Assignment: 1

Appraisal of Arbitration
Arbitration:
It is a form of dispute resolution. Arbitration is the
private, judicial determination of a dispute, by an
independent third party. An arbitration hearing may
involve the use of an individual arbitrator or a tribunal. A
tribunal may consist of any number of arbitrators though
some legal systems insist on an odd number for obvious
reasons of wishing to avoid a tie. One and three are the
most common numbers of arbitrators. The disputing
parties hand over their power to decide the dispute to the
arbitrator(s). Arbitration and similar alternatives were
primarily designed to provide for a streamlined and cost-
conscious option to deal with a legal issue.
Types of Arbitration:

There are essentially two kinds of arbitration, ad hoc or
institutional. Institutional arbitrations are entrusted to
one of the major arbitration institutions to handle, while
ad hoc arbitrations are conducted independently and
without such an organization, according to the rules
specified by the parties and their attorneys.

Arbitration: The pros

1. Neutrality.

The parties to an international contract come from
different countries. Although these parties are sometimes
willing to agree that the courts of a specific country have
jurisdiction over a dispute, it is often difficult to agree on
which country: should it be the courts of one of the parties
and if so, which party?or should it be the courts of a
neutral country? The courts in any country have their
own formalities, their own rules, their own procedures.
Most of these formalities, rules and procedures are unique
to that jurisdiction. The courts in one partys jurisdiction
are necessarily foreign to any party that is not from that
jurisdiction.
Giving jurisdiction to the courts of a neutral country does
not improve the situation: after all, the courts will be
foreign to both parties. Regardless of how it is arranged,
any national court will be foreign to one or more of the
parties. A related problem is that in any legal system most
of the court formalities, rules and procedures have been
developed to deal primarily with domestic matters, not
international commercial or investment disputes.
2. Expertise of the arbitrators.

Arbitrators can be selected for their specific expertise.
This is important in disputes involving highly technical
matters for which specific technical knowledge,
qualifications and experience are required.

3. Finality of the award.

Subject to certain provisions of national law or a specific
agreement between the parties, an arbitral award is final:
it will not, as is the case with court judgments, be the first
step on an expensive ladder of appeals.


4. Enforceability.

The judgment of a local court is enforceable only in that
country. In some instances, if that country is party to a
treaty for the reciprocal enforcement of court judgments,
the judgment is enforceable in other countries. However,
most countries are signatories only to a limited number of
such treaties.


Arbitration: The Cons

1. Delays and cost.

Arbitration parties are increasingly complaining about
delays, particularly at the beginning and end of the
arbitration. At the beginning, the complaint is that it takes
too long to constitute an arbitral tribunal and, thus, to
commence with the arbitration. At the end of the
arbitration, the complaint is that some arbitral tribunals
take too much time to make their award.

2. Limited powers.

In general, arbitrators have less power than a judge in a
court of law. For example, the power to enforce the
attendance of witnesses by ordering a fine or
imprisonment and the power to order the attachment of
assets or the funds in a bank account are powers held only
by the courts. No state is likely to grant these powers to a
private arbitral tribunal, however imminent and well
respected that arbitral tribunal may be.

3. Not suited for multi-party disputes.
Arbitration is conducted most easily when there are only
two parties involvedone as the claimant and the other as
the respondent. An arbitral tribunal has no power to
order someone who is not a party to the arbitration
agreement into arbitration against their will.


Arbitration in India:
The Indian law of arbitration is contained in the
Arbitration and Conciliation Act 1996
(Act).The Act is based on the 1985 UNCITRAL Model
Law on International Commercial Arbitration and the
UNCITRAL Arbitration Rules 1976. The Statement of
Objects and Reasons of the Act recognises that Indias
economic reforms will become effective only if the nations
dispute resolution provisions are in tune with
international regime.
Within and around Asia, India offers both the resources
and a venue for Arbitrations and dispute resolution
procedures and is dedicated in its mission to advancing
and supporting arbitration as a means of resolving
commercial disputes. With a sophisticated and well placed
legal system, India is also a party to the New York
Convention (on enforcement of arbitration awards)
allowing arbitral awards to be enforced by the Courts in
almost any country around the world.

I nternational Commercial Arbitration:

International commercial arbitration (ICA) is the binding
resolution of the merits of business disputes between or
among transnational actors through the use of one or
more arbitrators rather than the courts.



Name: Manish Sharma
MBA
KI I T School of Management