Meaning of Arbitration and kinds of arbitration

Definition

Arbitration and Conciliation Act, 1996 don't have definition of what "Arbitration" is. However there is clause 2(1)(a) which states as follows:
"Arbitration" means any arbitration whether or not administered by permanent arbitral institution.
It merely states that it includes any arbitration by permanent bodies like XYZ Chamber of Commerce or arbitration by ad-hoc members.

Check out the starting of clause, "Arbitration mean any arbitration...", meaning we have to seek definition from somewhere else!

As we know, Arbitration and Conciliation Act, 1996 is based on UNCITRAL model arbitration and conciliation law. Sadly it doesn't have definition either!

We will put out two definitions, one is literal meaning and other by Halsbury (Law encyclopedia). In literal sense it means "settlement of differences and dispute, by a third person(Arbitrator) whose decision would be binding on parties to dispute". Decision of arbitrator would involve adjudication of rights and liabilities of parties.

As per Halsbury it is as follows:
"The reference of dispute or difference between not less than two parties, for determination, after hearing both sides in judicial manner, by a person or persons other than a court of competent jurisdiction"
 From above we can infer below things that would constitute an Arbitration

  • There is dispute between parties
  • Parties agreed to resolve by arbitration, than to typical court proceedings
  • Arbitrator, or third person who is to resolve arbitration will hear both sides and give a judgement.

 Kinds of Arbitration

Ad-hoc Arbitration

"Ad hoc" mean when necessary of needed. For example there is contract between A and B, and dispute arises between them. They want to resolve that particular dispute by Arbitration. Such arbitration is called ad-hoc arbitration.

Institutional Arbitration

In Mumbai there is an institution named as "Mumbai Center for International Arbitration". Similarly in London there is London Court of International Arbitration which is very old, reputed and famous. When there is an agreement between parties that in case of dispute they will settle it by arbitration AND they will go to particular institution(Mentioned above for eg.), then this would be institutional arbitration.

These institutions have their own set of rules and parties must adhere to those rules.

Contractual Arbitration

In commercial contracts generally, parties have arbitration clause wherein it is mentioned that for particular dispute, whether in past or present or future, they will go to arbitrator. This is for speedy resolution of dispute. Arbitration clause could also contain appointment of arbitrator etc.

Statutory Arbitration

In some cases law mandates that some disputes must go to arbitration. There could be provision in law for that dispute must be resolved by Arbitration. Here consent of parties is not mandatory, neither there should be any arbitration clause. 

Domestic Arbitration

When parties to dispute are all desi and subject matter of dispute is also desi. These types of arbitration is called as domestic arbitration.

International Arbitration.

Section 2(1)(f) defines "International Commercial Arbitration". When dispute is commercial in nature(Not necessary that it should be contractual), and one of the parties is
  1. Citizen of other country than India (Vijay Mallya For example)
  2. Company or corporation is formed in other Country
  3. Company or corporation whose central management is in other company
  4. Government of foreign country
In above case it will be international arbitration.

Foreign Arbitration

When place of arbitration is outside India, it will be called foreign arbitration. 






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