Arbitration may be defined as the process of resolution of disputes out of the courts of law by person(s) nominated by the parties known as arbitrator(s) who pass an award which is binding on both the parties. However, the existence of an arbitration agreement is a precondition for the reference of a dispute to arbitration. Hence, in order to refer the dispute to arbitration, the parties must submit to arbitration by consensually signing the arbitration agreement. Once an award is passed, it can be enforced by the decree holder with the assistance of the court.
Arbitration is an alternative to litigation. It is primarily used to resolve disputes arising from commercial contracts, especially contracts with an international element. Arbitration is also the designated default dispute resolution process in disputes between governments and companies under international trade or investment treaties. By agreement between the parties (usually contained in a clause of the contract in dispute), an independent arbitrator, or a panel of three arbitrators (the tribunal), is appointed to hear the dispute and to produce a ruling (the award) on the merits.
This paper deals with the basic concepts of international Commercial Arbitration and its correlation with litigation. This paper discusses in detail the importance of Arbitration and the resolution of disputes without the help of courts. This paper also discusses the procedure, limitations and draws a comparison between the two processes of adjudication of disputes. This paper informs the reader about the various arbitration centers all over the world and their governing laws thereof. In conclusion, the paper deals with which is the better procedure along with reasoning for the same.