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ARBITRATION IN INDIA

A Brief History of Arbitration Law in India

Arbitration has a long history in India. In ancient times, people often voluntarily
submitted their disputes to a group of wise men of a community called the
Panchayat for a binding resolution. Modern arbitration law in India was created by
the Bengal Regulations in 1772, during the British rule. The Bengal Regulations
provided for reference by a court to arbitration, with the consent of the parties, in
lawsuits for accounts, partnership deeds, and breach of contract, amongst others.

Until 1996, the law governing arbitration in India consisted mainly of three statutes:

1. The Arbitration (Protocol and Convention) Act, 1937.

2. The Indian Arbitration Act, 1940 and

3. The Foreign Awards (Recognition and Enforcement) Act, 1961

The 1940 Act was the general law governing arbitration in India along the lines of
the English Arbitration Act of 1934, and both the 1937 and the 1961 Acts were
designed to enforce foreign arbitral awards (the 1961 Act implemented the New
York Convention of 1958).1 The government enacted the Arbitration and Conciliation
Act, 1996 in an effort to modernize the out-dated 1940 Act.

The Arbitration and Conciliation Act, 1996 is a comprehensive piece of legislation


modelled on the lines of the UNCITRAL Model Law. This Act repealed all the three
previous statutes (the 1937 Act, the 1961 Act and the 1940 Act). 2 Its primary purpose
was to encourage arbitration as a cost-effective and quick mechanism for the
settlement of commercial disputes.3 The 1996 Act covers both domestic arbitration
and international commercial arbitration.

THE ARBITRATION ACT, 1940:

1
The New York Convention of 1958, i.e. the 1958 Convention on the Recognition and Enforcement of Foreign
Arbitral Awards, is one of the most widely used conventions for recognition and enforcement of foreign awards.
It sets forth the procedures to be used by all signatories to the Convention. This Convention was first in the
series of major steps taken by the United Nation since its inception, to aid the development of international
commercial arbitration. The Convention became effective on June 7, 1959.
2
The Arbitration and Conciliation Act, 1996; Section 85.
3
Justice Ashok Bhan in his inaugural speech delivered at the conference on ‘Dispute Prevention and Dispute
Resolution’ held at Ludhiana, India, October 8, 2005.
The Arbitration Act, 1940, dealt with only domestic arbitration. Under the 1940 Act,
intervention of the court was required in all the three stages of arbitration, i.e. prior
to the reference of the dispute to the arbitral tribunal, in the duration of the
proceedings before the arbitral tribunal, and after the award was passed by the
arbitral tribunal. Before an arbitral tribunal took cognizance of a dispute, court
intervention was required to set the arbitration proceedings in motion. The existence
of an agreement and of a dispute was required to be proved. During the course of
the proceedings, the intervention of the court was necessary for the extension of time
for making an award. Finally, before the award could be enforced, it was required to
be made the rule of the court.

While the 1940 Act was perceived to be a good piece of legislation in its actual
operation and implementation by all concerned - the parties, arbitrators, lawyers and
the courts, it proved to be ineffective and was widely felt to have become out-dated.4

The Arbitration and Conciliation Act, 1996:

The 1996 Act, which repealed the 1940 Act, was enacted to provide an effective and
expeditious dispute resolution framework, which would inspire confidence in the
Indian dispute resolution system, attract foreign investments and reassure
international investors in the reliability of the Indian legal system to provide an
expeditious dispute resolution mechanism.

