ARBITRATION

A process in which a disagreement between two or more parties is resolved by impartial individuals, called arbitrators, in order to avoid costly and lengthy litigation. In this process a dispute is submitted to an impartial outsider who makes a decision which is usually binding on both the parties. It is a process where there is a hearing and a determination of a cause between parties in controversy by a person or persons chosen by them, or appointed under a statutory provision. The parties submit their disputes/issues and are bound by the award of an arbitrator in relation to the matter which is in dispute between them. It is a method whereby parties can resolve their disputes privately. It is known as an alternative dispute resolution mechanism. Instead of filing a case in a court, parties can refer their case to an arbitral tribunal, which is the forum where arbitration proceedings are conducted. The arbitral tribunal will consider the questions over which the parties are in conflict and will arrive at a decision. This decision is known as an 'award'. How does arbitration work? Arbitration procedures are very similar to court. The only difference being that there are no hurdles of the strict rules of procedure or law of evidence, yet legally binding. After the claim is filed and the opposite side responds; the parties exchange information

relevant to the case; the arbitrator hears both sides, studies the evidence, and decides the case. The difference between a court proceeding and arbitration is that arbitration takes less time and typically costs less. Arbitration often is contractual: two parties agree to use arbitration to resolve a dispute. The parties agree on what basis they want the arbitrator to decide the case.
he advantage of using the services of IIAM is an established Code of Procedure that governs how the arbitration will proceed and ensures that the arbitration is conducted in a fair and efficient manner. IIAM also have a panel of wide range of arbitrators and the parties will have the advantage of selecting the arbitrator apt for the issue at dispute. What kind of matters cannot be referred for arbitration? As per general practice, matters involving moral questions or questions of public law cannot be resolved by arbitration. For instance, the following matters are not referred to arbitration: Matrimonial matters, like divorce or maintenance; Insolvency matters, like declaring a person as an insolvent; Criminal offences; Dissolution or winding up of a company. Can international disputes be resolved by arbitration in India? Yes. International disputes can be arbitrated in India and it is advantageous to have India as the venue for international arbitration, if the resultant award is to be executed in India. If one of the parties to the agreement is an Indian and the other party a foreigner, either by its nationality or its incorporation as a body corporate or its management and control is exercised in any other country or it is the Government of a foreign country, it will be styled as international commercial arbitration. The arbitration pursuant to such an agreement may take place in India or outside. If it takes place in India the resultant award would be considered as a domestic award and would be governed by the provisions of Part I of 1996 Act and the award so rendered can be executed as a deemed decree. On the other hand, if the arbitration takes places outside India the resultant award would be a foreign award governed by the provisions of Part II of 1996 Act and it can be enforced only under the Geneva / New York convention, by making it a decree of the Indian court. Why do people choose arbitration? Mahatma Gandhi said, " I realised that the true function of a lawyer was to unite parties... A large part of my time during the 20 years of my practice as a lawyer was occupied in bringing about private compromises of hundreds of cases. I lost nothing thereby - not even money, certainly not my soul." Abraham Lincoln said, "Discourage litigation. Persuade your neighbours to compromise whenever you can . . . the nominal winner is often a real loser in fees, in expenses, and waste of time." Chief Justice Warren Burger of US Supreme Court stated: Our litigation system is too costly, too

painful, too destructive, too inefficient for a truly civilised people. Studies also show that arbitration is faster, less expensive and less disruptive. Fifty-nine percent of respondents to a survey conducted in the US selected arbitration over litigation as the preferred method of resolving claims over money. That percentage grew to 83% when respondents were informed that arbitration could save three-quarters of the cost of litigation. Arbitration is less expensive than litigation; Arbitration has simpler procedural and evidence rules, making it more user-friendly. Arbitration generates minimal hostility between the parties; Arbitration is less disruptive to ongoing and future business dealings among the parties; Arbitration is more flexible in scheduling times and places for hearings. How much does an arbitration cost? The party bringing the case is responsible for paying a nominal filing fee. The whole expenses incurred for institutional arbitration will be comparatively lesser than court expenses and taking into account the time advantage one gets in arbitration, the proceedings is much cheaper. IIAM has a scheduled fee structure enlisting the applicable arbitrator and administrative fees. Can a party recover its fees if it wins in arbitration? The winning party can request and be awarded the fees and costs it expended in the arbitration. The Act provides for such a relief. What is the role of IIAM? Everyone, big or small, is on equal footing with IIAM. IIAM is only compensated for administering cases. The Institution provides an atmosphere and necessary infrastructure and assistance to the parties to select the conciliator / arbitrator and conduct the conciliation / arbitration in a professional and fair manner. As a neutral arbitration administrator, the Institution has no exclusive client relationships. How long does an arbitration take? The length of an arbitration depends on a number of factors, including the types of claims being brought, the number of parties involved, and the ability to work with the schedules of the parties and their advocates. Most arbitrations can be completed within three to six months, when the same can take years or decades together in courts.

