Arbitration is a process where a dispute is submitted to an impartial third party, whose decision is usually binding. It involves both parties presenting their case to an arbitrator they choose or who is appointed by statute. The arbitrator reviews evidence and issues a decision based on equity and justice. Arbitration is best for resolving contractual disputes, while mediation is better for disputes over interests. Arbitration has advantages like bringing the process closer to the parties and being more flexible, expeditious and cost effective than litigation. There are two main types - voluntary arbitration agreed to by both parties, and compulsory arbitration required without consent.

1. ARBITRATION

2. Concept Arbitration is a means of securing an award on a conflict issue by reference to a third party. It is a process in which a dispute is submitted to an impartial outsider who makes a decision which is usually binding on both the parties. It is a process where there is a hearing and a determination of a cause between parties in controversy by a person or persons chosen by them, or appointed under a statutory provision. The parties submit their disputes/issues and are bound by the award of an arbitrator in relation to the matter which is in dispute between them.

3. Basics The arbitrator enforces his own point of view on the contending parties and the opinions of the participants are not given any predominance. Arbitration is a judicial process The award of the arbitrator is binding and rests on equity and justice, i.e., there is no scope for compromise Arbitration is best suited for the settlement of contractual rights, whereas mediation is suited to the adjustment of disputes over interests.

4. Advantages of Arbitration Since it is established by the parties themselves, arbitration has the particular advantage of bringing the dispute settlement procedure down to the level of the parties to the dispute. Workers and management tend to have greater faith and confidence in a settlement machinery which is in effect their own. Since arbitration is established by agreement, it is more flexible than other procedures and can be adjusted to the views, desires and experience of the parties and to the circumstances obtaining in the undertaking or industry.

5. Contd. This procedure, operating at the level closest to the parties to the disputes, has the advantage of enabling the arbitrators to acquire a much greater familiarity with the characteristics of the particular industry or undertaking than most courts or tribunals. The procedure is relatively expeditious when compared to that in ordinary courts or labour tribunals. It cuts down delays and results in a prompt settlement of differences. It is informal in character because the disputes are handled by the parties themselves, often without recourse to lawyers. Arbitration, therefore, is a less expensive than other procedures.

6. Contd. Awards are capable of implementation without any grudge on the part of both the parties of the dispute and do not lead to further chances of litigation. Since arbitration is based on the consent of both the parties, it helps building up a sound base for healthy industrial relations, mutual understanding and co-operation.' "It is popular because it is suitable and compelling. It is far better than a costly work-stoppage, even though not wholly satisfactory from either parties' point of views."

7. Types of Arbitration Voluntary arbitration : implies that the two contending parties, unable to compose their differences by themselves or with the help of the mediator or conciliator, agree to submit the conflict/dispute to an impartial authority, whose decision they are ready to accept. In other words, under voluntary arbitration, the parties to the dispute can, and do, themselves refer voluntarily any dispute to arbitration before it is referred for adjudication.

8. Essentials of voluntary arbitration The voluntary submission of dispute to an arbitrator The subsequent attendance of witnesses and investigations The enforcement of an award may not be necessary and binding because there is no compulsion. But, generally, the acceptance of arbitration implies the acceptance of its award-be it favorable or unfavorable; and Voluntary arbitration may be specially needed for disputes arising under agreements /contracts

9. Compulsory Arbitration Compulsory arbitration, is one where the parties are required to accept arbitration without any willingness on their part. When one of the parties to an industrial dispute feels aggrieved by an act of the other, it may apply to the appropriate government to refer the dispute to an adjudication machinery. Such reference of a dispute is known as 'compulsory' or 'involuntary' reference, because reference in such circumstances does not depend on the sweet will of both the contending parties or any party to the dispute. It is entirely the discretion of the appropriate government based on the question of existing dispute, or on the apprehension that an industrial dispute will emerge in a particular establishment.

