Md. Syful Islam
Arbitration means the Settlement of a dispute by referring the dispute to a third party biding by his decision. Arbitration is less costly than a suit in a court of law. It is also more expeditious. Therefore, commercial contracts frequently contain a clause providing for a reference to arbitration in case of a dispute breaks out concerning any matter relating to the contract.
Definition:
Arbitration means the setting of a dispute without going to court but with the help of an imperial third party.
Different authorities have defined the term arbitration:
S.K. Roy Chowdhury– “Arbitration is a term derived from the nomenclature of the Roman law. It is an agreement for taking and abiding by the judgment of a selected person’s disputed matter instead of carrying it to the established court of justice.”
Halsbury’s Laws of England- “An arbitration is the reference of dispute or difference between not less than two parties, for determination, after hearing both sides in a judicial manner, by a person or persons other than a court of competent jurisdiction.”
Wharton’s law lexicon- “Arbitration is the determination of a matter in dispute by the judgment of one or more persons called arbitrators, who in case of difference usually call in an ‘umpire’ to decide between them. An arbitrator is a disinterested person to who judgment and decision matters dispute are referred.”
Concise Commercial Dictionary: “Arbitration is an alternative to litigation, parties to a dispute may be written agreement legal proceedings are instituted, they may be stayed by the court on the application of the defendant. One or more persons may be appointed be arbitrator, if two, there is usually an umpire. The decision of an arbitrator is called an award and is binding in the same manner as a decision of a court.”
M.C Kuchhal: “Arbitration is the settlement of disputes and differences relating to matters (e.g. money or property or breach of contract) between one party and another in a quasi-judicial manner. By the decision of one or more persons called arbitrators, appointed by the conducting parties, without having recourse to a court of law.”
Considering the above definitions, it may be concluded as thus: arbitrations means the settlement or determination of dispute or difference (present or future) between two more parties by the dispute to a third party and abide by his decision Arbitrations is an alternative dispute are usually referred to some disinterested and impartial persons (usually called arbitrator) whose decisions the parties to a dispute agree to abide by Thus, when the parties to a dispute decide to refer the matter under dispute to be settled by a third party not connected with the disputants, it is called arbitrations
Nature and scope of Arbitrations:
An agreement between two or more parties to be bound by the decision of a third party does always constitute an arbitration agreement. There are some elements in an arbitration which distinguish it from other modes of settlement of disputes, namely:
- a) There must be a dispute between the parties,
- b) The parties must submit or refer the dispute to a third party
- c) The parties must abide by the decision of the third party.
The intention of the parties, the subject matter of the dispute, the functions to be discharged by the person appointed, the nature of the decision and the manner in which it is to be arrived at are to be considered in order to determine whether it is arbitration or another method of settlement of dispute which is not arbitration.
The difference between an arbitration room and a court of Justice is that the former is tribunal chosen by the parties themselves. But the later is a forum over which the parties have no choice. A matter comes as adversely before an arbitrator as before any other tribunal or a court of justice.
The objects of Arbitration:
A dispute between the parties may be determined by the court through judicial process or by arbitration through a non-judicial process. The method setting disputes through the arbitration process has certain merits as compared to a suit in a court of law. Thus, the objects are:
- Avoiding the cost and delay of court proceedings and coping with court overcrowding.
- Improving access to justice
- Offering more effective or efficient methods of dispute resolution
- Offering the public more chance to be involved in dispute resolution.
Modes of reference to be Arbitration:
A reference or submission to arbitration may be made in one of the following three ways-
- a) Arbitration under the order or through the intervention of the court when a suit is pending invoked by a joint petition of both the parties.
- b) By the operation of law.
- c) Arbitration by the agreement between the parties without the intervention of the court.
Arbitration through the court’s intervention:
Where there is an agreement, the parties have the option to proceed with the arbitration independently of any court or proceed with the arbitration under the supervision of the court. The latter course is usually adopted where difference regarding the actual jurisdiction of the arbitration agreement arises between the parties, e.g. one of the parties holds the view that a particular matter of dispute cannot be referred to arbitration as per the agreement, while the other party differs.
Arbitration through the intervention of the court takes place in two cases:
- a) Where there is no suit pending,
- b) Where there is a suit pending,
Arbitration by the operation of law:
Statutes or Acts of Parliament make it compulsory to refer disputes to arbitration and provide for the settlement of disputes arising out of their provision by arbitration. This type of arbitration is known as statutory arbitration. The procedure relating to such arbitration generally laid down by this Acts which enjoin such arbitration. Where, however, the A concerned is silent as to the whole or part of the procedure, the relevant provision of Arbitration Act 2001 shall apply. The rule is the same in the subcontinent and in English law.
Arbitration by agreement between the parties without the court’s intervention:
It is the usual mode of arbitration as in vogue from the historical antiquity. In this mode, the arbitration proceedings proceed up to the stages of making the ‘award’ by the mode the arbitrators without the intervention of the court. A reference by agreement of the parties must originate in an arbitration agreement. Such an agreement may be made verbally or in writ The English Arbitration Act 1996 and our Arbitration Act 2001 Apply only to written agreements. An award made by the arbitration amounts to a settlement of the dispute by mutual agreement and becomes binding on all the parties to the arbitration agreement. But the parties are not bound to be abiding by the decision of arbitration proceedings. It’s a quasi-judicial proceeding performed in a judicial manner. The dissenting party may go to the court for the determination of the dispute.
Matters which can be referred to arbitration:
Generally Speaking, all matters in dispute which can be divided by civil courts may be referred to arbitration unless prohibited by any legislation or law that in force. Thus, a dispute relating to matters which are purely criminal in nature cannot be referred to arbitration. However, the fowling matters can be referred to arbitration. Namely.
- Matters of Civil Matters .e.g. dispute about property or money, breach of contract, etc.
- Matters of relating to personal rights between the parties, e.g. question of marriage, maintenance, Separation between husband and wife, etc.
- A dispute regarding dignity and respect.
Matters which cannot be referred to arbitration:
The following Matters cannot be referred to arbitration: namely
- Matrimonial Matters like divorce or restitution of conjugal life.
- Testamentary matters like the validity of a will.
- Insolvency Matters.
- Matters relating to the guardianship of a minor or lunatic person etc.
- Criminal matters where a person is guilty of a guilty of an offense or not, cannot be decided by arbitration.
Conclusion:
Generally speaking, by their nature, arbitration proceedings tend not to be subject to appeal, in the ordinary sense of the word. However, in most countries, the court maintains a supervisory role to set aside awards in extreme cases, such as fraud or in the case of some serious legal irregularity on the part of the tribunal. Only domestic arbitral awards (i.e. those where the seat of arbitration is located in the same state as the court seat) are subject to set aside procedure.
References:
- Mercantile low by Me knchal
- Commercial law by Sen and mitra
- The Arbitration Act, 2001
- R David, Arbitration in International trade (1985)
- Gary Born International Commercial Arbitration