4 Types of Arbitration by James A. Gage When we think about arbitration, we think of a neutral third party who is empowered by 3 individual parties to decide the outcome of a dispute, but that is just scratching the surface as we will soon see. There are 4 types of Arbitration: Binding, non-binding, court appointed and what I invented and advocate Independent Arbitration. Binding Arbitration: The parties agree to waive their right to go to court for a judicial decision which is binding by the arbitrators ruling.

Non-Binding Arbitration: The parties have the discretion to abide by the arbitrator's decision or seek other venues. In my 20 plus years of arbitration experience this is the least appealing and successful form of arbitration; only the attorneys and arbitrator make money, and the parties rack up the venue bills. Court Appointed Arbitration: Is just that ordered by the court. The judge elects an arbitrator of their choice to hear and render a ruling which by the way is binding. And finally, we come to what I invented and strongly advocate as a business model... Independent Arbitration: Some have connected this form of arbitration with names like dispute resolution, ADR, debt settlement, debt arbitration and debt negotiating to name a few. However, with this type of arbitration you will notice vast differences. With this type of arbitration we represent only one party (usually the defendant if it happens to be a litigation case). We do not stay neutral in the dispute, but rather work as a fiduciary, representing our client to achieve out of court settlement, IRS tax issues and delinquent accounts payable. We set our own fees based on what we achieve for settlement for our clients, not an hourly rate like attorneys. And since we are not employed by agencies like the above 3 forms of arbitration, we are free to work as much or as little, increase or modify our fee structure, and work as much or as little as we desire. Why Would A Business Choose To Use An Arbitrator Instead of An Attorney? Few businesses elect the expense of litigation if arbitration is available. Put simply, arbitration is a business like forum for resolution of business disputes and while the elaborate safeguards of the legal system are often not available, the need for prompt and private resolution of disputes seems to convince most of our business clients to use independent arbitration. For those clients used to non American systems of law, arbitration seems a welcome and familiar way to resolve disputes and protect the rights of all concerned. Besides attorneys work a principle called billable hours, we work on results! If we do not settle the case we dont get paid, whereas, attorneys get paid whether they settle the case or not; you can see why this would be a motivating factor when a business owner is deciding who to engage to represent them.

Arbitrator: His appointment, powers and duties BALBIR

An arbitrator is person selected by mutual consent of the parties to settle the matters in controversy between them. A person appointed to adjudicate the difference is called an arbitrator. An arbitrator is a tribunal chosen by the consent of the parties.

Any person who enjoys the confidence of the parties may be selected as an arbitrator. Every person is free to choose his own judge for the settlement of any matter in controversy, and the judge so chosen, if accepted by the opposite party, becomes an arbitrator. They may choose an arbitrator by

lot or in any other way. If they an incompetent or unfit person, that is their own affair. An arbitrator should be a person who stands indifferent between the parties. He should have no interest direct or remote in the subject-matter of the controversy or in the parties. Any person who is under any legal disability by virtue of statutory provision or by reason of public policy cannot act as an arbitrator. An arbitration agreement appointing a supreme head of the state as an arbitrator would be against public policy and hence void at its inception. Appointment of an arbitrator by the parties The parties may by agreement appoint whomsoever they please to arbitrate on their dispute. They may appoint a single arbitrator or two arbitrators and an umpire or two or more arbitrators without any umpire. The parties may appoint an arbitrator in the following ways: 1) An arbitrator may be named in the arbitration agreement, or 2) He may not be named at all, or 3) It may be agreed that the arbitrator shall be appointed by a third party who shall be named in the agreement. Powers of Arbitrator and Umpire Section 13 lays down the powers of arbitrators or umpire. It is subject to the agreement of the parties. But they cannot be compelled to exercise those powers. This section is applicable to statutory arbitration as well. The various powers are as under : (1) To administer oath to parties and witnesses appearing before him; (2) To state a special case for the opinion of the court on any question of law or state the award in the form of a special case for the opinion of the court; (3) To make the award conditional or in the alternative; (4) To correct in an award any clerical mistake or error arising from any accidental slip or omission; (5) To administer any party interrogatories. In addition to the statutory powers given above, there are some implied and incidental powers, such as: a) Power to obtain legal assistance. b) Power to delegate authority limited to the performance of acts of ministerial character c) Power to award interest d) Power to award costs e) Power to allow payment by installments

