August 4, 2021

Arbitration Agreement under Arbitration and Conciliation Act

arbitration

Definition of Arbitration Agreement

The Arbitration agreement is the basis of any agreement. It is basically a clause provided in the contract which is submitted to the arbitration on which the dispute is been arised. It is also the agreement to which the dispute has been already arisen had submitted the dispute to the arbitration.

Enforcement of Arbitration Agreement under Arbitration and Conciliation Act, 1996

There are two types of enforcement the first is the right to waive the power to solve the dispute or adjudicate with regard to the courts and secondly to provide jurisdiction to the arbitrators that is in the hands of the private hands.

The Enforcement of the agreement can be done under the UNCITRAL Model Law and the New York Conventions

The model law defines the Arbitration Agreement as follows:

“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”

With regard to the New York Convention the definition states that

““Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractua1 or not, concerning a subject matter capable of settlement by arbitration”

If the Applicable law is is based on the modern law then the parties will continue to the arbitration clause as the agreement. in other case the applicable law will require assent from both the parties.

Applicability of Law

The law which is applicable will be a major governing factor:

The first one is the law chosen by the parties: In some case there are laws which are chosen by the parties and that govern the arbitration agreement

The second is the law that is applicable to the contract law applicable to contracts: the second is that the law which is applicable to the law of contact will be applicable to the law of the arbitration agreement.

The third is the procedural law that is applicable to the arbitration: in the absence of the agreement the procedural law will the law of the law of arbitration

The fourth and the final is the law of the place of the arbitration: the law of the place of arbitration is chosen as the said law to govern the arbitration

““Under the New York Convention, the validity of the arbitration agreement is, in the first place, subject to the law chosen by the parties. Otherwise, the law of the place of arbitration shall apply. This solution, clearly established when recognition or enforcement of an award is requested in court, may also reasonably be applied when the question is raised at the moment of requesting recognition of the arbitration agreement in court”

Essential Elements of Arbitration Agreement under Arbitration and Conciliation Act

(1) It must be arisen out of a mutual consent

(2) The parties must have the legal capacity to enter into a agreement

(3) The agreement must be made in writing

(4) It must be arisen out of the well-defined legal relationship

(5) The subject matter must be arbitrable

Termination of Arbitration Agreement under Arbitration and Conciliation Act

The termination of the arbitration agreement will terminate by a mutual consent by both the parties Another reason might be death of one of the parties. Another common reason is the parties going to insolvent or bankruptcy proceedings are been initiated against him

In case of the arbitrators in many laws and jurisdiction the death of the arbitrator does not stop the arbitration process and a replacement is been provided but in some jurisdiction the death effects the proceedings.

Severability of the Arbitration Agreement under Arbitration and Conciliation Act

It was interpreted that in a agreement forms a part of the clause in the contract that is the clause was accessory to the contract of the arbitration. Therefore, it was concluded that if the contract remains invalid the arbitration agreement would also remain to be invalid.

In lieu of that the doctrine of severability came up the arbitration agreement is now regarded as autonomous and separate from the main contract. the invalidity of the contract do not make the automatic making the arbitration agreement invalid. The Model Law expressly incorporates these principles.

Judicial Intervention in Arbitration

Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part. (Section 5 of the Arbitration and Conciliation Act)

The Arbitration and Conciliation Act) provides that in a Arbitration proceeding there must be a minimal amount of intervention.

Court cannot substitute its views over that of the arbitrators held in In a recent case of Ssangyong Engineering & Construction v. National Highways Authority of India.

In McDermott International Inc. v. Burn Standards Co. Ltd. In this case, the Court stated that the Arbitration and Conciliation Act, 1996 makes provision for the supervisory role of Courts, for the review of the arbitral award only to ensure fairness. (the court has the power to judicial review under Section 34 of the Arbitration and Conciliation Act))

Conclusion

The Arbitration Agreement remains of the most important element in the arbitration. The agreement defines the power and the jurisdiction of the arbitration agreement. The rule which follows the agreement can be followed by many numbers of ways and it depends upon the parties to the agreement to decide the rule which will be governing the agreement. The model law and the New York convention follows the rule of severability and competence competence doctrines.

For more notes on Arbitration and Conciliation Act, Click Here.

For law notes, Click Here.


Author Details: Shubhang Gomasta (LLM student, MATS University, Raipur, Chattisgarh).

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