10. Essentials of Compulsory Arbitration the parties fail to arrive at a settlement by a voluntary method; or when there 'is a national emergency which requires that the wheels of production should not be obstructed by frequent work-stoppages; or the country is passing through grave economic crisis; or there is a grave public dissatisfaction with the existing industrial relations; or (v) industries of strategic importance are involved; or

11. Contd. industries of strategic importance are involved; or parties are ill balanced, i.e., where the unions are weak, ill- organized, and powerless and the means of production are in the hands of the capitalists who are well-organized and powerful; or public interest and the working conditions have to be safeguarded and regulated by the state. Compulsory arbitration leaves no scope for strikes and lockouts; it deprives both the parties of their very important and fundamental rights.

12. Reference of Dispute to Arbitration Under Industrial Disputes Act, 1947 Under the Industrial Disputes Act, 1947, a dispute may be referred to arbitration under the following conditions: An industrial dispute exists or is apprehended in an establishment; The employer and the workers agree, in writing, to refer the dispute to arbitration; The arbitration agreement is in the prescribed form and signed by the parties to it in the prescribed manner; The agreement must be accompanied by the consent, in writing, of the arbitrator or arbitrators;

13. Contd. The dispute must be referred to arbitration at any time before it has been referred to a labour court or tribunal or a national tribunal; The reference must be to the person or persons specified in the arbitration agreement to act as arbitrator/arbitrators; The arbitration agreement must set forth the issue/issues to be decided by the arbitration procedure and a copy of the agreement is forwarded to the government and the conciliation officer.

14. Procedure for Investigation After the dispute has been referred to the arbitrator, he will hear both the parties. Hearing involves mastery of the facts of a particular dispute as well as the relevant provisions of the collective agreement and of the past practices of the parties in relation to matters relevant to the dispute. An investigation of the facts and circumstances of the dispute is of great importance. The arbitrator may call witnesses, get evidence and relevant records and documents, (bearing on the case) and arbitration decisions by other arbitrators in similar cases, that may suggest a line of reasoning. When an important witness is unable to attend, sworn affidavit is often used.

15. After the collection of facts and supporting materials, arguments take place. Certain principles are followed by an arbitrator while dealing with a particular dispute, namely: Fair hearing , which demands that an opportunity should be given to both the parties to be heard and cross-examined. Principle of natural justice requires that a party should have due notice of proceedings, and it must know what are the issues involved and what part it has to play.

16. The party should be free to give any evidence which is relevant to the enquiry and on which it relies for its arguments. The evidence given by one party should be taken in the presence of the other party so that the other party may rebut and place counter evidence, if necessary. The arbitrator should not rely on any document which is not shown and explained to the other party and to which a reply has not been received. He has to be completely impartial without any bias or prejudice against anybody.

17. Submission of Award The arbitrator, after investigating the dispute, has to submit his award to the government. The award will have the same legal force as the judgment of a labour court or tribunal. The award must be signed by the arbitrator.

18. While writing his award, the arbitrator has to ensure that: The award is in line with the terms of reference and that it does not go beyond its jurisdiction; It must be precise and definite, that is, it must be clear, unambiguous and without any, vagueness, and that it is not in any way capable of being misunderstood or misinterpreted; It should be capable of being enforced or implemented; in other words, it should not contain directives or provision which apparently seem impossible of enforcement;

19. The award should contain a date or a specific period for its implementation; The award should not violate any provision of any existing law or settlement legally arrived at, or one which is binding on parties The award should contain sufficient justification or reasons for the settlement arrived at by the arbitrator.

20. Evils of Compulsory Arbitration Compulsory arbitration promotes and prolongs industrial disputes; Compulsory arbitration undermines self-government in industry, i.e., it hampers the development of industrial democracy; It takes away from the employers and unions the responsibility of working out their mutual problems and transfers it to government-created tribunals;

21. It kills collective bargaining and replaces it with litigation; it allows the parties to avoid unpleasant confrontation of their difficulties, creating a dependency upon public authority; By requiring even an air of compulsory labour, it subjects workers to involuntary servitude; It exposes workers to arbitrary restraints and penalties before trial and correction;