Arbitration Mechanism at National and International Level: An Overview, By Kartikeya Hundet, At LexCliq

A country like India, with a population of around 1.38 billion, left only china above it in the world. This huge population in a society leads to more disputes between peoples as they file cases in court to resolve those disputes. However, the court is not in a position to settle all the issues on time. As a result, over the past few years, it can be seen in a gradual rise in pending court cases, straining the countries already overburdened judicial system. This is indicated towards a new approach for an alternative dispute resolution (ADR) process as an Arbitration mechanism. The Arbitration mechanism has a huge impact on the Indian economy and speedy resolution of the dispute.

The need for a new approach not only helps in speeding up the dispute resolution but also helps in having a strong in-country mechanism for out of court dispute resolution. The mechanism of ADR is practiced in the forms of arbitration, negotiation, conciliation, mediation and judicial settlement under section 89[1] of the code of civil procedure,1908. Broadly, in the arbitration process, appoint an independent person to act as arbitrator hears evidence and makes a decision. Arbitration is much similar to the court process, where both parties provide testimony and given evidence, as in a trial. However, it is usually less formal in comparison to the court proceeding. Therefore, to understand the actual benefits provides by this mode of dispute resolution in India.

Arbitration is a method used for settling a dispute without following the formal civil procedure in a court and even not going to court. Arbitration only comes into the picture when two parties agree to insert a written arbitration clause in the contract or sign an arbitration agreement to arbitrate a dispute, either before or after a legal dispute comes up between them. The importance of having a written arbitration agreement was held by the court, the arbitration clause, which is a part of the contract, was in writing, the same legal status could not be given to any oral demand or agreement[2]

The dispute resolution in arbitration follows the similar procedure of civil court trial. However, the parties have some rights such as:

  •   Both the parties have the right to choose any person as arbitrator (judge) as per rule lead under the law.
  •   The parties have the right to decide on the place of the seat as well as the date and time for further proceeding.
  •   The parties have the right to fix their own set of rules for the proceeding of the arbitration.

The concept of international arbitration law is mentioned in part II of the Act. Basically, international arbitration places can be either within India or outside India. The main element is that either the parties or the subject matter to the dispute are relating to foreign origin. The international arbitration is conducted in a place outside the territory of India and the final award shall be enforced as a foreign award. The parties in the international arbitration process can select for any international institution center or arbitral institution to administer without prejudice and follows the rule of institutional arbitration.

Some of the leading institutions which provide world-class international arbitration center are as below:

  1. Australian Centre for International Commercial Arbitration (ACICA) – this center was founded in 1985, ACICA is the leading body in Australia which manages both international and domestic arbitration cases. It is located in Melbourne.
  2. American Arbitration Association (AAA) \ International Centre for Dispute Resolution (ICDR)- Founded in 1926, the AAA is the main body for the administration of domestic arbitration cases in the U.S., and it is the leading arbitral institution in North America. The AAA also manages international arbitration cases through its International Centre for Dispute Resolution (ICDR).
  3. International Chamber of Commerce (ICC)- the center was founded in 1923 and seated in Paris, it is considered as one of the leading and most renowned institutions for the administration of the international commercial arbitration cases in France, as well as covered various cases all-around Europe. The chamber follows the regulation on the multilateral treaty on the international arbitration form the New York Convention.


[1] Section 89 Settlement of disputes outside the Court of the civil procedure code, 1908

[2] Boon Foods Pvt Ltd v. Mindscape One Marketing Pvt Ltd O.M.P. (COMM) 136/2017

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