Arbitration, a form of alternative dispute resolution, is a way to resolve disputes outside the courts. The dispute will be decided by one or more persons, which renders the ‘arbitration award’. An arbitration award is legally binding on both sides and enforceable in the courts. This will help to resolve the disputes in a short term, friendly and cost saving as well. When there is an agreement/MoU between the parties and while entering into the agreement if both the parties are agreed to solve their disputes through Arbitration, then they can appoint an Arbitrator to look after their issues in future. A person of any nationality may be an arbitrator, unless otherwise agreed by the parties, with respect to Civil issues usually retired Judge, senior Advocates may act as an Arbitrator.

Process:

• In the banking process, an Arbitration clause will be mentioned in contract, while entering into the agreement both the parties (Bank and the customer) are agreed to resolve their disputes through Arbitration and also agreed the place of Arbitration.
• Arbitrator will be appointed by the bank.
• When the dispute arises, banks file a petition before the Arbitrator to resolve their disputes.
• Considering the proof of documents, the Arbitrator issues notice to the customer/Borrower to raise their query against this petition.
• When barrower appear and raise their query against the petition filed by the bank, based on the fact, evidence Arbitrator may pass an Award.
• Even if borrower fails to appear, Arbitrator my pass an Ex-Parte Award considering the fact of the case.
• Banks may file an execution of the arbitration award after 4 months from date of passing the award, in case the award is not challenged during this time u/s 34 of the Arbitration and conciliation act. 
• There is no provision for appeal against an arbitral award and it is final and binding between the parties. However, an aggrieved party may take recourse to law court for setting aside the arbitration award on certain grounds specified in Section 34 of the Arbitration and Conciliation Act, 1996. 
• Arbitration Award has a limitation upto 12 years to file an execution.
• Through Execution attachment warrant bank can go for borrowers Movable, Immovable and salary attachment.   

Outcome: 

• Considering the case and his liability customer may come forward to compromise and clear the dues.
• Customer may contest the case.
• After passing the Award, customers may approach the judiciary to setting aside the Award passed by the Arbitrator.

Duration: Arbitration proceedings usually get over within 6 months to 2 years.