This article has been written by Ms. Tashveen Kaur , a 1^st year BA LLB student from Army Institute of Law ,Mohali.

Introduction

In the present times, arbitration has gained importance . People, nowadays prefer arbitration rather than litigation to solve their disputes as litigation is quite expensive and time consuming. Let’s take a look over the arbitration process and its termination 

What is arbitration?

Arbitration is a process where a neutral third party, called an arbitrator, hears evidence and arguments from the parties involved in a dispute and makes a decision that is binding on the parties. Arbitration is often used as an alternative to traditional litigation in courts because it is usually faster, less formal, and less expensive. In addition, parties to a dispute can choose their own arbitrator, who is often an expert in the subject matter of the dispute, and the arbitration process can be tailored to meet the specific needs of the parties.

Advantages of arbitration? 

Arbitration offers several advantages over traditional litigation in courts, including:

Speed and efficiency: Arbitration is often faster than going to court, as there are fewer procedural requirements, and the parties have more control over the scheduling of the proceedings.

Flexibility: The arbitration process can be tailored to meet the specific needs of the parties, allowing them to choose the arbitrator, the location, and the procedures to be followed.

Expertise: Parties to a dispute can choose an arbitrator who has expertise in the subject matter of the dispute, allowing for a more informed and specialized decision-making process.

Confidentiality: Arbitration proceedings are typically confidential, which can be important for disputes involving sensitive or proprietary information.

Finality: Arbitration awards are usually final and binding, meaning that the parties have limited options for challenging or appealing the decision.

Cost-effective: Arbitration can be less expensive than traditional litigation, as there are fewer procedural requirements and the parties have more control over the process.

International disputes: Arbitration can be a useful tool for resolving international disputes, as it can provide a neutral forum and avoid the complications of litigating in multiple jurisdictions.

Overall, arbitration can be an effective and efficient way to resolve disputes, especially when the parties value flexibility, expertise, confidentiality, and finality.

Differences between mediation and arbitration

Arbitration and mediation are both forms of alternative dispute resolution (ADR), but they differ in several ways. The main differences are:

Decision-making authority: In arbitration, the arbitrator(s) have the authority to make a binding decision, known as an award, which is enforceable by law. In mediation, the mediator does not have the authority to make a binding decision but instead helps the parties reach a mutually acceptable resolution.

Process: In arbitration, the parties present their case to the arbitrator(s), who make a decision based on the evidence and arguments presented. In mediation, the mediator facilitates communication and negotiation between the parties to help them reach a mutually acceptable resolution.

Control: In arbitration, the parties have less control over the outcome, as the arbitrator(s) make the final decision. In mediation, the parties have more control over the outcome, as they are involved in the negotiation process and have the final say in whether to accept a proposed resolution.

Time and cost: Arbitration is typically more formal and structured than mediation, and as a result, may take longer and be more costly. Mediation is generally quicker and less expensive than arbitration.

Finality: An arbitration award is typically final and binding, and can only be challenged in limited circumstances, while a mediated agreement is not necessarily binding and may be subject to further negotiation or litigation.

In summary, while both arbitration and mediation are forms of ADR, arbitration is a more formal process where an arbitrator(s) makes a binding decision based on the evidence and arguments presented, while mediation is a less formal process where a mediator facilitates communication and negotiation between the parties to help them reach a mutually acceptable resolution.

A quick view of how proceedings are conducted

The following sections of arbitration and counciliation act ,1996  govern the arbitration process:

1. According to section 7 , there must be written and signed arbitration agreement between the parties. 
2. According to section 21, notice must be given by one party to another before referring the matter to arbitration.
3. Section 10 says that parties are free to choose any odd number of arbitrators.
4. According to section 11, parties are free to agree upon the procedure to be followed for arbitration. 
5. Section 21 provides the parties with the rules that how the arbitration process will begin.
6. Section 18 states two basic principles for arbitration- parties involved in arbitration must be treated equally and they must be given full opportunity to present their case
7. According to section 20, parties are free to decide the place for arbitration. In case they fail to decide so, then the arbitration tribunal need to decide the same in a judicial manner.
8. Section 23 deals with the pleadings of parties. Firstly they need to file and exchange the pleadings.Within six months of the appointment of the arbitral tribunal, the statement of claim and defence has to be completed under this section.  
9. Section 24 deals with the manner in which proceedings are to be conducted.

Termination of arbitration proceedings 

Arbitration proceedings can be terminated in several ways, including:

Settlement: The parties may reach a settlement agreement at any point during the arbitration process, which would terminate the proceedings.

Withdrawal: One or both parties may choose to withdraw from the arbitration, which would terminate the proceedings. However, the withdrawing party may still be responsible for paying any costs associated with the proceedings up to that point.

Default: If one party fails to participate in the arbitration or comply with the arbitration agreement or the arbitrator’s orders, the other party may request that the arbitrator issue an award in their favor, which would terminate the proceedings.

Decision: Once the arbitrator has issued an award, the proceedings are terminated, and the parties must comply with the decision.

Agreement: The parties may also agree to terminate the arbitration proceedings for other reasons, such as if they decide to pursue the dispute in a different forum.

It is important to note that terminating arbitration proceedings does not necessarily mean that the dispute has been resolved. If the proceedings are terminated without a decision or settlement, the parties may need to pursue other methods of resolving the dispute, such as litigation or mediation.

Section 32 of arbitration and councilition act 1996

Termination of proceedings.—

(1) The arbitral proceedings shall be terminated by the final arbitral award or by an order of the arbitral tribunal under sub-section (2).

(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 recognises 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.

(3) Subject to section 33 and sub-section (4) of section 34, the mandate of the arbitral tribunal shall terminate with the termination of the arbitral proceedings

Cases laws  regarding termination of arbitration proceedings

Here are some Indian landmark cases related to the termination of arbitration proceedings:

1. Chloro Controls India Private Ltd v. Severn Trent Water Purification Inc.( CIVIL APPEAL NO. 7134 OF 2012 ) In this case, the Supreme Court of India held that an arbitration agreement cannot be terminated merely on the ground of delay or laches, unless the delay has resulted in the destruction of evidence or a situation where it would be impossible to have a fair trial.
2. Ssangyong  Engineering & Construction Co. Ltd. V. National Highways Authority of India,(APPEAL NO. 4779 of  2019): In this case, the Supreme Court of India held that if the arbitration agreement between the parties provides for a specific mode of termination, that mode must be followed, and termination by any other mode will be invalid.
3. Vijay Karia & Ors v. Prysmian Cavi E Sistemi Srl & Ors,( Appeal no.  1544 of 2020): In this case, the Supreme Court of India held that an arbitration agreement can be terminated by mutual consent of the parties, and that an arbitration tribunal has the power to accept such a mutual termination.
4. Indian Oil Corporation Ltd. V. Raja Transport (P) Ltd., ( Appeal no. 5760 of 2009): In this case, the Supreme Court of India held that an arbitration award can be set aside if the arbitrator exhibits bias or misconduct that affected the fairness of the arbitration proceedings.
5. National Insurance Co. Ltd. V. Boghara Polyfab (P) Ltd.(2007 (4) ARBLR 533 Bom, 2007 (4) BomCR 684): In this case, the Supreme Court of India held that a court can interfere with an arbitration award if it finds that the award is patently illegal or perverse, or if there is a violation of natural justice.

These cases reflect the Indian legal framework for the termination of arbitration proceedings, and provide guidance on the specific requirements and limitations for terminating arbitration in India.

Conclusion: 

Thus, nowadays arbitration is a preferred process by majority of business firms in order to solve their disputes. 

References:

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