SCOPE OF ARBITRATION IN LEGAL FIELD; MERITS AND DEMERITS OF ARBITRATION.
By-Ibeoji Chiemerie Michael
INTRODUCTION:
Arbitration is an important aspect of dispute resolution. It is one of the many forms of Alternative Dispute Resolution (ADR). Alternative dispute resolution is a machinery or means of settling dispute between person (s) or groups without going through litigation. One of the first legally recognised form of alternative dispute resolution is arbitration. In 1899 the Indian Arbitration Act was enacted to give adequate effects to alternative dispute resolution in Indian legal system.
However, arbitration is a process whereby parties to a dispute through an arbitration clause state clearly their intention to resolve their differences by inviting a third-party 'arbitrator' who is assumed to be unbiased and chosen by a consensus of the disputing parties. It is not required anywhere that an arbitrator or arbitration panel must be a national or licensed body of person(s) rather such person must be chosen by both parties to the disputes. The Indian courts by the Arbitration and Conciliation Act 1996 do not intervene in arbitration processes but refuse to enforce the agreement when prima facie no valid agreement on arbitration exist between the parties or the subject matter is not arbitrable.
Arbitration is limited to civil matters as in criminal matters, the only alternative is litigation. Section 34 of the Arbitration and Conciliation Act 1996 allows courts to set aside decisions made in matters out of the scope of arbitration. Under rule 8 of Indian Council of Arbitration Rules,the decisions of arbitrators over any disputes will be final and the parties to the arbitration are bound to follow it. Matters which are considered arbitrable are always commercial disputes such as; shipping, sales,purchase, banking, insurance, building construction, engineering, patents, trademarks,management consultancy, etc. The Indian supreme Court in N Radhakrishna v. Maestro Engineer & Ors [2009] (13) SCALE 403 held that allegations of fraud are to be reported by the courts alone not by an arbitration body. However,this decision was distinguished in World Sport Group Ltd v. MSM Satellite (Singapore) Ltd that it is wrong to conclude that only the courts have power to resolve a dispute in relation to fraud or misrepresentation but an arbitration is sufficient if done effectively.
In other jurisdictions such as Nigeria, the Arbitration and Mediation Act 2023 is the legal framework for commercial arbitration. Nigeria has also signed and ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards which mandates courts to recognise and enforce arbitration awards as binding and enforceable. Section 1 of the Arbitration and Mediation Act 2023 of the Federal Republic of Nigeria makes it mandatory for all arbitration agreements to be in writing.
RULES OF ARBITRATION
the Indian Council of Arbitration proferred rules which all arbitration processes must abide by, thus;
1. A written application to the registrar.
2. The names and full addresses of the parties to the dispute.
3. Statement of claim.
4. Original or duly certified copies of the arbitration agreements.
5. INR 1000, registration fee.
6. Where the arbitration has been ordered by courts then, a certified copy of the order of such courts.
STAGES OF ARBITRATION
These are stages or steps taken in the course of an arbitration.
1. Dispute: at this stage there is the occurrence of disputes between two parties.
2. Arbitration agreement is entered.
3. Arbitrator is selected
4. Discovery of evidences and statements
5. Hearing
6. Decision
7. Award and enforcement.
TYPES OF ARBITRATION
They are basically two types of arbitration;
1. Ad hoc arbitration
2. Institution arbitration
(1) Ad hoc arbitration: This is one in which no administration or institution is selected as the arbitrator. The parties themselves commence the arbitration proceedings and determine the conduct of such arbitration.
(2) Institution arbitration: Here, arbitration is administered by an arbitrary institution. Institutional arbitration are conducted pursuant to institutional arbitration rules and overseen by an arbitral institution with responsibility for various aspects relating to constituting the arbitral tribunal. in India an example of arbitrary institution is Indian Council of Arbitration and the International Centre for Alternative Dispute Resolution in the United States of America, American Arbitration Council, Nigerian Institute of Chartered Arbitrators (NICArb), etc.
MERITS OF ARBITRATION
Arbitration has many benefits which includes:
1. Arbitration processes tends to be faster than actual litigation. In India and other jurisdictions courts are always overburdened with responsibilities which makes it take longer for a court verdict to be made.
2. The parties usually agree on the arbitration creating a situation whereby both side have confidence that the proceedings will be impartial and fair.
3. Arbitration is private,much persons are not invited into arbitration processes unlike the normal Court proceeding where the public has the liberty to enter. This helps the parties protect their reputation and business interests.
4. There is lower cost for the preparation of the arbitration process unlike the normal jury trial which cost a lot ranging from payment for lawyers and payments for establishing a suit in a court of law.
5. There is no much appeal as arbitration decisions are binding and enforceable. It keeps meddlesome interlopers who tend to appeal on each court decision creating multiplicity of actions away from the courts.
DEMERITS OF ARBITRATION
As the normal saying goes "for every progress there is a setback". They are also setbacks to arbitration processes which includes;
1. No appeal: Since arbitration decisions are final, parties in dispute are not allowed to appeal until they achieve a satisfactory decision. This creates an avenue where by one party might not be satisfied with the arbitration decision.
2. Arbitrators Partiality: Even after appointments have been made, a party may still doubt the Independence or the impartiality of the arbitrator for reasons not foreseen before such appointments.
3. Non-acceptance of Evidence: Unlike in courts where Judges consider the kind of evidence that is tenderable or acceptable, arbitration body accept any information brought before it without necessary evaluation or cross-examination. This brings doubt and noncontentment in decisions made by arbitrary bodies.
4. Lack of Consistency: There are no definite rule that govern arbitration, making it difficult if not impossible to find consistency.
5. Arbitration takes away the job of lawyers and other legal practitioners by allowing non-legal persons to make arbitrary decisions.
CONCLUSION
It is gainsaying that arbitration is an important aspect of dispute resolution. As misunderstandings are inevitable in human existence, it is pertinent that they are settled in a way that won't affect the mutual relationship between parties. The world legal system should give arbitration and all alternative dispute resolution a chance to add flavour to settling disputes amicably.
