Archna (VP) 20 July 2011

Arbitration Clause - Doubts

Hi All

Below is clause which I intend to insert in our service contract. But I have few doubts so I seek your opnion and suggestions.

1) IS THIS A UNILATERAL ARBITRATION CLAUSE?

2) THE COMPANY HERE IS PRIVATE/PARTNERSHIP FIRM.

3) CAN THIS ARBITRATION BE CHALLENGED?

"The claim for compensation/liquidated damages for any breach and all other

matters, actions, disputes, claims, differences or controversies between the

parties hereto arising out of or in connection with or in relation to this

Agreement, whether in contact, tort, or otherwise shall be finally settled and

resolved by arbitration to be conducted at New Delhi, in accordance with the

Arbitration & Conciliation Act 1996, by Sole Arbitrator appointed or

nominated by the Director of the Company. The decision of this arbitrator

shall be final and binding on both the parties."

Regards

Archna

Reply Follow

6 Replies

Daksh (Student) 21 July 2011

Ms.Archna,

Your querries are hereunder :

1) IS THIS A UNILATERAL ARBITRATION CLAUSE?

The answer is negative as after due formatlities i.e. signing and execution it becomes bilateral and binding.

2) THE COMPANY HERE IS PRIVATE/PARTNERSHIP FIRM.

3) CAN THIS ARBITRATION BE CHALLENGED?

The answer to this query is also negative as either one does not agree for the same as the whole agreement has to be read and this clause cannot be read in isolation, but even otherwise once the Agreement is signed it becomes operative, binding and could not be challenged subsequently.

Best Regards

Daksh

Archna (VP) 21 July 2011

Hi Daksh

Please see this - replies from 'your advocate'

Ajay Kumar (Administration) 26 July 2011

Once the arbitration clause is signed by both the parties, it becomes bilateral as stated by Mr. Daksh above.

Anyone can sign the arbitration clause be it a Ltd Company, Pvt Ltd company, partnership or sole proprietorship firm.

The Award of Arbitrator can not be challenged however the proceedings of arbitration can be challenged.

Archna (VP) 26 July 2011

Mr A K Puri

Citations/ Examples Please??

As I do not agree with you here - "The Award of Arbitrator can not be challenged however the proceedings of arbitration can be challenged."

Regards

Archna

Advocate Bhartesh goyal (advocate) 01 January 2012

Madam Archna

Award passed by Arbitrator can only challanged by way of objections under sec 34 of Act but No appeal lies against Award.

Siddharth Kulkarni (Legal Advisor) 02 January 2012

I am fully agree with Mr. Goyal. An Arbitration Award can be challenged u/s 34 of the Arbitration Act on one or other grounds. Further as far as the query of Ms. Archana is concern, the said clause is appropriate enough to cover the essential ingredients of arbitration clause with reference to place of arbitration and appointment of arbitrator. There is nothing to fear about it. Alternatively you can negotiate for “arbitration tribunal” if it is feasible in present circumstances.