June 13, 2023

Arbitration is the procedure wherein a dispute is submitted as per an agreement between the parties involved to one or more arbitrators. Such arbitrator/s makes a binding decision on the dispute submitted. The intention of choosing arbitration is to opt for a separate dispute resolution procedure instead of going to the court. Arbitration is most common in commercial disputes. International commercial transaction disputes and credit obligation disputes are usually resolved through arbitration. Labour, family, and consumer disputes are also frequently handled through arbitration. Certain disputes that arise between states or investors are best resolved with arbitration.

Arbitration is like a small-scale trial and can occur before the trial for a lawsuit, hoping that a resolution will be reached before the trial and negate the need for a full-scale trial.

These third-party deciders can assist save the courts from becoming overburdened with trials that don’t require a full court trial. When an arbitration clause is included in a contract, the decision might be seen as a legal judgement by filing a court petition. If one of the parties is unhappy with the verdict, they might appeal it on the grounds of severe unfairness, fraud, or conspiracy.

Some states require matters to be arbitrated by a third party. Primarily, it is governed by the Arbitration and Conciliation Act, 1996; however, for arbitrations commenced after 23 October 2015, the Arbitration Act as amended in 2015 will apply. There have been further amendments in the years 2019 and 2021. The Arbitration and Conciliation Act of 1996 replaced the erstwhile Arbitration and Conciliation Act of 1940.


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