Arbitration in India – Mechanism and Challenges

Arbitration in India is gaining importance given the overstressed judicial system with the huge pendency of cases. With a lot of commercial disputes, it’s necessary to have a proper arbitration mechanism in place for faster resolution of issues.

In this article, we discuss topics like the importance of arbitration, the present status of arbitration in India, problems afflicting Indian arbitration mechanism, various arbitration mechanisms and their pros and cons, key recommendations of B N Srikrishna Committee, etc.

What is arbitration?

In simple words, arbitration is the act of dispute settlement through an arbitrator, i.e. a third party, who is not involved in the dispute.

It is an alternative dispute settlement mechanism, aiming at settlement outside the court.

What are the advantages arbitration?

  • It minimizes the court intervention.
  • It brings down the costs of dispute settlement.
  • It fixes timelines for expeditious disposal.
  • It ensures the neutrality of arbitrator and enforcement of awards.
  • Having an arbitration law encourages foreign investments to a country. It projects the country as an investor friendly one having a sound legal framework and ease of doing business.
  • Having an arbitration law facilitate effective conduct of international and domestic arbitrations raised under various agreements.

What is the mechanism of arbitration in India?
Arbitration in India is regulated by the Arbitration and Conciliation Act, 1996.

The Act is based on the 1985 UNCITRAL (The United Nations Commission on International Trade Law) Model Law on International Commercial Arbitration and the UNCITRAL Arbitration Rules 1976.

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