Which Types Of Disputes Are Typically Referred To Arbitration
- lead india
- Aug 7, 2025
- 4 min read
Arbitration can be conducted ad hoc, with parties agreeing on the rules and processes themselves, or through recognized arbitration organizations, which provide both rules and administrative support. Arbitration is now commonly employed in commercial disputes, labor conflicts, and international problems because it offers a more flexible and discreet alternative to litigation. Arbitration judgments are typically final and can only be appealed in extremely narrow circumstances.
The arbitration process is fairly similar to the litigation and court arrangements. It has a judge known as an 'arbitrator,' hearings and evidence, and so on. The difference is that it is a private conflict settlement process in which both parties choose the rules and appoint their own judge. The parties in disagreement select a neutral third party, known as an arbitrator, who then makes a decision between them. The process is rather flexible, and the parties may choose to ignore the intricacies of judicial processes. The arbitral tribunal's decision is referred to as an "award" and is considered to have the same effect as a court ruling. It is also worth noting that the Arbitration and Conciliation Act of 1996 governs arbitration in India.
Which types of disputes are referred to Arbitration
Arbitration can be used to resolve almost all civil disputes, with the exception of probate, child custody, family court disputes, and tax and revenue matters. In some ways, most issues involving rights in personam are arbitrable, whereas disputes concerning rights in rem are beyond the scope of arbitration.
Disputes within arbitration include joint ventures, construction projects, partnership differences, intellectual rights, and personal injuries involving product liability, professional liabilities, real estate securities, contract interpretation and performance, banking and non-banking, and insurance transaction claims.
Procedure of Arbitration Proceeding
Arbitration normally begins with a contractual agreement between parties, which can be found in a section of a larger contract. The clause states that if a dispute arises over the contract, it will be resolved by arbitration rather than litigation.
When a dispute emerges, the parties must decide on an arbitrator or panel of arbitrators. It could be a single arbitrator chosen by both parties or a panel of arbitrators, with each party nominating one arbitrator and the arbitrators appointing a third neutral arbitrator.
Although arbitration proceedings are less formal than court trials, they nonetheless allow both parties to present their claims, call witnesses, and argue their points. The arbitrator will serve as a judge, considering the evidence and arguments presented before him.
After hearing the facts and arguments, the arbitrators reach a conclusion, which is referred to as an arbitration award. The arbitration ruling is usually binding and enforceable, which means that both parties are legally obligated by the outcome.
Case Laws
Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. (2011), 5 SCC 532: The Supreme Court explained that actions in rem are not covered by the Arbitrability clause since they exclusively deal with property and status against the world, but actions in personam deal with individual rights and obligations. The Court also ruled that criminal offences, matrimonial disputes, guardianship, insolvency and winding-up matters, testamentary matters, and eviction or tenancy matters covered by special statutes cannot be arbitrated.
Benefits of Arbitration
Arbitration is primarily chosen because it is thought to be less expensive than litigation. However, the costs of arbitrations might vary depending on criteria such as the complexity of a case, the number of arbitrators, and the arbitration organisation chosen to manage the procedures.
In most cases, arbitration rulings are final and binding, but there may be limited grounds for appeal. Finality is one of the costs associated with the efficiency and cost-effectiveness of arbitration.
Typically, arbitration proceedings are private and confidential. In contrast, most court procedures are open to the public. This means that those who wish to protect secret information can keep it out of the public realm.
Parties to a contract can frequently choose the governing law and location for arbitration, which is advantageous in international disputes when parties may be from different legal jurisdiction.
Arbitration is typically speedier than regular litigation because it involves less procedural formalities. Parties can reach an agreement on a variety of components of the arbitration process, such as arbitrator selection, location, and arbitration rules.
In general, arbitration offers parties a flexible and private way to resolve disputes outside of typical court proceedings, with its own set of advantages and disadvantages.
Although India's legal system generally favours arbitration, some issues are deemed non-arbitrable due to the nature of the dispute or particular statute requirements. Court interpretations have substantially affected the concept of non-arbitrability, making it critical to assess arbitrability before beginning arbitration proceedings. The idea of arbitrability is intended to define the scope of its application in order to ensure that parties who sign into arbitration agreements can resolve their disputes effectively and legally. Understanding these nuances allows parties to correctly write arbitration agreements, ensuring the enforceability of arbitration outcomes in India.
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