The dictionary meaning of ‘arbitration’ is the process of solving an argument between people by helping them to agree to an acceptable solution
Arbitration is a part of the Alternative Dispute Resolution mechanism that benefits parties who want to avoid the normal lengthy recourse to the local courts for settlement of disputes. It is in fact a legal technique for the resolution of dispute outside the courts, wherein the parties to a dispute refer it to one or more persons namely arbitrator(s) by whose decision (the “award”) they agree to be bound.
Arbitration is the dispute settlement process between two agreeable parties to appoint an arbitrator to give a binding solution on the dispute. It is a way to settle disputes outside the courts thereby saving time and resources at the same time.
Arbitration is a legal mechanism encouraging settlement of disputes between two or more parties mutually by the appointment of a third party whose decision is binding on the parties referring the said dispute.
Arbitration is an effective way of expediting resolution of disputes in these modern times when there is scarcity of time.
All disputes however are not arbitrable and there are certain disputes which fall outside categories of arbitrable disputes as held by the Hon’ble Apex Court in the matter of Booz Allen and Hamilton Inc V. SBI Home Finance Ltd. These are:
Section 2 (1) (f) of the Arbitration and Conciliation Act 1996 defines International Commercial Arbitration as under:
“an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial law in force in India and where at least one party is:
International Commercial Arbitration is a means of resolution of disputes that arise under the commercial contracts, which are international in nature.
An arbitration that is often an alternative to litigation wherein the parties to the arbitration mutually control the terms thereby avoiding their national legislation or rules of procedure.
An arbitration to resolve cross border disputes without having to file in national courts thereby avoiding long and technical procedures of national courts.
As per the Article 1 (3) United Nation Commission on International Trade Law (UNCITRAL) arbitration is international when :
Advancement, liberalisation and globalisation of international business relations necessitated the invention of a flexible, reasonable, favourable and time saving method of resolution of disputes without making the parties to go through the rigorous, time consuming and resource exhausting procedure of the traditional justice delivery system.
All these have boosted the need for Arbitration in these modern times.
International Commercial Arbitration has risen as an agreeable mechanism to effectively resolve cross border commercial disputes and ensuring the preservation of cross border business relations.
The expertise of the International Commercial Arbitrators armed with the proper knowledge of international laws governing international trade and customs of the parties have made the international commercial arbitration as a quintessential ingredient of international dispute redress/resolution process.