Blog Details

Author - Advocate Amit Lathkar

Recently, while discussing a proposed litigation case, a client of mine casually asked me “Is there any way to save on the hefty legal fees and obviously… save on time?” A startup owner in his late 20s, he was clear about how to spend his valuable time and money.

“Of course there is… You can refer your case to an arbitrator” I said.

Poor chap, he didn’t have any idea about what I was saying. Not his fault. Many young chaps are usually unaware about the arbitration process and its benefits.

Arbitration is a dispute resolution process. In this process, your disputes are taken first to arbitrators, who give you a solution which is binding for you to follow. Sounds way similar to the judicial process? Wait, there’s a huge difference.

Arbitration is a private dispute resolution process. It focuses upon helping you in resolving your disputes. This option is often opted before going to the Courts for litigating. Obviously, you may have proper solutions and can save on hefty legal fees as well.

One of the crucial parts of arbitration is that this process is truly consensual. That means, arbitration can take place only if both the parties to the dispute have already agreed to choose this way to resolve their future probable disputes together. However, this method can also be mandated by an arbitration clause in a contract between the parties. If the arbitration clause is in its place, then one party can impose arbitration upon the other.

Arbitration is often used in commercial disputes; especially in international commercial transactions, for having timely and cost effective solutions. 

In the Indian context, arbitration can only take place with an agreement to that effect signed by the disputing parties. The Arbitration and Conciliation Act, 1996 is the key law which governs arbitration in India. 

This Act provides the process of arbitration proceedings which are as follows:

• Arbitration Clause: this is an agreement or a clause in the agreement which states that if a dispute arises between the parties, they will opt to resolve it through the arbitration process.
  
  

• Arbitration Notice: is sent for invoking the arbitration process between the parties. When the parties have chosen the arbitration route to dispute resolution in advance, the aggrieved party has to send the notice against the defaulting party.
  
  

• Appointment of Arbitration: both the parties together appoint the arbitrator or arbitrators, in the manner specified in the arbitration agreement or clause.
  
  

• Statement of Claim: a statement of claim is drafted which contains the dispute in question and the details of it along with the compensation claimed by the aggrieved party. A counter claim can be filed by the other party with a reply to the statement of claim.
  
  

• Hearing of the Parties: the arbitral tribunal will hear both sides and view the evidence
  
  

• Award: once the hearing is completed, the tribunal will pass a decision, which is known as ‘Award’ and is binding on both the parties. An appeal can be filed before the High Court against the arbitral award if either party is dissatisfied.
  
  

• Execution of Award: once the award has been passed by the tribunal, it must also be executed. The party in whose favor the award was passed has to file for execution of enforcement of award.

“So you see; the Arbitration process is opted by many today, due to the ease and affordability of the process.” I finished explaining what arbitration is, in short.

Now the client has a well defined arbitration clause in all of his agreements. And it helps him save both, time and money