Last updated: March 11th, 2020 3:31 PM

Invoking Arbitration Clause

Arbitration under the Arbitration and Conciliation Act, 1996 can be invoked to resolve disputes quickly, at less cost when compared to that of a suit in a court of law. Further, arbitration awards are in general final and appeal is only permitted only in certain cases. Hence, arbitration can be used to resolve disputes in a very simple and more expeditious manner.  Know more about Arbitration in India.

Invoking Arbitration

Any party to a contract in which arbitration clause is there, either himself or through his/her authorised agent may refer the dispute to arbitration, as per provisions of the arbitration clause. The following is a sample arbitration clause that can be used in a legal agreement to invoke arbitration if necessary:

“In the event of a dispute arising out of or relating to this contract, including any question regarding its existence, validity or termination, the parties shall first seek settlement of that dispute by mediation in accordance with the LCIA India Mediation Rules, which Rules are deemed to be incorporated by reference into this clause. If the dispute is not settled by mediation within [     ] days of the appointment of the mediator, or such further period as the parties shall agree in writing, the dispute shall be referred to and finally resolved by arbitration under the LCIA India Arbitration Rules, which Rules are deemed to be incorporated by reference into this clause. The language to be used in the mediation and in the arbitration shall be [     ]. The governing law of the contract shall be the substantive law of [     ]. In any arbitration commenced pursuant to this clause, (i) the number of arbitrators shall be [one/three]; and (ii) the seat, or legal place, of the arbitration shall be [City and/or Country].”

In case any party disregards the agreement and files a suit in Civil Court, the other party can apply to the court for referring the dispute to arbitration as per the agreement not later than the submission of the first statement. The application must include a certified copy of the arbitration agreement and if the Court finds fit, the matter will be referred to arbitration.

Disputes that Cannot be Referred to Arbitration

Disputes relating to insolvency, criminal matters, lunacy, the appointment of a guardian to a minor, matters relating to Will, matters relating to Charitable Trust and disputes arising on the basis of an illegal contract cannot be referred to or decided by arbitration.

Appointment of Arbitrator

The appointment of Arbitrator is usually determined by the agreement entered into by the parties. There are no fixed qualifications of a person eligible to be appointed as an arbitrator. However, an Arbitrator should be a person of integrity and intelligence, known for impartial behaviour and competence so that he may do justice to the parties. An appointed Arbitrator enjoys the following powers:

1. administer the oath to the parties and witnesses appearing;
2. state a special case for the opinion of the court or any question of law involved or state the award, wholly or in part, in the form of a special case of such question for the opinion of the court;
3. make the award conditional or in the alternative;
4. correct in an award any clerical mistake or error arising from any accidental slip or omission;
5. administer to any party to the arbitration such interrogatories, as may, in the opinion of the arbitrators, be necessary.

The arbitration and reconciliation amendment rules, 2019 can be accessed here.