Comment on the following: Aims and Prerequisite of Arbitration.

Aim of Arbitration The 'arbitration agreement' under the Arbitration and Conciliation Act, 1996 means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of defined legal relationship whether contractual or not. Civil litigation takes years and years to settle simple disputes. Arbitration is a means devised to quick and economical settlement of a dispute between two contracting parties, who also agree as part of the main agreement to refer dispute or difference arising out of or touching upon the terms and conditions of the agreement to a third person to give his judgement, which shall be binding on both the parties. Where the decision of a person is binding on only one of the parties and not on all the parties to the dispute, it cannot be said that the function, which the person giving the decision is exercising, is arbitral in character. Prerequisites of Arbitration Every arbitration must have the following three pre-requisites: a dispute between parties to an agreement, requiring a settlement; its submission for a settlement to a third person; and a decision by such third person according to his own judgement based on the facts and circumstances of the dispute, which is binding on both the parties.