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Arbitration and its Type

Arbitration is one of the methods of Alternative Dispute Resolution where the parties of dispute instead of approaching the court take the disagreement to a neutral third party (arbitrator) who after hearing both parties pronounces an arbitral award which has a binding effect similar to that of the judgement passed by a court.

There are various kinds of arbitration depending upon various factors. Some of them are discussed below:

  • Domestic arbitration:

As the name suggest, those arbitrations which are held on Indian soil, where the parties to the dispute and the bone of contention comes within the Indian jurisdiction, and the laws applied are Indian in nature, are called as Domestic Arbitration.

  • International Arbitration:

International arbitrations are those arbitrations whose procedure is held somewhere outside the boundaries of India. Generally, one of the parties to the dispute are not of indian origin or the subject matter of dispute has some foreign element. The laws are applied of the country which are either decided upon by parties in the contract or are reflected in the facts and circumstances of the dispute.

  • International Commercial Arbitration:

The following type of arbitration has been discussed in the Sec. 2(1)(f) of the Arbitration and Conciliation Act, 1996. According to the given section, any dispute between two or more parties is treated as International Commercial Arbitration if it comes under the area of commercial according to any law in force in India. It is also necessary that one of the party to the dispute must either be:

  1. An individual with any other nationality than Indian
  2. A corporate body having relation with any foreign territory
  3. A company or any other association or organisation that has its control unit outside India
  4. Government of some other country
  • Institutional Arbitration:

In some cases, the parties of dispute may approach a particular institution who have trained arbitrators and defined set of rules and laws related to the arbitration procedure. Section 2(6) of the Arbitration and Conciliation Act, 1996 states that the parties are free to approach any association or institution to solve their issue.There are many institutions in India and internationally that are recognized worldwide for providing excellent arbitrating services.

  • Ad-Hoc Arbitration:

When the parties decide not to refer their issue to a particular arbitral institute instead approach a private individual, it is termed as Ad-Hoc Arbitration. The rules relating to Ad-Hoc Arbitration depend on the laws of that nation as well on the parties who agrees to the same. It is more flexible in nature to the parties. thus, in Ad-Hoc arbitration parties themselves make an arrangement on rules applied at the person arbitrating without any role of an Arbitral Institution.

  • Statutory Arbitration:

An arbitration where parties are mandated to solve their dispute through Arbitration by any special law in force, then such an arbitration is called a statutory arbitration. There are various acts and provisions in Indian law that provide for statutory arbitration. For Example, any dispute arising out of the jurisdiction of the Defence of India Act, 1971, the parties are forced to settle through arbitration instead of approaching a court.

  • definition of arbitration
  • kinds of arbitration
  • detail explanation

BY : Kopal Bansal

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