Arbitration: In a Nutshell

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Definitions of Arbitration – The term ‘arbitration’ has been given different yet similar meanings such as:

  • Black’s Law Dictionary: “The reference of a dispute to an impartial (third) person chosen by the parties to the dispute who agree in advance to abide by the arbitrator’s award issued after a hearing[1] at which both parties have an opportunity to be heard.”[2]
  • Shorter Oxford English Dictionary: “Uncontrolled decision”; “The settlement of a question at issue by one to whom the parties agree to refer their claims in order to obtain an equitable decision.”[3]
  • Qatar Arbitration Law: “A legal consensual method to settle the dispute in lieu of resorting to the judiciary, whether the entity undertaking the arbitration procedures is, upon the agreement of the Parties, a permanent Arbitration Centre or otherwise.”[4]
  • UAE Arbitration Law: “A method that is regulated by Law, by which a dispute which has arisen between two Parties or more is decided by a binding decision through an Arbitral Tribunal upon the agreement of Parties.”[5]
  • Halsbury’s Laws of England: “Arbitration is a process used by the agreement of the parties to resolve disputes. In arbitrations, disputes are resolved, with binding effect, by a person or persons acting in a judicial manner in private, rather than by a national court of law that would have jurisdiction but for the agreement of the parties to exclude it. The decision of the arbitral tribunal is usually called an award.”[6]
  • In Re Curtis Arbitration: “Arbitration is an arrangement for taking and abiding by the judgment of selected persons in some disputed matter, instead of carrying it to the established tribunals of justice; and is intended to avoid the formalities, the delay, the expense, and vexation of ordinary litigation.”[7]
  • Chief Justice of India, N V Ramana (as he then was): “Arbitration is the best-suited dispute resolution mechanism for the commercial world. It is an effective alternative to traditional litigation and is regulated primarily by the terms previously agreed upon by the parties themselves. The process is consensual, confidential and the result is binding”.[8]
  • Martin Domke: “The process by which parties voluntarily refer their disputes to an impartial third person, an arbitrator, selected by them for a decision based on the evidence and arguments to be presented before the arbitration tribunal. The parties agree in advance that the arbitrator’s determination, the award, will be accepted as final and binding upon them.”[9]
  • René David: “A device whereby the settlement of a question, which is of interest for two or more persons, is entrusted to one or more other persons – the arbitrator or arbitrators – who derive their powers from a private agreement, not from the authorities of a State, and who are to proceed and decide the case on the basis of such an agreement.”[10]

In short, arbitration is an excellent alternative to litigation. It is a time and cost-efficient method of resolving disputes where the parties oust the jurisdiction of the courts and instead take their dispute to one or more third persons chosen by them—in a word, the arbitrator(s). It provides the parties autonomy, and the proceedings are confidential in nature. It also provides for flexible procedures to be followed, unlike litigations, that can be agreed upon between the parties.

Disputants agree to submit their disputes to arbitrator(s) whose judgment they are prepared to trust. He or she listens to the parties, considers the facts and the arguments, and makes a decision. That decision is final and binding on the parties—and it is final and binding because the parties have agreed that it should be, rather than because of the coercive power of any state.[11] Arbitration, is an effective way of obtaining a final and binding decision on a dispute, or series of disputes, without reference to a court of law (although, because of national laws and international treaties such as the New York Convention, that decision will generally be enforceable by a court of law if the losing party fails to implement voluntarily).[12]

The Qatar Court of Cassation noted that arbitration is a legal system by which a binding judgment is adjudicated in a legal dispute between two or more parties by a person or persons of third parties who derive their task from the agreement of the parties to the dispute.[13]

The salient features of an arbitration can be said to be that:

  • it is in the form of a written[14] arbitration agreement[15];
  • it is a private and non-national system of dispute resolution;
  • the parties are relatively free to agree on how their disputes are resolved and can refer the dispute to arbitration[16];
  • it is a fair resolution of disputes by an impartial tribunal that may be selected by the parties;
  • it is without unnecessary delay or expense[17];
  • there should be minimal court intervention;
  • it results in a binding enforceable award.

