Arbitration is a form of alternative dispute resolution (ADR) that resolves disputes outside the judiciary courts. The dispute will be decided by one or more persons (the 'arbitrators', 'arbiters' or 'arbitral tribunal'), which renders the 'arbitration award'. An arbitration decision or award is legally binding on both sides and enforceable in the courts, unless all parties stipulate that the arbitration process and decision are non-binding.

Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court.

Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transactions. In certain countries such as the United States, arbitration is also frequently employed in consumer and employment matters, where arbitration may be mandated by the terms of employment or commercial contracts and may include a waiver of the right to bring a class action claim. Mandatory consumer and employment arbitration should be distinguished from consensual arbitration, particularly commercial arbitration.

Arbitration is the buzz word in the present day business contracts. The law bestows 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 procedures of a court. The Act covers both Domestic and International Arbitration. This article deals primary with domestic elements which also govern key elements of International Arbitration.

 

Since the arbitrators cannot act ultra vires of their powers under the code, the act has established a higher authority to keep checks and balances on the practices of the ADR. The Courts have been defined in the act as they are required to performs several important functions for setting up this institution. The Court performs the Supervisory function as regards that arbitration. This supervisory function would include granting of interim measures, challenge to an arbitral tribunal, review of an award, and enforcement of awards, etc.

 

The Chart Below depicts which court will exercise original jurisdiction on the type of arbitration, post 2015 amendment.

 

An award is the passing of the conclusive reasoning to the questions, issues forming the disputes that are put forward before the arbitral tribunal to decipher. The award is passed after reasonable opportunity has been granted to all parties to present their case and produced the evidence.

 

An arbitral award is similar to a judgment given by a court of law. In other words, an arbitral award is given by the arbitral tribunal as a decision on various issues in a matter which the parties had placed before the arbitral tribunal. The awards are several types: Final Award – Interim Award and Settlement Award. A settlement award is reached by the consensus amongst the parties, hence the said award in non-appealable.

 

The Act provides for setting aside of an Arbitral Award by the Court. A comprehensive list of circumstances under which an Arbitral Award can be set aside by the Court and they are where the party is under some incapacity; Arbitration agreement between the parties is not valid; Lack of notice of appointment of arbitrator or of holding of arbitral proceeding; Arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration or it contains decisions on matters beyond the scope of submission of arbitration; Composition of arbitral tribunal or arbitral procedure was not in accordance with the agreement of the parties; The Court finds that the subject matter of the dispute is not capable of settlement by arbitration under the Law; and lastly, the Award is in conflict with the Public Policy. The unlikely challenges to be entertained by the courts are that the arbitral tribunal is favouring or is biased in favour of one of the parties. Such a challenge should be first at the first instance of its knowledge coming to the parties. The parties to the dispute may appeal to the court establishing vested interest of the arbitrator.