The 1996 Act has two significant parts - Part I provides for any arbitration conducted
in India and enforcement of awards thereunder. Part II provides for enforcement of
foreign awards. Any arbitration conducted in India or enforcement of award
thereunder (whether domestic or international) is governed by Part I, while
enforcement of any foreign award to which the New York Convention or the Geneva
Convention applies, is governed by Part II of the 1996 Act. The 1996 Act contains
two unusual features that differed from the UNCITRAL Model Law. First, while the
UNICITRAL Model Law was designed to apply only to international commercial
arbitrations,5 the 1996 Act applies both to international and domestic arbitrations.
Second, the 1996 Act goes beyond the UNICITRAL Model Law in the area of
minimizing judicial intervention.6

4
Arbitration and Conciliation Act, 1996, Statement of Objects and Reasons.
5
Article 1 of the UNICITRAL Model Law.
6
S.K. Dholakia, ‘Analytical Appraisal of the Arbitration and Conciliation (Amendment) Bill, 2003’, ICA’s
Arbitration Quarterly, ICA, New Delhi, 2005 vol. XXXIX/No. 4 at p. 3.
The changes brought about by the 1996 Act were so drastic that the entire case law
built up over the previous fifty-six years on arbitration was rendered superfluous. 7
Unfortunately, there was no widespread debate and understanding of the changes
before such an important legislative change was enacted. The Government of India
enacted the 1996 Act by an ordinance, and then extended its life by another
ordinance, before Parliament eventually passed it without reference to a
Parliamentary Committee—a standard practice for important enactments. In the
absence of case laws and general understanding of the Act in the context of
international commercial arbitration, several provisions of the 1996 Act were
brought before the courts, which interpreted the provisions in the usual manner.

The Law Commission of India prepared a report on the experience of the 1996 Act
and suggested a number of amendments.8 Based on the recommendations of the
Commission, the Government of India introduced the Arbitration and Conciliation
(Amendment) Bill, 2003, in Parliament for amending the 1996 Act. It has not been
taken up for consideration. In the meantime, Government of India, the Ministry of
Law and Justice, constituted a Committee popularly known as the ‘Justice Saraf
Committee on Arbitration’, to study in depth the implications of the
recommendations of the Law Commission of India contained in its 176th Report and
the Arbitration and Conciliation (Amendment) Bill, 2003. The Committee submitted
its report in January 2005.

The Scheme of The Arbitration And Conciliation Act, 1996:

The Act is a composite piece of legislation. It provides for domestic arbitration,


international commercial arbitration, enforcement of foreign award and conciliation
(the latter being based on the UNCITRAL Conciliation Rules of 1980).

The more significant provisions of the Act are to be found in Parts I and II thereof.
Part I contains the provisions for domestic and international commercial arbitration.
Any arbitration to be conducted in India would be governed by Part I, irrespective of
the nationalities of the parties. Part II provides for enforcement of foreign awards.

Part I is more comprehensive and contains extensive provisions based on the Model
Law. It provides, inter alia, for arbitrability of disputes, non-intervention by courts,

7
Sundaram Finance v. NEPC Ltd., (1999) 2 SCC 479; The Supreme Court held at p. 484 thus: ‘The provisions of
this Act (the 1996 Act) have, therefore, to be interpreted and construed independently and in fact reference to
the 1940 Act may actually lead to misconstruction.’
8
Law Commission of India, One Hundred and Seventy Sixth Report on The Arbitration and Conciliation
(Amendment) Bill, 2001; viewed on 19th April, 2018; Available at: <http://lawcommissionofindia.nic.in/ar.pdf>
composition of the arbitral tribunal, jurisdiction of the arbitral tribunal, conduct of
the arbitration proceedings, recourse against arbitral awards and enforcement. Part
II, on the other hand, is largely restricted to enforcement of foreign awards governed
by the Convention on the Recognition and Enforcement of Foreign Arbitral
Awards16 or the Convention on the Execution of Foreign Arbitral Awards.17 Part II
is thus, (by its very nature) not a complete code. This led to judicial innovation by
the Supreme Court in the case of Bhatia International vs. Bulk Trading.9 Here the
Indian court‘s jurisdiction was invoked by a party seeking interim measures of
protection in relation to arbitration under the Rules of Arbitration of the
International Chamber of Commerce International Court of Arbitration19 to be
conducted in Paris. The provision for interim measure (section 9) was to be found in
Part I alone (which applies only to domestic arbitration). Hence, the court was faced
with a situation where there was no proprio vigore legal provision under which it
could grant interim measures of protection. Creatively interpreting the Act, the
Supreme Court held that the „general provisions‟ of Part I would apply also to
offshore arbitrations, unless the parties expressly or impliedly exclude applicability
of the same. Hence, by judicial innovation, the Supreme Court extended the general
provisions of Part I to foreign arbitrations as well.

