In the present globalised and decentralized world, India may not afford to keep its economy closed and secluded. Thus, an interaction between Indian economy and world’s economy is inevitable .Arbitration is supposed to be a simple, user-friendly process. In fact, if arbitration is well designed and competently handled. Arbitration is often categorized as a kind of Alternative Dispute Resolution process. Arbitration resolves disputes when the parties cannot agree. Like litigation, it is a tiebreaker, to be used if and only if, the parties cannot settle their differences by agreement. Arbitration is increasingly the dispute resolution mechanism of choice in international transactions.