Arbitration And Its Scope

Whenever there is a dispute between two parties, the first idea which comes to our mind, to resolve that dispute, is ‘Arbitration’. Arbitration is a mechanism or a process, used to resolve certain types of dispute between two parties. It is a way used to resolve the disputes out of the Court. Arbitration is a far better alternative than court proceedings.

When we look at the court cases and suits, we come to a conclusion that legal proceedings in a court take a lot of legal research and paperwork, along with a huge amount of time. Sometimes these cases remain pending before courts and they keep on continuing up to many years. When it comes to Arbitration, the judgment is given in the form of awards, and that too, quicker as compared to court judgments. Arbitration saves time and money, also prevents delay.

Arbitration involves a third person, to settle the dispute. This third person or party, acts as a neutral third party, who does not have any personal interest in any of the parties to dispute. This third person must not be biased, and should provide the evidence for the same. Arbitration can be a compulsory as well as voluntary process.

Disputes that generally fall under arbitration are trade related disputes, disputes related to commercial property, rent related disputes, consumer disputes, and family disputes. Given that, criminal or public law related disputes may not be solved through arbitration.

The award that is passed through the arbitration process are given statutory power, and are thus binding upon both the parties at dispute, and it is also considered a decree of the court. Though sometimes, arbitral awards may be non-binding too. Only difference between binding and non-binding awards is that, the decisions cannot be imposed on the parties in non binding awards. But as per the definition, non binding arbitration cannot be considered arbitration.

Arbitration consists of certain elements-

  • Arbitration Agreement- Defined under section 7 of the Arbitration and Conciliation Act 1996. This agreement is needed to be submitted in writing to the arbitrator[1]. Oral agreements are not accepted.
  • Arbitral Award- It is the decision made by the arbitral tribunal, after the arbitral proceedings, that is binding on both the parties, as it is considered a decree of the court.
  • Arbitral Tibunal- It refers to the panel where one or more than one adjudicators sit and resolve the disputes between the parties through arbitration.


Arbitration is a fast, cheap, and easy method to resolve a dispute, rather than legal proceeding of court. It is a method of alternate dispute resolution, and many times, the parties to a conflict or dispute, are suggested by the court to get their dispute resolved through arbitration. In arbitration, the parties can choose their own judge, the arbitrator, as compared to the court.

The language of the arbitral proceedings can be chosen by the parties as compared to courts. Arbitration reduces the number of pending cases in the court, and thus reduces the burden on the courts to pass judgments.

Therefore, Arbitration is not only beneficial for the courts, but also to the parties at dispute. Overall, ninety percent of the disputes are solved through Alternate dispute resolution methods, while only ten percent of the disputes are resolved by the courts.

[1] Mother Boon Foods Pvt Ltd. V. Mindscape Online Marketing Pvt. Ltd. OMP (COMM) 136/2017

This Article Is Authored By Divyanshu Mishra, Student of BBA LL.B (Hons.), Amity University, Lucknow

Also Read – Two Tier Arbitration in India: Good or Not !!

Law Corner

Leave a Comment