Arbitration in India: Meaning and Scope

The Arbitration and Conciliation Act, 1996 codified, strengthened, and authorized the earlier arbitration−related laws in India, including the Foreign Awards Act, 1961; the Arbitration Act, 1940; and the Arbitration Act, 1937. The UNCITRAL Model Law on International Commercial Arbitration and the UNCITRAL Conciliation Rules serve as additional sources of authority for this law. It consolidates and oversees the legislation governing domestic arbitration, arbitration for business disputes, and the recognition and execution of foreign arbitral rulings. Additionally, it outlines the conciliation−related laws.

What is Arbitration?

Arbitration is an alternative mode of dispute resolution, which usually formed outside the court. Under such arrangement, parties (in dispute) at their will and convenience choose the arbitrator/s and collectively decide the place and date of arbitration to resolve their dispute.

Types of Arbitration Proceedings

Following are the major types of Arbitration −

Domestic Arbitration: Indian law is applied when issues are brought before an Indian court. The parties to domestic arbitration should be of Indian descent or nationality.

Institutional Arbitration: In this type of arbitration, an institution aids the parties in determining the arbitration process. The search institution handles procedures, including appointing an arbitrator, setting a timetable to file the paperwork, etc. Institutional arbitration lessens the parties' workload by providing them with administrative support. This immediate support helps speed up the process.

Statutory Arbitration: Arbitration is allowed by law in particular situations, and this is known as statutory arbitration. Part I of the Arbitration Act's provisions shall take precedence over any other Act in the event of a conflict.

Ad hoc Arbitration: Ad hoc arbitration refers to a proceeding in which the parties reach a decision independently of the arbitral tribunal.

Flip Flop Arbitration: Arbitration on the flip−flop is also known as pendulum arbitration. In this style of arbitration, the parties prepare the cases in advance and then ask the arbitrator to choose between the two possibilities.

The Arbitral Council of India

The following people must be on the council −

  • A former judge of the Supreme Court or High Court, the Chief Justice of the High Court or a judge of the High Court, or an accomplished individual with the necessary expertise and experience in the administration of arbitration to serve as the central government's Chairperson in consultation with the Chief Justice of India.

  • A practitioner of institutional arbitration should be knowledgeable and experienced in both local and international arbitration. The searcher will be chosen by the members of the central government.

  • In consultation with a chair member, an academic with sufficient expertise in arbitration and alternative dispute resolution laws shall be nominated.

  • government of India secretary working in the ministry of law and justice's department of legal affairs, or a substitute holding the rank of joint secretary−member, ex officio.

  • The central government part−time member will select a representative of a recognized business and industry organization on a rotating basis.

  • Ex Officio a Joint Secretary−Member of the Government of India's Department of Expenditure, the Minister of Finance, or a person authorized by him.

Arbitration Procedures in India

Arbitration is used when there is a dispute between two parties. To begin an arbitration process, an arbitration clause in the parties' contract is required. The procedure is carried out in the way described below.

  • A contract or other agreement that both parties have signed must include an arbitration clause in order to have the dispute arbitrated. A separate agreement or a contract in arbitration can both contain arbitration clauses. The party must also state the location of the arbitration clause's hearings.

  • Claim and defence statement− Section 23 of the Act governs this clause. An arbitrator is chosen after both parties accept the arbitration process. The claimant creates a statement of claims that includes all the facts and supporting documentation they believe are pertinent to the situation.

  • The arbitrators and arbitral tribunal hear about the disputes between the parties and review the written procedures. The tribunals then evaluate if the data or proof offered by the claimants is reliable or not, and the case is continued. This is covered by Section 24.

  • Arbitral award − The arbitrator makes a decision following the hearing and examination. Both parties must abide by and accept this. The parties can appeal the arbitral decision in court, but they cannot do so before the arbitral tribunals. This clause is contained in Section 31.

  • Enforcement of arbitral award − The award must be carried out after the arbitrator makes it. Sections 35 and 36 contain this provision.


In India, arbitration has considerably increased. In order to resolve conflicts outside of court, civilians now also add arbitration clauses to their agreements and contracts. There are, nevertheless, some judgments and rules that are not clear. India's inhabitants must be informed of these acts to effectively settle a dispute. It is crucial since many people lack the financial means to pursue legal action. The matters are resolved without favoritism or advantage right away.

Frequently Asked Questions

Q. What do you understand by the term "arbitration"?

Arbitration is a mode of dispute resolution, which is formed outside the court. In this mode of dispute resolution, parties have number of privilege that usually not available in litigation mode of dispute resolution. In arbitration, a third party that the parties have agreed upon provides a quote to resolve the conflict between the two. The prevailing consensus is that litigation is expensive, time−consuming, and lengthy. On the contrary, the arbitration is simpler choice.

Q. What do you understand by the term "conciliation"?

It is a process where a neutral third party helps disputing parties come to a mutually agreeable resolution. This authority is delegated to a conciliation officer. He could express his point of view on the conflict and contribute to the resolution. In other words, the agreement is a sign of the parties' willingness to compromise.

Q. Can an aggrieved party go to court once the arbitration award is pronounced?

Once the arbitration process is completed and the award (the arbitral tribunal’s final decision or judgement is technically known as an award) is pronounced, then such an award is binding upon the parties. However, an unsatisfied party can approach the High Court against such an award.

Q. Is arbitration better than litigation?

Prima facie, litigation and arbitration are both distinctive and the best modes of dispute resolution systems in their own place. However, if we discuss the criminal cases, then there is no scope for arbitration. For criminal matters, only choice is litigation. And, for civil matters, parties have both choices. Here, depending upon the urgency, agreements’ clauses, and jurisdiction, arbitration is normally a better choice. Through arbitration, matters can be resolved swiftly and at the convenience of parties in terms of the date of hearing, place of hearing, choice of arbitrator, time of hearing, and on top of this, the arbitrators’ negotiable fees.

Updated on: 13-Dec-2022

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