Types of arbitration and their importance Dear All, There are two types of Arbitration: In other words, under voluntary arbitration the parties to the dispute can and do they refer voluntarily and dispute to arbitration before it is referred for adjudication. The essential elements in voluntary arbitration are:
People are gradually distancing themselves from traditional court procedures and are opting for cost effective and expedient dispute resolution mechanisms like Arbitration.
In arbitration, parties to the dispute refer their disputes to an arbitrator or an arbitral institute and the decisions rendered by them are binding on the parties. Arbitration is distinct from litigation primarily because the parties to the dispute have the right to choose the arbitrator depending on the type of arbitration they opt eg: It is also pertinent to mention that India is a signatory to the New York convention, which facilitates the enforcement of international arbitral awards.
Before digging deeper about the types of arbitration, it is recommended that you have a quick look at our detailed article on All About Arbitration. As discussed in the article recommended, there are four different categories of arbitrations namely: Ad-hoc Arbitration Contractual Arbitration and Statutory Arbitration This article will focus on two of the commonly used categories of arbitration i.
Ad-hoc and Institutional Arbitrations. Ad-hoc Arbitration This refers to a type of arbitration where the procedures or all aspects related to the arbitration like seat of arbitration, number of arbitrators, governing law, language of arbitration, etc.
Ad-hoc arbitration unlike the institutional arbitration is not administered by institutions like FICCI, ICC, etc, but are agreed to and arranged by parties to the dispute themselves without resorting to any help from arbitral institutions. However, the parties to the dispute are not barred from adopting the rules of any particular arbitral institution even without submitting or referring their disputes to the said arbitral institution.
However, it can only be deemed flexible if the parties are cooperative and in consensus with each other with regards to the arbitration procedure. This form of arbitration is more cost effective than institutional arbitration.
The administrative costs incurred are lesser than institutional arbitration, the parties just need to pay the fees of the arbitrators, attorneys, etc. This type of arbitration can be an aid to people who are not economically sound. In ad hoc arbitration, parties to the dispute have the right to choose the seat of arbitration, which is not the case with arbitral institutes where arbitration is likely to be conducted within the institute premises.
Parties to the dispute have full control over the process, they can set their own rules, arbitration procedure, time frame, etc.
It is suitable for all claims whether big or small. It can be designed to cater to the needs of the parties involved. Disadvantages of Ad Hoc Arbitration The flexibility of the arbitration procedure is dependent on the willingness of the parties to cooperate with regard to the arbitration procedure.
Failure to cooperate would lead to delay and more time will be spent in resolving the issues between the parties. Delays and miscommunications may be caused if the parties to the dispute are of different nationalities. The parties may have to resort to litigation owing to misunderstandings or lack of cooperation between them or because of delay on the part of the arbitral tribunal.
This would dissolve the entire purpose of choosing arbitration for dispute resolution over long and vexatious court litigation. More often than not, parties choose arbitrators based on the firm belief and confidence they have in them and not just because of their expertise.
If incompetent arbitrators make their way into the dispute resolution mechanism, it would lead to further delay, which would inevitably lead to escalated fees and the parties would end up opting traditional court procedures.Aug 26, · Arbitration procedures at some forums can vary depending on the nature of the dispute.
Some forums, such as the American Arbitration Association, have a distinct arbitration procedure for consumer, labor, construction, and employment disputes.
An arbitration decision can be either binding or non-binding. If it is binding, the decision may be enforceable as a judgment of the court. In a binding arbitration, the decision made by the arbitrator is final.
Arbitration is typically triggered by a mandatory provision in a contract providing that any disputes arising from the parties’ agreement or transactions will be resolved through an arbitration proceeding.
Various types of contracts incorporate an arbitration clause, such as employee, business, and consumer contracts. A wide variety of processes, practices, and techniques fall within the definition of "alternative dispute resolution." Arbitration and mediation are the best known and most frequently used types of ADR, but not the only ones.
Jun 10, · Arbitration is a form of alternative dispute resolution (ADR) which allows disagreements between two parties to be resolved outside of the traditional court system. Types of arbitration and their importance Dear All, There are two types of Arbitration: 1.
Voluntary Arbitration 2.
Compulsory Arbitration Voluntary Arbitration is a binding, adversarial dispute resolution process in which the disputing parties choose one or more arbitrators to hear their dispute and to render a final decision or award after an .