Arbitration: One Size Does Not Fit All: Necessity of Developing Institutional Arbitration in Developing Countries

• Author: Namrata Shah - Niyati Gandhi
• Position: National Law School of India University, Bangalore, India - National Law School of India University, Bangalore, India
• Pages: 232-242

JICLT

Journal of International Commercial Law and Technology

Vol. 6, Issue 4 (2011)

232

Arbitration: One Size Does Not Fit All:

Necessity of Developing Institutional Arbitration

in Developing Countries

Namrata Shah

National Law School of India University, Bangalore, India.

E-mail:

namratashah@nls.ac.in

, namrata.shah06@gmail.com

Niyati Gandhi

National Law School of India University, Bangalore, India.

E-mail: niyatigandhi227@gmail.com

Abstract. Litigation in developing countries has many defects which has prompted a need

for the development of alternative dispute resolution mechanisms. Arbitration, being one suc h

substitutive mechanism as a type of private litigation is the most suitable for the sa me. This paper

deals with the need to develop institutional arbitration to co-exist with ad hoc arbitration and scale

it down to be available for dispute resolution in developing countries using an illustration of India.

Certain recomme ndations to make institutional arbitration, which is considered to be appropriate

for international commercial dispute resolution, suitable for domestic disputes in developing

countries have been highlighted.

1.Introduction

“Arbitrate- Don’t Litigate”

The increase in trade and investment coupled with the growing trend of asserting legal claims has led to the

restructuring of the dispute resolution sys tem in developing countries throughout the world. The shortcomings of

litigation have come to the forefront in the develo ping nations in the contemporary period which has necessitated

the rise of alternate dispute resolutio n mechanisms. Subsequently, the alternative forums of dispute resolution

which provided the ordinary litigant with pro mptness, affordability, impartial decision making, rea sonable

solutions and efficiency gained importance and prominence in the world.

The c hanging scenario led to the accepta nce of arbitration as the substitutive redressal foru m in litigating

societies. Arbitration can be defined as “A reference o f a dispute or difference between not less than two parties

for determination after hearing both sides in a judicial manner by a person or persons other than a court of

competent jurisdiction.” The alternative resolution bodies were sought to provide a support system to the

overburdened and inefficient system of adjudication. Therefore, arbitration which was similar to litigation in the

private sector seemed the most conducive to be accepted as a surrogate.

The principles of arbitration include a fair resolution of disputes by an impar tial body without unnecessary

delay or expense with restricted interference of the courts. With these principles as the preconditions, the

varieties of arbitration have been classified into different types depending o n the terms of agreement, subject

matter of dispute and la ws governing such a rbitrations. The basic types of arbitration are domestic,

international, foreign, contractual, statutory, ad hoc and institution al based on the above mentioned criteria.

Ad hoc arbitration is a pro ceeding that requires the parties to make their own arrangements for selection of

arbitrators, designation of rules, applicable law and administrative support. On the other hand, the arbitration

clause might specify the designation of an organisation as an arb itration administrator which gives rise to