Settlement of Commercial Disputes through Arbitration in India

Settlement of Commercial Disputes through Arbitration in India.

For quickly enforcement of commercial contracts, and to reduce the pendency of cases in courts and to hasten the process of dispute resolution through arbitration, the Government of India has enacted the Arbitration and Conciliation Act, 1996 to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards as also to define the law relating to conciliation and for matters connected therewith or incidental thereto.

Presently, the preferred option to settle the commercial disputes is the Arbitration.

Steps and Procedure for settlement of dispute through Arbitration:

  • Arbitration Agreement: To refer a commercial dispute for settlement through Arbitration, there must be an Arbitration Agreement between the parties. The Arbitration Agreement may be a separate agreement or even an arbitration clause in any contract to settle the disputes through arbitration is sufficient.
  • Notice for Arbitration: Where a dispute has arisen between the parties to an agreement, a party shall send an arbitration notice to the other party for invoking arbitration clause or arbitration agreement.
  • Appointment of Arbitrator: Upon receipt of the arbitration notice from a party, both parties shall appoint a Sole Arbitrator or one Arbitrator by each Party and third arbitrator i.e. presiding arbitrator shall be appointed by both the arbitrators who have been appointed by the parties. However, if there is any manner, mode and process is provided for appointment of Arbitrator under the arbitration agreement or arbitration clause in the contract, the Arbitrator shall be appointed in accordance with the same. Further, in case parties fail to appoint the arbitrator within 30 days from the date of receipt of arbitrator notice, the matter shall be referred to the High Court for appointment of arbitrator.   
  • Arbitral Tribunal: It is to be noted that the Sole Arbitrator or Arbitrators as appointed by the parties or by the High Court, shall constitute and known as Arbitral Tribunal.
  • Statement of Claim: As a next step the party invoking the arbitration, shall draft and submit to Arbitral Tribunal (appointed Arbitrators / Sole Arbitrator), Statement of Claim containing the dispute between the parties and compensation claimed from the Defaulting Party or other party.
  • Statement of Defence with Counter Claim: Upon receipt of copy of Statement of Claim, the defaulting party or other party shall submit Statement of Defence along with the Statement of Counter Claim, if any, before the Arbitral Tribunal.
  • Hearing of the Parties: Thereafter, the Arbitral Tribunal will hear both the parties and look into their evidences.
  • Award: After hearing both the parties to the disputes, arbitral tribunal shall pass an order in the form of an “Award” which is binding on the parties. However, an appeal against the arbitral award can be filed before the High Court by the aggrieved party.
  • Execution of Award – Once the award has been passed by the arbitral tribunal, the parties shall honour the same. If any of the parties is not honouring the award, the other party in whose favour the award has been passed has to file an application with the court having jurisdiction over the matter for execution of award, with the help of a good arbitration lawyer.

If anyone needs any kind of help or legal advice on this issue or in general, please feel free to contact me at any time. My Number is 9818865693 and email is adv.jeetkumarsingh@gmail.com

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