or to participate in a class action sue. This ends up being beneficial to businesses but curtails the rights of the consumers or the workers and thus can end up being unfair to workers or consumers. However, these clauses are not illegal until the required underlying conditions are fulfilled. 

Is the decision of arbitrator final?

Yes, the arbitrator’s decision is final and binding and if the parties do not agree with the decision of the arbitrator or the Tribunal, they have the option to appeal in a Court of Law. 

The author of this blog is Adv. Sricharan Telaprolu having an experience of 19+ years in handling arbitration related matters from his experience he wants to share this beneficial information for the individuals having any issues with respect to arbitration related matters.

Lawtendo empanels more than 15000 domain expert legal advisors in 700+ districts in India. Be it drafting the contract to include an arbitration clause in it or be it drafting the statement of claims, or the statement of counterclaims/reply, Lawtendo provides at your fingertips an extensive list of experienced lawyers. Connect with us @+91 96716 33666 or at [email protected].