It may be stated that this was premised on the assumption that the Indian courts
would otherwise have jurisdiction in relation to the matter (in the international
sense). This became clear in a subsequent decision of the Supreme Court in Shreejee
Traco (I) Pvt Ltd. vs. Paperline International Inc.10 Here the court‘s assistance was
sought for appointing an arbitrator in a foreign arbitration. The power of
appointment by the court exists under section 11 of Part I of the Act (which applies
to domestic arbitration alone). The court declined to exercise jurisdiction. It found
that the arbitration was to be conducted in New York and that the law governing the
arbitration proceedings would be the law of seat of the arbitration. Hence, the
extension of Part I provisions to foreign arbitrations sanctified by Bhatia
International case would not be resorted to in every case. The Indian courts would
have to first determine if it has jurisdiction, in the international sense.

Salient Features of The Arbitration and Conciliation Act, 1996:

The Arbitration and Conciliation Act, 1996 lay considerable stress on the party
autonomy. The party to the dispute can decide the number of arbitrators, the rules of

9
2002 (4) SCC 105.
10
2003 (9) SCC 79.
procedure, and the rules governing the substance of the dispute, the place of
arbitration and the language of the arbitrators. The major advantage of the new law
is that, it facilitates quick resolution of the commercial disputes and speeds up
arbitration procedure by minimizing intervention by the Court. Under the new law,
a Court may provide certain interim measures of protection at a party‘s request and
may offer assistance in taking evidence or recovering documents at the request of the
arbitral tribunal or a party to the reference. The award of an arbitrator is itself
enforceable as a decree of Court and is not required to be made a “Rule of Court”. The
arbitrator has to give reasons for his award. However, no reasons need to be given if
the disputant parties agree beforehand to such a thing. In case of Babar Ali vs.
Union of India11 case it was held by Supreme Court that, The Arbitration and
Conciliation Act, 1996 is neither unconstitutional nor in any way offends the basic
structure of the Constitution of India, as Judicial review is available for challenging
the award in accordance with the procedure laid down therein. The time and
manner of the judicial scrutiny can be legitimately laid down by the Act passed by
the parliament.

The Indian Arbitration Act sought to achieve the following main objectives:

 to comprehensively cover international and domestic arbitration and conciliation;


 to make provision for an arbitral process which is fair, efficient and capable of
meeting the needs of each arbitral proceeding;
 to ensure that the arbitral tribunal gives reasons for its award;
 to ensure that the arbitral tribunal remains within the limits of its jurisdiction;
 to minimise the supervisory role of the Indian courts in the arbitral process;
 to permit an arbitral tribunal to use mediation, conciliation or other procedures
during the arbitral proceedings to encourage settlement of disputes;
 to provide that every final award is enforced in the same manner as if it were a
decree of the court;
 to provide that a settlement agreement reached by the parties as a result of
conciliation proceedings will have the same status and effect as an award
rendered by an arbitral tribunal; and
 to provide that every award made in a country that is party to an international
convention to which India is also a signatory will be enforceable as a foreign
award.

11
(2000) 2 SCC 178.
The objectives mentioned above clearly indicate the legislative intent to make
arbitral proceedings more efficient and result-oriented. To achieve those objectives,
and to encourage the use of arbitration in all civil disputes at family, commercial,
domestic and international law levels, Section 89 was inserted into the Civil
Procedure Code 1908 by the Civil Procedure Code (Amendment) Act 1999. Its aim is
to promote alternative methods of dispute resolution by requiring the courts to
consider the possibility of settlement through such methods at any stage of legal
proceedings.

