It is a well-known fact that the construction industry is one of the most litigious industries. Be it construction delays, non-payments, caused overruns and wrongful termination of the project can lead to many claims and disputes. Many construction companies in India resort to Alternative Dispute Resolution (ADR) as fighting lawsuits is not just expensive but long drawn. Arbitration is one of the most common forms of ADR that construction companies rely on for solving disputes. Besides arbitration, there are some other types of ADR forms, such as negotiation and mediation.
1. What is arbitration in Alternative Dispute Resolution in India?
Arbitration is one of the most commonly used methods of Alternative Dispute Resolution in India. It is a process in which two or more parties agree to submit their dispute to a neutral third party (an arbitrator) for a binding decision. An arbitrator conducts a hearing the way it is done in a trial in court. The decision of the arbitrator is legally binding. Many construction companies prefer arbitration as the process is fast and cost-effective as compared to litigation.
2. Arbitration is more formal than mediation:
Unlike mediation, which is non-binding, arbitration offers a more formal way to resolve disputes without going to court. A mediator does not pronounce an award but helps the parties communicate so they can try to resolve the dispute themselves. On the other hand, in arbitration, a private tribunal determines the outcome and it is final and binding on the parties involved. Both parties can choose a single arbitrator or go for a three-member tribunal. Each party appoints one arbitrator each; those two arbitrators decide on the presiding arbitrator.
Note: Unlike mediation, a party cannot withdraw from arbitration.
3. Arbitration is agreed by both parties:
Arbitration is also consensual, meaning that both sides agree to submit their dispute to arbitration and be bound by the arbitrator’s decision. To avoid lawsuits, many construction companies even insert an arbitration clause in the contract. A dispute can be referred to arbitration by submitting a submission agreement. If the parties do not agree to submit their dispute to arbitration, the court will decide whether or not arbitration is appropriate. However, even if the court finds that arbitration is appropriate, the parties still have the right to reject arbitration and proceed with litigation.
4. The decision of arbitration will be confidential:
Arbitration is a confidential procedure. This means that all information related to the case is kept confidential and only shared with the parties involved in the case. This confidentiality helps to ensure that the parties are able to have an honest and open discussion about their dispute without worrying about the information being made public.
How can Contract Square Pvt Ltd help your business resolve construction disputes?
As one of the leading construction claim consultants, we have highly-qualified and well-experienced arbitration and dispute resolution experts who can help you in resolving all your construction disputes. Our team can prepare all the paperwork, file claims and rejoinders and battle out the case before the tribunal to ensure financial rewards for our clients. To know how we can help your construction company, call us at 9051739355.