What is arbitration?
Arbitration means settlement of a dispute between parties to a contract by a neutral third party i.e. without resorting to court action. During arbitration, third party listens to both sides of a legal disagreement. With the documents provided and the oral statements of each person involved, the arbitrator will issue a resolution.
The Arbitration and Conciliation Act, 1996 is an Act that regulates domestic arbitration in India.
Advantages of arbitration:
•The result of arbitration is fair outcome as arbitrator is chosen by the parties and parties agree to the arbitrator.
•Arbitration is more flexible in terms of scheduling as a legal resolution through arbitration is much quicker than waiting for a trial date.
•The process of arbitration is cheaper and both parties split the cost of the arbitration.
•The decision of arbitrator cannot be appealed as results are an agreeable outcome.
•It is more private than a trial.
•Appointment of an attorney for representation is not necessary.
Disadvantages of arbitration:
•The formal appeals process is not available. The decision of arbitrator is final.
•Arbitrators do not have to follow specific regulations when accepting evidence.
•The arbitration process generally includes documents and not witnesses, voiding the ability to cross-examine.
•The level of confidentiality can be disadvantageous to one party and there is also a lack of transparency.
Scope of judicial intervention:
The scope of Judicial Intervention under Arbitration Act is limited. Section 5 of the Act provides that no judicial authority shall intervene except for cases provided in the Act. The Act was enacted to reduce the scope of judicial intervention.
The intervention of court is seen in few circumstances like, in case of fraud or bias by the Arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. The court plays the role of supervision at minimum level. Section 8 of the Act also eliminates the scope of judicial intervention and states that a judicial authority before which an action is brought in a matter, which is the subject of an arbitration agreement shall refer the parties to arbitration.
Therefore, the judicial intervention has been restricted and minimised.