Scope of Application and General Provisions of The Arbitration and


Conciliation Act, 1996:

The Arbitration and Conciliation Act, 1996 covers both domestic and international
arbitrations (i.e., where at least one party is not an Indian national), as well as
mediation and conciliation. The Indian Arbitration Act comprises four parts and
three schedules, as follows:

Part I: General Provisions on Arbitration (General Provisions);

Part II: Enforcement of certain Foreign Awards (Chapter I of Part II of the Indian
Arbitration Act deals with New York Convention awards and Chapter II covers
awards under the Geneva Convention, 1927);

Part III: Conciliation;

Part IV: Supplementary Provisions;

First Schedule: New York Convention;

Second Schedule: Geneva Convention, 1923; and

Third Schedule: Geneva Convention, 1927

Accordingly, the Indian Arbitration Act puts domestic awards and foreign awards in
two different and distinct compartments, subject to certain overlapping provisions.
The General Provisions apply to all other parts and chapters of the Indian
Arbitration Act, unless it is expressly stated otherwise. For example, Part II provides
a separate definition of “arbitral award” and contains separate provisions for the
enforcement of foreign awards. In addition, if the arbitral proceedings are seated
outside of India, all or some of the General Provisions may be excluded by the
express or implied agreement of the parties. However, if no such exclusion is agreed,
the General Provisions will apply to the arbitration and it will not be open for the
parties to argue that Part I of the Indian Arbitration Act is not applicable to the
arbitration.12

PREAMBLE

Preamble to the 1996 Act is an introductory, prefatory and an explanatory note about
the sections namely that of the Arbitration and Conciliation Act, 1996. United
Nations Commission on International Trade Law (UNCITRAL) adopted the
UNCITRAL Model Law on International Commercial Arbitration in 1985. Thereby,
the General Assembly of the United Nations recommended that all countries give
due consideration to the said Model Law, in view of the desirability of uniformity of
the law of arbitral procedures and the specific needs of international commercial
arbitration practice. The United Nations Commission on International Trade Law
has adopted the UNCITRAL Conciliation Rules in 1980. Thereby, the General
Assembly of the United Nations recommended the use of the said Rules in cases
where a dispute arises in the context of international commercial relations and the
parties seek an amicable settlement of that dispute by recourse to conciliation. The
said Model Law and Rules has a significant contribution to the establishment of a
unified legal framework for the fair and efficient settlement of disputes arising in
international commercial relations.

Based on the above facts the Parliament of India considered that it was expedient to
make law with respect to arbitration and conciliation, taking into account the
aforesaid Model Law and Rules in the forty seventh year of the Republic. The
Arbitration and Conciliation Act, 1996 repealed the Arbitration Act of 1940, the
Arbitration (Protocol and Convention) Act of 1937 and the Foreign Awards
(Recognition and Enforcement) Act of 1961. Supreme Court in Fuerst Day Lawson
Ltd vs. Jindal Exports Ltd.13 held that the provisions of the Arbitration and
Conciliation Act, 1996 have to be interpreted and construed independent to that the
Arbitration and Conciliation Act, 1940. In order to get any further help in construing
the provisions, it is more relevant to refer to the United Nations Commission on
International Trade Law. The Arbitration and Conciliation Act, 1996 is divided into
following parts, Part I deals with the “Domestic arbitration”. Part II deals with the
“Enforcement of foreign awards”. Part III deals with the “Conciliation procedures”
and Part IV of the Act deals with the “Supplementary provisions”. Act has three
Schedules namely, The First Schedule on the Convention on recognition and

