Section 7 of the Arbitration and Conciliation Act of 1996 defines arbitration agreement as an agreement by the parties to refer to arbitration all or some disputes which have arisen or will arise on a future date between them with reference to a defined legal relationship, whether contractual or not. It also has the advantage of being cost-effective and expedient unlike traditional Court procedures. Arbitration is a quasi-judicial process and the disputes between the parties are not referred to normal courts but to domestic tribunals. It saves the parties from undergoing the hassle of waiting for years together for their cases to be heard and finalised in Courts. The decision of the third party is binding on the parties to dispute.Īrbitration, in lucid terms, means referring of disputes by the parties to a neutral third party, this neutral third party is known as an arbitrator, he adjudicates over the disputes and his decisions are binding on the parties. Arbitration is governed by the Arbitration and Conciliation Act of 1996. Arbitration is a form of alternative dispute resolution mechanism, which gives the parties in dispute an opportunity to refer their present or future disputes to a neutral third party, who is known as the arbitrator, instead of running from pillar to post seeking justice.
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