f) Power to allow amendment of the plaint. The arbitrators have no power: 1) To allow withdrawal of the reference 2) To receive or realize monies 3) Alter the terms of arbitration agreement 4) Award damages otherwise than in accordance with law. Duties of Arbitrator or Umpire 1. Duty to follow rules of natural justice : An arbitrator must observe the rules of natural justice. He must act in a judicial manner. His enquiry should not be slip-shod but full and complete. He must give due notices and maintain proper record of the proceedings. He ought not hear one side in the absence of the other side. Any departure from the rules of natural justice is sure to vitiate the award. 2. Duty to act fairly to both parties : The arbitrator must act fairly to both parties. He must not favor one party more than another, or do anything for one party which he does not do for another. 3. Duty not to delegate : An arbitrator must not delegate his duties to a third person, or to a co-arbitrator. Since one who has an authority to do an act for another, must do it himself and cannot delegate to another. This rule is, however, subject to the exception that an arbitrator may delegate to another the performance of an act of ministerial character only. 4. Duty to decide according to law : It is duty of an arbitrator, in the absence of a provision to the contrary, to decide the question according to legal rights of the parties and not according to what he may consider to be fair and reasonable under the circumstances. If an arbitrator decides honestly, through wrongly, he is not guilty of misconduct. But deliberate disregard of law in matters of arbitration is misconduct. 5. Duty not to exceed his authority : An arbitrator cannot go beyond the scope of his authority. He derives his authority from the arbitration agreement. He cannot take upon himself an authority which is not conferred by the submission. If the arbitrators go beyond the scope of reference and decide a dispute not referred to them, the award is bad. 6. Duty to decide all matters referred : It is the duty of the arbitrator to decide all the matter referred to him. Where he omits to decide some of the important questions referred the award is bad. A partial award is invalid and should be

remitted for reconsideration. 7. Duty to act together : When there are several arbitrators, all must act together. The presence of all the arbitrators at all the meetings is essential to the validity of the award. Omission on the part of the arbitrators to act together amounts to misconduct. 8. Duty not to accept hospitality : An arbitrator should not accept hospitality from one of the parties, if the invitation is given with the intention of inducing him to act unfairly. But merely dining or lunching with one of the parties and his witness in the absence of other will not invalidate an award.
Fee structure As per the Construction industry arbitration councilarbitrator fee structure is as follow (Valid with effect from 1st april 2011 till further amendment) Sum in Dispute (Claim + Counter Claim) (In Indian Rupees) Arbitrators Fees (In Indian Rupees) Upto 50,000 50,001 to 1,00,000 1,00,001 to 5,00,000 5,00,001 to 10,00,000 10,00,001 to 20,00,000 20,00,001 to 50,00,000 50,00,001 to 1,00,00,000 1,00,00,001 to 5,00,00,000 5,00,00,001 to 8,00,00,000 8,00,00,001 to 10,00,00,000 Over 10,00,00,000 Note: 1. 2. The fee mentioned in the above table is the amount payable to one arbitrator. If there are 3 arbitrators, the fees would have to be multiplied by 3. The fee is pegged to the entire sum in dispute [i.e. Claim plus Counterclaim (if any)]. The fees would have to be shared equally by the parties in the first instance. Parties are jointly & severally liable for the Arbitrators Fees. 3. 4. If the Claim and/or Counterclaim is not quantified, the Registrar of CIAC wo uld fix the Arbitrators Fees. Please see Rule 34 of the CIAC Arbitration Rules that deals with Deposits to Costs and Expenses. 10000 10,000 + 14% excess over 50,000 24,000 + 5.25% excess over 1,00,000 66,000 + 3.8% excess over 5,00,000 1,04,000 + 1.9% excess over 10,00,000 1,42,000 + 0.9% excess over 20,00,000 1,96,000 + 0.5% excess over 50,00,000 2,46,000 + 0.2% excess over 1,00,00,000 4,06,000 + 0.13% excess over 5,00,00,000 4,84,000 + 0.09% excess over 8,00,00,000 5,20,000 + 0.06% excess over 10,00,00,000