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Arbitration – A brief snapshot

Arbitration was conceived as an alternate dispute redressal mechanism to lengthy court procedures. Civil suits in India have always been a time consuming affair, particularly in some jurisdictions. Arbitration has been looked at as a better alternative to resolve such disputes, especially in technical matters where expert arbitrators are required.

However, over a period of time Arbitration became a costlier affair, following lengthy processes with hardly any speedy redressal, and corporate battles of large MNCs. This defeated the main objective of Arbitration as an effective, alternative dispute resolution mechanism.

But welcome changes in the Arbitration Act in India have now again made it a speedy and hence affordable option, most preferable for commercial disputes and cross border transactions. It is now gaining popularity with local business deals and contracts as well.

Arbitrators

There can be any number of arbitrators, though they must be odd in number. Generally retired judges, experienced senior lawyers, and other senior professionals like Chartered Accountants are appointed as arbitrators, but they may be appointed from any profession or may be any industry expert. Code of Civil Procedure or Evidence Act are not required to be followed. Arbitrators have to give a statement that they will be independent and impartial.

Arbitrators are masters of their own procedures and can frame the procedure the way they want. Arbitrators give a hearing to both the parties and give their judgment. The Arbitrators have to reason out the awards passed by them.

International Arbitration

In case of international commercial arbitration, parties are free to choose the governing law for the dispute matters. It may however be noted that Indian companies cannot ignore the Indian legislation and opt out for being governed by foreign law.

Parties need to be careful of the venue, also referred as Seat of Arbitration, especially in International Arbitration. It decides the role of local courts, enforceability of award and may have restrictions about procedure and treatment of witnesses or may have any other impact in line with the local customs.

A lot of Indian and cross border transactions opt for international Arbitration. One such preference is Arbitration in Singapore. It has a transparent process and gives cost estimate depending on the nature of claim and is being most preferred destination for Arbitration in recent times.

Observations

By and large, Arbitration is a non judicial process. However it is not uncommon that parties challenge arbitration, seek litigation, seek preliminary relief and a lot depends on the way the arbitration clause is worded. It is best to avoid any ambiguity and have clear guidelines agreed to and mentioned in the arbitration agreement.

This article is authored by Leena Makani, representing India Business Solutions (IBS) which is a boutique advisory firm helping a lot of Start ups, SMEs in India and Singapore in fulfilling their aspirations. Leena is a co-founder at IBS and can be reached on
leena@dmibs.in