Scope of Arbitration in Legal Field / Merits & Demerits of Arbitration

                                            Scope of Arbitration in Legal Field / Merits & Demerits of Arbitration

Arbitration is an alternative form of conflict resolution that often takes place outside of court. In such an arrangement, the parties to the dispute select the arbitrator or arbitrators at their discretion and convenience, as well as the venue and date of the arbitration hearing.

The Arbitration and Conciliation Act, 1996 (the Act) sets down the rules governing arbitration in India. The UNCITRAL Model Law on International Commercial Arbitration from 1985 and the UNCITRAL Conciliation Rules from 1980 served as the foundation for this law.

Arbitration monitors and unifies the laws regulating domestic arbitration, commercial dispute arbitration, and the enforcement of international arbitral awards. It also lists the legislation pertaining to conciliation. The primary objective of arbitration is to limit the need for judicial intervention stated in Section 5 of the Arbitration and Conciliation Act of 1996.1

There is a limit to the scope of arbitration as it considers only certain matters especially pertaining to civil cases.The Arbitration and Conciliation Act acknowledges that some conflicts cannot be settled by arbitration. When it is determined that the dispute's subject matter cannot be resolved by arbitration, the court may set aside an award under Sections 34(2) and 48(2) of the Act.2 However, the Act makes no mention of which issues are excluded from arbitration. But certain matters as seen in today's legal field regarding criminal offences, matrimonial disputes, issuance of patents and landmarks are non-arbitrable in nature.3

The significant decision of Calcutta High Court in the case of Keventer Agro Ltd. vs. Seegram Comp. Ltd. (1998)4 might be derived in order to define the parameters of arbitration. Although issues related to such issues may be addressed by arbitration, issues like criminal crimes and marriage conflicts may not be. There is mention of some conflicts that cannot be submitted to arbitration, including those involving status disputes like divorce, public criminal crimes, and disputes resulting from unlawful agreements.

The conclusion that follows is that such matters do not fall under the purview of arbitration unless a special legislation establishes the authority of a certain autonomy of the Court. It was

1 Extent of judicial intervention.—Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.

2 Enforcement of an arbitral award may also be refused if the Court finds that—

(a)the subject matter of the difference is not capable of settlement by arbitration under the law of India; or

(b)the enforcement of the award would be contrary to the public policy of India

3https://www.barandbench.com/law-firms/view-point/the-viewpoint-arbitrability-and-non-arbitrability-of-disput

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4 [A.P.O. No. 499 of 1997 : C.S. No. 592 of 1997]

customary for the legal system's courts to determine which types of conflicts would be subject to arbitration and which would not.

1.Efficient and adaptable: The conflict will often be settled more quickly. A court trial date may take many years to get, but an arbitration date is typically doable within a few months. The two parties involved in the issue provide for more flexibility in the legal consequences. Neither side is required to retain legal counsel for representation.

2.Less Complex: Litigation often involves a protracted procedure of submitting documents and motions and appearing in court for proceedings like motion hearings. In arbitration processes, the rules of evidence may not be rigidly followed, which makes it much simpler to admit evidence.

3.Privacy: Compared to a trial, arbitration results in a private settlement, allowing for the confidentiality of the details of the dispute and its resolution. Due to the total confidentiality of all testimony, declarations, and arguments, this may be appealing for well-known public personalities or clients in commercial disputes.

4.Fairness: Since the arbitrator is often chosen jointly by the parties to the dispute, all sides may be sure that the arbitrator will be neutral and impartial.

5.Usually less costly: Arbitration is frequently, but not always, more affordable than litigation. Attorney expenses are decreased since arbitration hearings tend to conclude much more swiftly than court cases. 5

1.Unpredictability: Unlike courtroom trials, arbitration does not always adhere to the formal standards of process and evidence. In a typical court environment, a judge must adhere to precise rules when accepting evidence. However, arbitrators are free to use whatever information presented to them. There are often no witnesses present throughout the arbitration procedure, therefore cross-examining is not permitted, thereby leading to uncertainty.

2.No presence of jury: For most people, having a panel of impartial judges is a crucial right that aids in preventing prejudice and unfairness. In the case of arbitration, juries

5https://www.mondaq.com/india/arbitration--dispute-resolution/1308440/the-pros-and-cons-of-arbitration-vs-liti

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are completely eliminated, and the case is decided by a single arbitrator who serves as both a judge and a jury.

3.Finality: While this could be advantageous if one agrees with the arbitration result, if it is binding, both parties forfeit their right to an appeal. There is very little chance to reverse the judgement if one side believes it to be incorrect.

4.Lack of transparency: Hearings in arbitration are typically held in secret, which may be advantageous to some. However, because arbitration rulings are also seldom challenged by the courts, it is probable that the absence of transparency increases the likelihood of bias in the process.

5.Can be more expensive: There are several situations when arbitration might end up costing more than going to court. Superior arbitrators may want significant costs that would not be allowed in court. The parties are able to file their dispute in court again after a non-binding arbitration, thereby adding the expense of litigation to the arbitration's initial filing fee.

In conclusion, arbitration is a highly effective instrument and reasonably priced technique for settling conflicts. Its widespread use and appeal are evidence of its usefulness as an alternative dispute settlement method. Having said that, despite its advantages, there are still a number of areas that require attention and improvement if this process is to be more advantageous for all participants. Whether it applies to or is preferred in a given disagreement has to be carefully considered. Additionally, it expedites the process of providing just and equitable resolutions while lightening the burden on the judiciary.