arbitration agreement

Arbitration Agreement.
Arbitration means the determination of a dispute by the decision of one or more persons called Arbitrators. The Arbitrators form a ‘tribunal’, chosen by the consent of parties to adjudicate their differences. In fact, all questions which might be referred to a civil court may be referred to it. Hence, Arbitration is a settlement of dispute by the decision of the Arbitrator in a speedy manner, so that it may not become the subject matter of further litigation between the parties. Agreement: The Arbitration agreement is the basic foundation. It is between the two parties and must be in writing, setting out the disputes between the parties and requiring settlement by Arbitration in a quasi judicial manner. According to Sec.3 the Arbitration agreement is deemed to include the provisions set out in the First schedule of the Act, unless the parties provide otherwise. Hence, an agreement between the parties to refer the dispute to an arbitrator and to abide by his decision amounts to an arbitration agreement. It is this agreement that gives jurisdiction to the Arbitrator. A new agreement may supercede the original agreement.

According to Section 70f Arbitration Conciliation Act, 1996 the Essentials and Kinds of Arbitration
Agreement are:
1. “Arbitration agreement” 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 a defined legal relationship, whether contractual or not.
2. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
3. An arbitration agreement shall be in writing.
4. An arbitration agreement is in writing if it is contained in :
1) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or
2) An exchange of statements of claim and defense in which the existence of the agreement is alleged by one party and not denied by the other.
5. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.
There are eight rules provided for in the schedule mentioning the implied
conditions of the Arbitration agreement.
The eight implied conditions refer to :
i) The reference may be made to a single arbitrator. But, either side may appoint one arbitrator, if they so desire. If there are two arbitrators, the arbitrator should appoint an umpire within one month.
ii) The award shall be final and binding on the parties.
iii) The arbitrators must make the award within four months or within such time, the court may extend. If not so made, either party . to the agreement may treat the arbitrator as at an end.
iv) If a umpire is appointed, the award should be given in two months or as extended by the court.
v) The costs of Arbitration, shall be borne by the parties, as may be decided by Arbitrators.
vi) Parties should make submissions on oath or affirmation before the Arbitrators, and produce all evidence papers, books, documents, accounts etc.
Matters which may be referred :
Only matters of civil nature (Sn 9 C P C), may be referred to
The following are matters which cannot be referred :
1. Criminal matters.
2. Matrimonial matters.
3. Insolvency, Lunacy proceedings
4. Testamentary matters.
1. Arbitration between parties, without court’s intervention.
2. Arbitration with court’s intervention.
3. Arbitration, when suit is pending in the court.
Binding nature:
Award of arbitrators is binding on the parties. Arbitration Act has made provisions for enforcement by passing a decree on the award.
Stay of legal proceedings :
If the parties have an agreement to refer to arbitration for settlement of disputes, the suit filed by one of the parties, may be stayed by the court. Exhaustion of remedy rule applies.

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