Process and Steps of Arbitration

In the year 1996, a law was passed which enabled the parties to avoid the litigation process in order to resolve the disputes. This law came to be known as Arbitration and Conciliation Act 1996. This law was amended in the year 2015. It is a fairly easy process in comparison to litigation and one doesn’t even require a lawyer to file for it. Most of the business disputes these days are being resolved by this process. In short, it enables the parties to appoint arbitrators among themselves to get a decision quickly. It also allows the parties to make rules for arbitration mutually which will be implemented in the arbitration process.

 The decisions made in the arbitrational tribunal doesn’t have to follow the guidelines of the court and at times the decisions are made in unorthodox ways. Mostly all the business contracts have a clause of arbitration so that any dispute arising between the parties can be fixed through arbitration. There are some steps to invoke arbitration in case of a dispute, these steps are listed below.

CLAUSE OF ARBITRATION – As mentioned above, the first step towards arbitration is getting an arbitration clause incorporated in the business contract. The clause may include the rules of arbitration. It may also list the number of arbitrators and some may even have a name of the arbitrators in case the dispute occurs. In case the companies could not decide on that.

ARBITRATION APPOINTMENT – Appointment of arbitrator is a very important process. It is fine If the arbitrator is already decided, otherwise the arbitrational tribunal can appoint the arbitrator for the disputing parties.

NOTICE OF ARBITRATION – According to the law, to start the arbitration process, one has to send a notice to the default party and that party has to reply to the notice within the specified time mentioned in the notice.

CLAIM SHEET – Claimant has to submit the statement of claim along with all the documents and evidences which supports the claim. The claim can also be amended in case both parties agree to it. The claim can also be changed in case the arbitrational tribunal points out inaccuracies in it.

HEARING OF THE CASE – Once the statement of the claim is submitted, the hearing starts and the tribunal hears both parties and analyse the evidences. This process can take place at a location which can be mutually agreed upon. Both the parties have to submit the arguments in written.

AWARD – Once the stage of hearing is complete, the tribunal gives the decision. This decision is commonly known as “arbitral award”. This award is final and binding on both parties. The award becomes most effective when actually resolves is the dispute. The award should also be very clear and the arbitrator should not be biased. There may be some possibility that it can be challenged in few specific cases.

EXECUTION OF THE AWARD – Once the award has been passed, it has to be enforced by the tribunal and it will be executed. The award holder has to wait for 90 days before they can intervene for the execution of the award. 90 days is a period which may be required to challenge the award in case it is eligible for the appeal.