With reference to the written arbitration agreement, what is considered written and what is not can itself be debatable given especially the innovation in technology. Therefore, some countries have gone to a great extent to clarify what constitutes a ‘written’ arbitration agreement in their national legislations.[18]

Arbitration is not a mediation, adjudication, negotiation, litigation[19], expert determination or any other form of alternative dispute resolution. However, multi-tier arbitration clauses exist in which along with arbitration, mediation, negotiation or other forms of alternative dispute resolution may also be involved.

Generally, it is understood that the arbitrations are voluntary i.e. the parties give mutual and free consent to refer their disputes to arbitration in the form of an arbitration agreement, however, it could be compulsory as well.[20]

In sum, arbitration has created certainty that commercial transactions could be upheld; it has provided a mechanism for private persons or States to bring claims against other private persons or States and it has even avoided war between states.[21]

Author: Vikrant Nehra


[1] An exception to this is documents only arbitration where there is no hearing, and the arbitrator decides on the basis of the written submissions of the parties.

[2] Black’s Law Dictionary (5th ed., 1979).

[3] The Shorter Oxford English Dictionary (3rd ed, 1969).

[4] Qatar’s Law No. (2) of 2017 on Promulgating the Law of Arbitration in the Civil and Commercial Matters, Article (1).

[5] UAE’s Federal Law No. 6 on Arbitration, Article 1.

[6] Halsbury’s Laws of England (5th ed, LexisNexis UK 2008), para 501.

[7] In Re Curtis Arbitration, Supreme Court of Errors of Connecticut, July 9, 1894, 64 Conn. 501, 30 A. 769, 42 Am.St.Rep. 200.

[8] Arbitration best-suited dispute resolution mechanism for commercial world, says CJI, available at: (last visited on August 11, 2022).

[9] Domke on Commercial Arbitration, 1.

[10] Martin Hunter, Arbitration in International Trade by Professor René David, Arbitration International, Volume 3, Issue 2, 1 April 1987, 5.

[11] However, in limited circumstances the arbitral award can be set aside or refused to be enforced.

[12] Nigel Blackaby, Constantine Partasides, et al., Redfern and Hunter on International Arbitration (6th ed.), (Kluwer Law International; Oxford University Press 2015) p. 2.

[13] Appeal No. 358 of 2015, Qatar Court of Cassation, the Court of Civil and Commercial Matters dated February 2, 2016.

[14] See, e.g., UNCITRAL Model Law, Article 7(2) (“[t]he arbitration agreement shall be in writing.”); Qatar’s Law No. (2) of 2017 on Promulgating the Law of Arbitration in the Civil and Commercial Matters, Article (7/Item 3) (“[t]he Arbitration Agreement shall be in writing otherwise it shall be invalid.”); Federal Law No. 6 of UAE on Arbitration, Article (7/1) (“[a]n Arbitration Agreement must be made in writing, or otherwise it shall be null and void.”); The (Indian) Arbitration and Conciliation Act, 1996, Section 7(3) (“[a]n arbitration agreement shall be in writing.”); (English) Arbitration Act 1996, Section 5(1) (“[t]he provisions of this Part apply only where the arbitration agreement is in writing, and any other agreement between the parties as to any matter is effective for the purpose of this Part only if in writing.”); Singapore’s International Arbitration Act 1994, Section 2A(3) (“[a]n arbitration agreement must be in writing.”).

[15] The arbitration agreement may be part of a contract or a separate agreement in itself. Main Street Business Funding, LLC and Robert S. Goggin, III v. Michael J. Goldner, JDJSL LLC, Dovecote Lane, LLC, Joel S. Luber and Reger Rizzo & Darnell LLP, Superior Court of Pennsylvania, 2018 WL 6191066 (Pa. Super. Ct. Nov. 28, 2018) (“[h]owever, there must be a valid agreement to arbitrate, and parties to a contract cannot be compelled to arbitrate a given issue absent an agreement between them to arbitrate that issue.”); Jagdish Chander v. Ramesh Chander & Others, Supreme Court of India, (2007) 5 SCC 719 (“[a]ny agreement or clause in an agreement requiring or contemplating a further consent or consensus before a reference to arbitration, is not an arbitration agreement, but an agreement to enter into arbitration agreement in future.”).

