Arbitration Agreement Under Arbitration and Conciliation Act – All You Need to Know
Arbitration is a method of dispute resolution where the parties meet outside the court to resolve their disputes. It is an alternative to litigation, where the parties submit their dispute to an arbitrator or a panel of arbitrators who make a binding decision on the matter. The Indian law has provided for arbitration in the Arbitration and Conciliation Act, 1996.
One of the essential features of arbitration is the arbitration agreement, which is a written agreement between the parties to submit their disputes to arbitration. An arbitration agreement can be in the form of a clause in a contract or a separate agreement. It can be entered into before a dispute arises or after the dispute has arisen.
The Arbitration and Conciliation Act, 1996, lays down the requirements of a valid arbitration agreement. According to the act, an arbitration agreement should be in writing, and it should be signed by the parties or their authorized representatives. The agreement should identify the disputes that are to be submitted to arbitration and the arbitrator or a panel of arbitrators who will conduct the arbitration.
The act also provides that an arbitration agreement can be contained in an exchange of letters, emails or other modes of communication, which provide a record of the arbitration agreement. These written communications should indicate that an agreement has been reached to submit the dispute to arbitration and the terms of the agreement.
The act states that an arbitration agreement can be enforced by either party in the same way as a contract. Therefore, if one party refuses to participate in the arbitration process, the other party can approach the court to enforce the arbitration agreement.
One of the advantages of arbitration is that it is a private and confidential process. The parties can agree to keep the arbitration proceedings and award confidential, which is not possible in litigation. The arbitration award is binding on the parties and can be enforced by the court.
The act also provides for international commercial arbitration, where the dispute involves parties from different countries. The parties can agree to arbitrate their dispute under the rules of an institutional arbitration, such as the International Chamber of Commerce (ICC) or the London Court of International Arbitration (LCIA).
In conclusion, the arbitration agreement is a crucial element of the arbitration process. The parties should ensure that the arbitration agreement is in writing, signed by both parties, identifies the disputes to be submitted to arbitration and the arbitrator or a panel of arbitrators who will conduct the arbitration. The parties can also agree to keep the arbitration proceedings and award confidential. The arbitration process is an effective alternative to litigation, especially in resolving commercial disputes.