Who Can Enter Into Arbitration Agreement?

An arbitration agreement is a special kind of arrangement where parties agree to resolve their disputes outside of court, using an arbitrator or a panel of arbitrators. Similar to making contracts, not just anyone can enter into an arbitration agreement. There are specific criteria that need to be met for the agreement to be valid and enforceable.

Meaning of Arbitration Agreement

In the Arbitration Act, Section 7 helps us understand what an Arbitration Agreement is and how it’s formed. This gives us a clear picture of the agreement from different angles.

As mentioned before, an Arbitration Agreement can be part of a contract, like a special section or it can be a separate agreement. Remember, an Arbitration Agreement is considered “written” if it’s in a document signed by the people involved or in their written conversations like emails, faxes, letters or other messages.

These written records are proof that the agreement exists, especially when one party challenges that there was no agreement. So, according to Section 7, an agreement doesn’t always have to be written and signed by both sides. It can also be understood from the way both parties act, informally, by sharing letters and messages through fax, emails and so on.

Who Can Enter into an Arbitration Agreement?

The rules for who can make an arbitration agreement are the same as for any regular contract. If someone isn’t capable, the agreement won’t count.

Just like with other contracts, only people who are capable of making contracts in the first place can enter into an arbitration agreement. For an agreement to be valid, the people involved need to be legally able to make contracts. If they’re not able, the law says the agreement is no good.

According to the law, these kinds of people can make an arbitration agreement:

• Adults (as defined in Section 3 of the Indian Majority Act, 1875).
• People who are mentally sound (as defined in Section 12 of the Indian Contract Act, 1872).
• Anyone who isn’t disqualified by the law.

Both parties involved in the contract need to give their written agreement to enter into the contract. This is usually done by signing the arbitration agreement. The signature must be given willingly, without any unfair pressure.

Competent to Contract

As per Sections 11 and 12 of the Indian Contract Act, the following people are competent to contracts:

• Anyone who’s reached majority: Section 11 states that anyone who’s 18 years old or older can make a contract.
• People who are mentally well: Section 12 says that people who are mentally healthy can make contracts. If someone is mentally unwell when they’re making the contract, they can’t make a contract.
• People who aren’t banned by the law: According to Section 11, anyone not prohibited by the law can make a contract.

Conclusion

People who can enter into arbitration agreement include those with age of majority, sound minds and those who are not disqualified by law. All parties must willingly express consent through their signatures, ensuring a fair and legally compliant alternative to court dispute resolution.