[16] George Russell v Anthony Snider Pellegrini, (1856) 6 Ellis and Blackburn 1020 (Lord Campbell C.J. observed “[s]omehow the Courts of law had in former times acquired a horror of arbitration; and it was even doubted if a clause for a general reference of prospective disputes was legal. I never could imagine for what reason parties should not be permitted to bind themselves to settle their disputes in any manner on which they agreed. The decision in Scott v. Avery [5 H. L. Ca. 811], that an agreement that there should be a reference before the party should be at liberty to sue might be so made as to be binding, was a very wholesome decision. The enactment in The Common Law Procedure Act, 1854, sect 11, had for its object to give the parties, who should agree that their differences should be referred to arbitration, the full benefit of such a reference.”).

[17] At least this was the objective of arbitration. However, in recent times, arbitration has become increasingly costlier and comparatively less time efficient.

[18] See, e.g., Qatar’s Law No. (2) of 2017 on Promulgating the Law of Arbitration in the Civil and Commercial Matters, Article (7/Item 3) (“[t]he Arbitration Agreement shall be considered in writing if it is contained in a document signed by the Parties, or it is in the form of paper or electronic correspondence, or in any other form done by the means of communication which allows for written proof of receipt.”); Federal Law No. 6 of UAE on Arbitration, Article (7/2) (“[t]he requirement that an Arbitration Agreement be in writing is met in the following cases: a- If it is contained in a document signed by the Parties or mentioned in an exchange of letters or other means of written communication or made by an electronic communication according to the applicable rules in the State regarding the electronic transactions. b- If a reference is made in a written contract to the terms of a Model Contract, international agreement or any other document containing an arbitration clause, where such reference is clear as to make that clause part of the contract. c- If an Arbitration Agreement is made while the dispute is pending before the competent Court, the Court shall issue its decision confirming the Arbitration Agreement, and the litigants shall freely initiate the arbitration proceedings in the place and time determined thereof and under the terms governing such arbitration, and the Court shall consider the lawsuit as if never existed. d- If it is contained in an exchange of written statements between the Parties during the arbitration proceedings or upon acknowledgement before the Court, where one party requests that the dispute be referred for Arbitration and no objection is made by the other party in the course of his defence.”); The (Indian) Arbitration and Conciliation Act, 1996, Section 7(4) (“[a]n arbitration agreement is in writing if it is contained in- (a) a document signed by the parties; (b) an exchange of letters, telex, telegrams or other means of telecommunication including communication through electronic means which provide a record of the agreement; or (c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.”);  (English) Arbitration Act 1996, Section 5(2) (“[t]here is an agreement in writing- (a) if the agreement is made in writing (whether or not it is signed by the parties), (b) if the agreement is made by exchange of communications in writing, or (c) if the agreement is evidenced in writing.”); Singapore’s International Arbitration Act 1994, Section 2A(4) (“[a]n arbitration agreement is in writing if its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct or by other means.”).

[19] Michael V. PISANO, Individually and as Administrator of the Estate of Vincent F. Pisano, Deceased v. EXTENDICARE HOMES, INC., Operating under the Fictitious Name Belair Health and Rehabilitation Center, Superior Court of Pennsylvania, 77 A.3d 651, 2013 PA Super 232 (“compelling arbitration upon individuals who did not waive their right to a jury trial would infringe upon wrongful death claimants’ constitutional rights.”).

[20] Black’s Law Dictionary (5th Edn., 1979) (“[c]ompulsory arbitration is that which occurs when the consent of one of the parties is enforced by statutory provisions. Examples of such are state statutes requiring compulsory arbitration of labor disputes involving public employees.”).

[21] David Rivkin, “The Impact of International Arbitration on the Rule of Law”, International Arbitration Lecture 2012.

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