Methods of disputes settlement

 There are two well-recognised methods for settlement of disputes, i.e: litigation and arbitration.

(1) Arbitration: If conciliation is not used or an agreement. cannot be achieved, the next stop often used is arbitration. When all else fails, arbitration, rather than litigation, is the preferred method for resolving international commercial disputes. The usual arbitration procedure is for the parties involved to select a disinterested and informed party or parties as referee to determine the merits of the case and make a judgement that both parties agree to honour. Although informal arbitration is workable, most arbitration is conducted under the auspices of one of the more formal domestic or international arbitration groups organised specifically to facilitate the resolution of commercial disputes. These groups have formal rules for the process and experienced arbitrators to assist. In most countries, decisions reached in formal arbitration are enforceable under the law. The popularity of arbitration has led.to a proliferation of arbitral centers in countries, organisations, and,institutions. All have adopted standardised rules and procedures to administer cases and each has its strengths and weaknesses.

(2) Litigation: Seeking justice in a court is generally avoided by parties to an agreement. The costs incurred, the frustrating delays involved, and extended aggravation make victories in law suits spurious. There are other grey areas also in litigation:

* Fear of creating a poor image and damaging public relations

* Fear of unfair treatment in a foreign court

* Difficulty in obtaining judgement that may otherwise have been possible in a mutually agreed settlement through arbitration.

* The relatively high cost and time required to settle the dispute. The issue of paying compensation to victims of the Bhopal gas tragedy has been only recently decided though decades have gone by since the disaster occurred.

* Loss of confidentiality. Unlike arbitration and conciliation that are confidential, litigation is public.

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