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ARBITRATION Powered By Docstoc


•Arbitration, a form of alternative dispute resolution (ADR),
is a legal technique for the resolution of disputes outside
the courts, where the parties to a dispute refer it to one or
more persons (the "arbitrators", "arbiters" or "arbitral
tribunal"), by whose decision (the "award") they agree to be
      It is a settlement technique in which a third party
reviews the case and imposes a decision that is legally
binding for both sides.

•Arbitration can be either voluntary or mandatory
(although mandatory arbitration can only come from a
statute or from a contract that is voluntarily entered into,
where the parties agree to hold all disputes to arbitration,
without knowing, specifically, what disputes will ever occur)
and can be either binding or non-binding.

The following are said to be advantages of arbitration over
court litigation:
A. Speedier resolution; however, there can be exceptions
due to multiple parties, arbitrators, lawyers and litigation
B. Less costly; however, there can be exceptions due to
multiple parties, lawyers, arbitrators and litigation strategy.

C. Exclusionary rules of evidence don’t apply; everything
can come into evidence so long as relevant and non-
D. Not a public hearing; there is no public record of the
proceedings. Confidentiality is required of the arbitrator
and by agreement the whole dispute and the resolution
of it can be subject to confidentiality imposed on the
parties, their experts and attorneys by so providing in the
arbitration agreement.
E. From defense point of view, there is less exposure to
punitive damages and run away juries;
F. A party may record a lis pendens even if there if an
arbitration pending by filing a law suit and then holding
the case in abeyance until the arbitration is resolved.
G. The ability to get arbitrators who have arbitrator
process expertise and specific subject matter expertise.
H. Limited discovery because it is controlled by what the
parties have agreed upon and it is all controlled by the
I. Often, the arbitration process is less adversarial than
litigation which helps to maintain business relationships
between the parties.
J. The arbitration is more informal than litigation.
K. The finality of the arbitration award and the fact that
normally there is
no right of appeal to the courts to change the award.


The following have often been said to constitute the
disadvantages of
A. There is no right of appeal even if the arbitrator makes
a mistake of fact or law. However, there are some
limitations on that rule, the exact limitations are difficult
to define, except in general terms, and are fact driven.
B. There is no right of discovery unless the arbitration
agreement so provides or the parties stipulate to allow
discovery or the arbitrator permits discovery.
C. The arbitration process may not be fast and it may not
be inexpensive, particularly when there is a panel of
D. Unknown bias and competency of the arbitrator unless
the arbitration agreement set up the qualifications or the
organization that administers the arbitration, has pre-
qualified the arbitrator.
E. There is no jury and from the claimant’s point of view
that may be a serious drawback.
F. An arbitrator may make an award based upon broad
principles of “justice” and “equity” and not necessarily on
rules of law or evidence.
G. An arbitration award cannot be the basis of a claim for
malicious prosecution.

"Arbitration agreement" means an agreement by the
parties to submit to arbitration all or certain disputes
which have arisen or which may arise
between them in respect of a defined legal relationship,
whether contractual or not.
•An arbitration agreement may be in the form of an
arbitration clause in a contract or in the
form of a separate agreement.
•An arbitration agreement shall be in writing
•An arbitration agreement is in writing if it is contained
(a) A document signed by the parties;
(b) An exchange of letters, telex, telegrams or other
means of telecommunication
which provide a record of the agreement; or
(c) An exchange of statements of claim and defence in
which the existence of the
agreement is alleged by one party and not denied by
the other.

