Types of Arbitration in India

What is Arbitration?

When parties to a legal dispute mutually consent to hand over their matter to a third person called arbitrator for resolution, it is called arbitration. It is another form of alternative dispute resolution governed by the Arbitration and Conciliation Act, 1996. The scope of arbitration makes it clear that arbitration is not the opposite but synonymous to litigation. It is just a process with more convenience while deciding legal disputes. Since arbitrators follow the applicable rules while deciding a matter through arbitration, the decision, i.e. the arbitration award is usually final. The difference between arbitration and mediation is that arbitration award is a third party’s decision, while mediation agreement is the outcome of mutual understanding of parties to dispute and the mediator is there to find a convenient way out for them. The kinds of arbitration as explained below throw some light on the process involved.

Types of arbitration

The kinds of arbitration agreement may be categorized based on the territorial jurisdiction, i.e. the place whereby matters are being dealt with. It may also depend upon the laws agreed upon to apply on the legal relationship of parties concerned. Based on this, the types of arbitration in India are classified.

1- Domestic Arbitration

When there is a dispute among two parties sharing a legal relationship whereby both of them are residing or located in India, such a resolution of dispute through arbitration is termed as domestic arbitration. In such cases, there is least confusion regarding applicable laws for deciding the matters. The arbitration lawyers in India help with representation of parties before the arbitration tribunal.

2- International Arbitration

When one of the parties belongs to countries other than India and the dispute is being resolved through arbitration as per Indian laws, it is called international arbitration. Presence of an international element is obvious in such cases. The matters under international arbitration are usually resolved beyond Indian territory.

3- International Commercial Arbitration^[1]

Where there is an international element in a commercial dispute whereby one of the parties (individual or body corporate) is Indian, resolution of disputes arising is done through laws as agreed upon in the contract. Where there is a lack of specific terms regarding dispute resolution or an agreement to follow Indian laws, the arbitration and mediation rules applicable in India are followed thereby. Such an arbitration process is called International commercial arbitration.

4- Institutional Arbitration

Types of arbitration include when there is a particular institution selected by the parties to contract in the arbitration clause, such an institution is responsible for dispute resolution through arbitration. In such cases, parties may not be required to go through the hassle of selecting the arbitrator while the institution takes charge for such tasks. Institutional arbitration helps efficient dispute resolution.

5- Ad-Hoc Arbitration

When there is no contractual compulsion and parties agree for deciding matters via arbitration through mutual consent, it is termed as ad-hoc arbitration. It is one of the most common types of arbitration in India. In such cases, parties to dispute may mutually decide the process to be followed during arbitration.

6- Fast Track Arbitration

Section 29B of Arbitration and Conciliation Act, 1996 provides for fast track procedure of arbitration. Among the other kinds of arbitration, this is the most efficient way of dispute resolution through arbitration. Things are usually summed up in documents to speed up things.

7- Contractual Arbitration

A contract is an official document in which several terms are agreed upon by the parties. Sometimes, parties to a contract include an arbitration clause which clarifies referring any dispute to arbitration before heading towards the courts. In such cases, terms mentioned in the arbitration clause decide the way parties go ahead with dispute resolution through an arbitrator.

8- Statutory Arbitration

There are some laws or statutes which specify dispute resolution through arbitration only. While dealing with legal relationships under such laws, arbitration is the way out for settling the disputes.

9- Foreign Arbitration

When one of the parties is Indian and they have mutually agreed to follow rules of a foreign land through arbitration while dealing with legal disputes, it is called foreign arbitration. In such cases, regardless of whether the arbitration takes place in India or or the other country, foreign arbitration laws are followed. 

Difference between Types of Arbitration

It is pretty clear that all the kinds of arbitration explained above have one or the other specific feature which differentiates one from another. It may be the location, the specific tribunal, the mutual decision of the parties, etc. But the main part is that arbitration is a kind of alternate dispute resolution for settling matters without court interference. Thus, there is no clear line of differentiation among the types of arbitration agreement. The scope of arbitration still remains the same regardless of which kinds of arbitration are being followed.

^[1] Section 2 (1) (f) of Arbitration and Conciliation Act, 1996.