ARBITRATION: – A Boon or Bane

ARBITRATION: – A Boon or Bane


Arbitration is an effective alternative dispute resolution to resolve disputes outside the Court. There is no jury or judge, rather, just an Arbitrator who listen both the parties and decides the matter by pronouncing Arbitration Award. Arbitration Law in India is governed by the Arbitration and Conciliation Act 1996. In this, the parties by mutual consent choose arbitration route rather than approaching Court of law to resolve their disputes. The reason behind the evolution of arbitration is to minimize the burden from the Court of law and provide speedy remedy to the parties.



Any commercial matter if it relates to a contract can be referred to Arbitration. However certain matters viz., matrimonial matters, criminal proceedings, insolvency matters anti-competition are not referred to arbitration. Generally, matters covered by statutory reliefs through statutory tribunals would be non-arbitrable. Similarly, matters involving criminal question or questions of public interest cannot be resolved by Arbitration.



Arbitration is preferred over traditional litigation due to the following reasons:-

  • Minimal intervention or role of Court: One of the foremost features of the Act is that the role of the Court has been minimized. It is provided that any matter before a judicial authority containing an arbitration agreement shall be referred to arbitration. However, it provides for specific situations where courts can intervene in the arbitration proceeding, which includes:-
  • appointment of an arbitrator (when both the parties does not agree for a common Arbitrator);
  • termination of the mandate of an arbitrator or the panel,
  • appeals against the orders passed by arbitrator;
  • Expertise: The parties have the freedom to choose any person, regardless of any qualification, as the Arbitrator. But it is expected that the parties chose a person who possess requisite expertise to deal with the matter.
  • Privacy: The arbitration hearings are generally held in the private and hence the proceedings are always kept confidential.

Some Other benefits of Arbitration are:-

  1. Arbitrator is appointed through the consent of parties.
  2. Arbitration hearings are confidential and private.
  3. The procedures can be simplified according to the circumstances, without going into legal technicalities.
  4. Hearings are arranged at times and place to suit the parties.



  • Lack of Judicial Skill: The parties has to rely on the personal skill/ experience of the Arbitrator, rather than a Judicial Judge. At times, evidence are taken without following the proper process of law and thus adversely affecting the final decision.
  • Lack of transparency: Arbitration hearings are generally held in private rather than in an open courtroom, and decisions are usually not publicly accessible. However, this lack of transparency makes the process more likely to be tainted or biased, which is especially troublesome because arbitration decisions are so infrequently reviewed/reversed by the Courts.



The procedure for appointment of Arbitrator(s) is provided under Section 11 of the Arbitration and conciliation Act 1996. A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. The aforesaid section also deals with the contingency wherein the parties fail to appoint an arbitrator mutually. In such a situation, the appointment shall be made, upon request of a party, by the Supreme Court or any person or institution designated by such Court, in the case of an International Commercial arbitration or by High Court or any person or institution designated by such Court, in case of a domestic arbitration. 



Section 24 of the Arbitration and conciliation Act 1996 discusses the manner in which arbitral proceedings are to be conducted. In the absence of any prior agreement between the parties relating to this matter, the arbitral tribunal has the power to decide whether the proceedings shall be held orally or on the basis of documents and other materials.



Section 34 of the Arbitration Act, sets out the grounds on which the Court may set aside an Arbitral Award:

  1. a party to the arbitration was under some incapacity;
  2. the arbitration agreement was not valid under the law in force;
  3. the applicant party was not given proper notice of the appointment of an arbitrator or of the arbitration proceedings, or was otherwise unable to present his case;
  4. the composition of the tribunal or the procedure followed was different from that agreed by the parties or against the law;
  5. the subject matter of the dispute was incapable of resolution or settlement by arbitration under law for the time being in force; or
  6. the award conflicts with the public policy of India.



A common person is afraid of approaching Court of law because he does not understand the legal technicalities and also not sure as to how long it is going to take to get the justice. Arbitration is an answer to them because Arbitration Tribunal is not bound to follow the strict legal technicalities and the justice is delivered at your doorstep within minimum possible time. But the choice of the Arbitrator is crucial. He should be an independent personal, having requisite experience with judicial mind, who is acceptable to both the parties.

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