Understanding the jargon called arbitration.

What is an arbitration?

Arbitration is a mechanism for adjudication of the dispute between two parties by a private person or a panel of person chosen by the parties who are called Arbitrator or Arbitral Tribunal. Arbitration is an alternative dispute resolution Technique in which the Court or the State have the very limited role to play.

Procedure of Arbitration.

Unlike Court the Arbitrator is free to choose his/her own procedure. However, the parties are free to agree on any particular procedure to be followed by an Arbitrator and in such case such procedure shall be binding upon the Arbitrator and Arbitration shall be conducted accordingly.

There are three more component of the laws governing Arbitration. The procedural law or curieal law, Lex Fori or Law of the Country by which Arbitration procedure shall be govern and the substantive law by which the rights of the parties shall be determine.

Some time another component also became relevant which is called Lex Loci which means the law of the country is which transaction is performed. An example of Lex Loci would be the two parties sitting in New Delhi enter in to a contract for sale & purchase of liquor which is prohibited in the States of Gujarat and Bihar. Now if any consignment of liquor is sold or purchased in prohibited area like Gujarat and Bihar, such transaction would be illegal and any claim based thereon shall be void.

Appointment of Arbitrator.

Appointment of Arbitrator is also governed by contract. The number of Arbitrators has to be either one or three or such odd figure. The parties can agree to the name of Arbitrator in contract or may agree to a name after the dispute has arisen but if no such agreement is reached, the one of the parties can approach to Court for appointment of Arbitrator.

It is however, seen that often the right to appoint the Arbitrator is reserved in favour of the partial having clout over the matter.

Live dispute must exist.

Existence of a live dispute is a sine que non or necessary pre-requisite of commencement of Arbitration proceeding or appointment of Arbitrator. Ordinarily a demand raised by one party and denied by another party is a sufficient evidence of existence of dispute. Often a demand raise by a party which remain un-responded by another  party can also lead to inference of dispute.

However raising of dispute and acceptance of a part payment instead of whole amount of claim would raise inference of satisfaction of claim, if the conduct of party concerned also reflect cavalier approach of not approaching for remedy for a long time.

Long delay can also a render a claim sale in certain circumstances even if such claim not beard by limitation.

Of course a claim barred by limitation shall be thrown out in limine i.e. at the out set.