12
Bhatia International Case Supra, n. 9; Venture Global Engineering vs. Satyam Computers Services, [2002] AIR
SC 1432.
13
A.I.R. 2001 S.C. 2293; Sundaram Finance Ltd. vs. NEPC India Ltd. AIR 1999 S.C. 565.
enforcement of foreign arbitral award as per New York convention, the Second
Schedule on the Protocol on Arbitration clauses and Third Schedule on the
convention on the execution of foreign arbitral awards as per Geneva Convention. In

Konkan Railways Corp. Ltd. vs. Mehul Construction Co.14 case, Supreme Court of
India stated that the Arbitration and Conciliation Act, 1996 was introduced in order
to attract the ‘international mercantile community’ and at the time of interpretation,
regard must be had to the objectives behind the enactment of the Act.

Arbitration:

Arbitration is one of the oldest methods of settling civil disputes between two or
more persons by reference of the dispute to an independent and impartial third
person, called arbitrator, instead of litigating the matter in the usual way through the
courts. It saves time and expense. It also avoids unnecessary technicalities and at the
same time ensures “substantial justice within limits of the law”.

In Union of India v. D.P. Wadia & Sons,15 it was observed that arbitration is a
domestic forum. It is a forum other than a court of law for determination of disputes
and differences, after hearing both the sides, in a judicial manner.

The Arbitration and Conciliation Act, 1996 governs the “arbitration procedures” in
India. Part-I of the Arbitration and Conciliation Act, 1996 comprises of 43 sections
spread over ten chapters, making detailed provisions relating to domestic arbitration
and International commercial arbitration held in India under this Act. ‘Arbitration'
means, a process of dispute resolution in which a neutral third party called
arbitrator, renders a decision after a hearing at which both parties have an
opportunity to be heard.16 Arbitration is a consensual process. It is not a matter of
coercion.

No arbitration statute can require parties to arbitrate when they have not agreed to
do so. Nor can it prevent them from excluding certain claims from the scope of
arbitration agreement in any manner they choose. It requires Courts just to enforce
privately negotiated agreements to arbitrate, like other contracts, in accordance with
their terms.17

14
(2000) 7 SCC 201.
15
AIR (1977) Bom 10.
16
Black's Law Dictionary, 6th edn. (1990), West Publishing Co., p. 105.
17
Volt Information Sciences, Inc. vs. Leland Stanford University 489 US 468(1989)
As defined under Section 2(1) (a) of Arbitration and Conciliation Act, 1996 it covers
any arbitration whether it is administered by any permanent arbitral institution or
not. It also covers arbitration relied on voluntary agreement by the private parties or
by operation of law.

The Arbitration and Conciliation Act, 1996 does not provide definition of the word
"Arbitration". Arbitration, in law, is a form of Alternative Dispute Resolution -
specifically, a legal alternative to litigation, whereby the parties to a dispute agree to
submit their respective positions (through agreement or hearing) to a neutral third
party called the Arbitrator for resolution of the dispute between them. The literal
meaning is that "settlement" of differences or disputes by mutual understanding or
agreement by the parties where the rights and liabilities of the parties are
determined in judicial point of view which are binding to them, such settlement may
be before the arbitral tribunal but not by the Court of law.

In Jivaji Raja Vs Khimiji Poonja & Company18, Bombay High Court observed that,
arbitration is the reference of dispute or difference between two or more parties to a
person chosen by the parties or appointed under statutory authority, for
determination of the same. In a broad sense, it is substitution of ordinary judicial
machinery by a mutually chosen tribunal i.e., an Arbitrator or an Arbitral Institution.

Arbitration Agreement:

The first stage in arbitration is the formulation of the arbitration agreement whereby
the parties agree to submit their present or future differences to arbitration. Section 2
(1)(b) does not give a definition of the term, but states that “Arbitration Agreement”
means an agreement referred to in Section 7.

