Difference Between Arbitration and Adjudication
Difference Between Arbitration and Adjudication
1. Meaning
| Term | Definition |
|---|---|
| Arbitration | A private dispute resolution process where parties agree to refer their dispute to an impartial third party (arbitrator), whose decision is usually binding. |
| Adjudication | A decision-making process where a neutral third party (adjudicator) determines the rights and obligations of the parties, often under a legal framework, but it may or may not be binding immediately. |
2. Nature of Process
| Aspect | Arbitration | Adjudication |
|---|---|---|
| Voluntary or Mandatory | Mostly voluntary; parties agree beforehand to arbitrate disputes | Can be mandatory or contractual, e.g., under construction contracts |
| Flexibility | More flexible, parties control procedure and choice of arbitrator | More formal and rigid; procedures may be pre-defined |
| Binding Effect | Decisions (awards) are final and binding and enforceable like a court decree | Often interim or binding, but sometimes open to appeal or further challenge |
| Jurisdiction | Private jurisdiction agreed by parties | Often statutory or contractually mandated authority |
| Scope | Broader, can handle various disputes | Usually limited to specific areas, e.g., construction disputes |
3. Purpose
| Arbitration | Adjudication |
|---|---|
| To resolve disputes through a binding decision | To provide quick interim decisions or settle disputes under specific contracts |
4. Legal Framework
Arbitration: Governed by the Arbitration and Conciliation Act, 1996 (in India).
Adjudication: Can be governed by contractual clauses, statutes (like the Construction Industry Model Adjudication Rules), or specific laws.
5. Case Law
🏛️ K.K Verma v. Union of India (1984) AIR 993
The Supreme Court clarified that arbitration is a consensual process based on parties' agreement.
Emphasized the binding nature of arbitration awards.
🏛️ M/s. Gammon India Ltd. v. National Highways Authority of India (NHAI) (2010) SCC 547
Discussed adjudication in the context of construction disputes.
Held that adjudication is a quick dispute resolution mechanism to keep projects moving.
Adjudicator’s decisions can be challenged later but are binding temporarily.
6. Comparison Table
| Feature | Arbitration | Adjudication |
|---|---|---|
| Initiation | By agreement between parties | Often mandated by contract or statute |
| Decision-maker | Arbitrator(s) | Adjudicator |
| Procedure | Flexible, controlled by parties | More formal and time-bound |
| Finality of Decision | Binding and final, limited grounds for challenge | Often interim, subject to review or appeal |
| Enforceability | Award enforceable like court decree | Enforcement depends on contract/statute |
| Purpose | Full and final resolution of dispute | Interim or specialized dispute resolution |
7. Summary
Arbitration is a formal, binding dispute resolution method chosen by parties.
Adjudication is often a faster, less formal process, especially in commercial or construction sectors, where decisions may be interim or provisional.
Both aim to reduce court burden but differ in process, finality, and enforceability.
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