What is Arbitration in a lawsuit?

What is Arbitration in a lawsuit?

05-Jul-2021 | Article by Legal White Official

The meaning of arbitration in the English language is the entire process of solving a dispute or a disagreement between two or more people with a solution acceptable to all. It is an effective way to resolve a contention without going to the court which under normal circumstances a lengthy and sometimes a painful process.

Arbitration is a form of Alternate Dispute Resolution (ADR) which provides dispute settlement option to the parties without going through the long court process. It is also worth mentioning that arbitration is a legal way of out of the court settlement in which all the disputing parties choose or are given one of more persons who acts as an “arbitrator” and whose decision is agreed by all. The arbitrator is generally an attorney/lawyer in the field of law. It must be noted that the decision is legally binding on the parties, however it may be challenged in higher court if there is a provision to do so.

Arbitration can be of two types, voluntary, wherein the disputing parties agrees on it, they also have to freedom to appoint an arbitrator themselves after mutually agreement or mandatory, as in some cases, the court or the law wants to decide the case through arbitration. The arbitrator or the party arbitrating should be neutral, however many evidences or procedures can be set aside in order to reach to a quick and acceptable resolution.

Arbitration has become the need of the hour because of technological advancement and globalization of businesses internationally where in the solution of the discord can be achieved quickly and off course without incurring huge cost over court procedure. It must also be noted that, court procedures have rules which needs to be followed, however parties can set up their own rules in arbitration. In contrast to the court hearing where there is no individual judge for a single case, single arbitrator is assigned for the entire process.

English Common law is the basis of the arbitration law in India. Arbitration and Conciliation Act 1996 governs and regulates the law in India which is based on UNCITRAL model law. The Arbitration and Conciliation Act was amended in 2015. The major amendment was to decrease the role of active judiciary courts and to give the decisions of the arbitrators more strength.

While talking about arbitration, it must be also stated that, there may be some disadvantages of it as well. One of the most important drawbacks is regarding the appeal rights in which, the arbitrator award is binding and final in most of the cases. There is very less opportunities for appeal against that order. It is quite natural for the arbitrator to make mistakes and it might cost dearly for the losing party. Apart from this, unlike in a court proceeding, additional parties must have to require an agreement to join the arbitration proceeding or must have a consent to join.

To Sum up, it must to admit that, arbitration is a better way of solving the dispute and the Indian Judiciary is also putting in a lot of effort to further simplify the process of Arbitration.

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