LawAlternative Dispute Resolutionintermediate

Arbitration

/ˌɑːrbɪˈtreɪʃən/

Dispute Resolution Term

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Definition

A private method of resolving disputes outside courts, where parties agree to submit their dispute to one or more arbitrators whose decision (award) is final and binding. Governed in India by the Arbitration and Conciliation Act, 1996 (amended in 2015, 2019, and 2021). An arbitration clause in a contract ousts civil court jurisdiction. Arbitral awards can be enforced like court decrees and challenged only on limited grounds (Section 34).

Examples

Two companies with a dispute clause in their contract cannot sue each other in civil court — they must first go to arbitration as agreed. Only if arbitration fails can they approach courts.

An international arbitration award (e.g., from ICC, London) can be enforced in India as a 'foreign award' under the New York Convention provisions of the Arbitration Act.

Case Study

In BALCO v. Kaiser Aluminium (2012), a Constitution Bench of the Supreme Court held that Part I of the Arbitration Act (Indian-seated arbitrations) and Part II (foreign awards) operate in separate domains — Indian courts cannot intervene in foreign-seated arbitrations under Part I. This overruled the widely criticised Bhatia International judgment and aligned India with international arbitration practice.

Key Cases

BALCO v. Kaiser Aluminium

2012

(2012) 9 SCC 552

Part I of the Arbitration Act does not apply to foreign-seated arbitrations. Indian courts cannot interfere in arbitrations seated abroad. Overruled Bhatia International; aligned India with international arbitration standards.

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Also Known As

ADRprivate adjudication

Synonyms

alternative dispute resolutionADRprivate adjudicationarbitral proceedings

Antonyms / Opposites

litigationcourt proceedings

Related Terms

Arbitration and Conciliation Act 1996arbitral awardSection 34mediationADRNew York Convention

Dictionary Entry

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