The term arbitral tribunal is used to denote the arbitrator
or arbitrators sitting to determine the dispute. The
composition of the arbitral tribunal can vary enormously,
with either a sole arbitrator sitting, two or more
arbitrators, with or without a chairman or umpire, and
various other combinations.
The duties of a tribunal will be determined by a
combination of the provisions of the arbitration
agreement and by the procedural laws which apply in
the seat of the arbitration. The extent to which the laws
of the seat of the arbitration permit "party autonomy"
(the ability of the parties to set out their own procedures
and regulations) determines the interplay between the
However, in almost all countries the tribunal owes
several non-derogable duties. These will normally be:
to act fairly and impartially between the parties, and to
allow each party a reasonable opportunity to put their
case and to deal with the case of their opponent
(sometimes shortened to: complying with the rules of
"natural justice"); and to adopt procedures suitable to the
circumstances of the particular case, so as to provide a
fair means for resolution of the dispute.
Number of arbitrators. — (1) the parties are free to
determine the number of arbitrators,
provided that such number shall not be an even number.
Appointment of arbitrators -- (1) A person of any
nationality may be an arbitrator, unless
otherwise agreed by the parties.
2) Failing any agreement, in an arbitration with three
each party shall appoint one arbitrator, and the two
appointed arbitrators shall appoint the third          6
arbitrator who shall act as the presiding arbitrator.
Termination of proceedings

1.   The arbitral proceedings shall be terminated by the
     final arbitral award or by an order of the arbitral
 2. The arbitral tribunal shall issue an order for the
termination of the arbitral proceedings where—
(a) The claimant withdraws his claim, unless the
respondent objects to the order and the arbitral tribunal
recognizes a legitimate interest on his part in obtaining a
final settlement of the dispute,
(b) The parties agree on the termination of the
proceedings, or
(c) The arbitral tribunal finds that the continuation of the
proceedings has for any other reason become unnecessary
or impossible.

Correction and interpretation of
award; additional award
award.—(1) within thirty days from the
receipt of the arbitral award, unless another period of
time has been agreed upon by the parties—
(a) A party, with notice to the other party, may request
the arbitral tribunal to correct any
computation errors, any electrical or typographical errors
or any other errors of a similar
nature occurring in the award;
(b) If so agreed by the parties, a party, with notice to the
other party, may request the
arbitral tribunal to give an interpretation of a specific 7
point or part of the award.
(2) If the arbitral tribunal considers the request made
under sub-section (1) to be justified, it shall
make the correction or give the interpretation within
thirty days from the receipt of the request and
the interpretation shall form part of the arbitral award.
(3) The arbitral tribunal may correct and error of the type
referred to in clause (a) of sub-section
(1), on its own initiative, within thirty days from the date
of the arbitral award.
(4) Unless otherwise agreed by the parties, a party with
notice to the other party may request,
within thirty days from the receipt of the arbitral award,
the arbitral tribunal to make an additional
arbitral award as so claims presented in the arbitral
proceedings but omitted from the arbitral
(5) If the arbitral tribunal considers the request made
under sub-section (4) to be justified, it shall
make the additional arbitral award within sixty days from
the receipt of such request.
(6) The arbitral tribunal may extend, if necessary, the
period of time within which it shall make a
correction, give an interpretation or make an additional
arbitral award under sub-section (2) or
sub-section (5).
(7) Section 31 shall apply to a correction or interpretation
of the arbitral award or to an additional
arbitral award made under this section.

Arbitral awards

Although arbitration awards are characteristically an
award of damages against a party, in many jurisdictions
tribunals have a range of remedies that can form a part
of the award. These may include:
payment of a sum of money (conventional damages)
the making of a "declaration" as to any matter to be
determined in the proceedings
in some[who?] jurisdictions, the tribunal may have the
same power as a court to:
     1. order a party to do or refrain from doing
         something ("injunctive relief")
     2. to order specific performance of a contract
     3. to order the rectification, setting aside or
         cancellation of a deed or other document.

In other jurisdictions, however, unless the parties have
expressly granted the arbitrators the right to decide such
matters, the tribunal's powers may be limited to
deciding whether a party is entitled to damages. It may
not have the legal authority to order injunctive relief,
issue a declaration, or rectify a contract, such powers
being reserved to the exclusive jurisdiction of the courts



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