As per Section 7, the arbitration agreement is defined as, 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.
Thus, the provision of arbitration can be made at the time of entering the contract
itself, so that if any dispute arises in future, the dispute can be referred to arbitrator
as per the agreement. It is also possible to refer a dispute to arbitration after the
dispute has arisen. It was held by the Supreme Court in the Wellington Association
Ltd Vs Kirti Mehta19 case that, the word in the Section 7(1) “means an agreement by

18
AIR 1934 Bom 476.
19
AIR 2000 SC 1379.
the parties to submit to arbitration”, postulates an agreement which necessarily or
rather mandatory requires the appointment of an arbitrator or arbitrators.

Section 7 does not cover a case where the parties agree that they ‘may’ go to a suit or
that they ‘may’ also go to arbitration. Arbitration agreement may be in the form of
an arbitration clause in a contract or in the form of a separate agreement. Section 7(3)
of the Act requires that the arbitration agreement must be in writing. Section 7(2)
provides that it may be in the form of an arbitration clause in a contract or it may be
in the form of a separate agreement. Under Section 7(4), an arbitration agreement is
in writing, if it is contained in:

1. a document signed by the parties,


2. an exchange of letters, telex, telegrams or other means of telecommunication,
providing a record of agreement,
3. or an exchange of claims and defense in which the existence of the agreement is
alleged by one party and not denied by the other. Sec.7 (5) of the Act expressly
provides that reference to a document containing an arbitration clause would
constitute an arbitration agreement.

In Jayant N.Seth Vs Gyaneshwar Apartment Cooperative Housing Society Ltd.20,


case the Court laid down the essential ingredients of an arbitration agreement as
defined in Clause 2(1) (b) read with Section 7 as, there should be a valid and binding
agreement between the parties. Such an agreement may be contained as a clause in a
contract or in the form of a separate agreement. Such an agreement is deemed to be
in writing if it is contained in a document signed by the parties or in an exchange of
letters, telex, telegrams or other means of telecommunication which provide a record
of the agreement or an exchange of statements of claim and defense in which the
existence of the agreement is alleged by one party and not denied by the other.
Reference in a contract to a document containing an arbitration clause also
constitutes an arbitration agreement, provided the contract is in writing and the
reference is such as to make that arbitration clause part of the contract. Parties intend
to refer present or future disputes to arbitration. The dispute to be referred to an
arbitrator is in respect of a defined legal relationship, whether contractual or not. In
Motilal vs. Kedarmal Jainarayan Bharadiya21 case, it is held that, arbitration is an
alternate dispute resolution system of quasi-judicial nature and if no judicial

20
2000(1) RAJ 117 (Bom).
21
2002(3) RAJ 403 (Bom).
functions are attributed to the nominated persons, the document cannot be said to be
an arbitration agreement. The Supreme Court of India in Firm Ashok Traders vs.
Gurumukh Das Saluja22 case held that, under the scheme of the Arbitration and
Conciliation Act, 1996, the Arbitration clause is separable from other clause of
partnership deed. The arbitration clause constitutes an agreement by itself.

In Tamil Nadu Electricity Board vs. Sumathi and Others,23 case there was no
arbitration agreement within the meaning of Section 7 of the Arbitration and
Conciliation Act, 1996. The dispute relating to the payment of compensation for the
death due to electrocution was under the consideration of the High Court under
Article 226. The High Court appointed an arbitrator in exercise of its power under
the 1996. The Supreme Court quashed the order of the High Court, as the Suo-motu
appointment of arbitrator in the absence of agreement to that effect is not provided
for under the provisions of the Arbitration and Conciliation Act, 1996.

The Section 4 of the Arbitration and Conciliation Act, 1996 is a deeming provision. It
lays down that, where a party precedes with the arbitration without stating his
objection to non-compliance of any provision of Part I from which the parties may
derogate or any requirement under arbitration agreement, it shall be deemed that he
has waived his right to so object.24 In Basheshar Nath vs. Commissioner of Income
Tax25, the Supreme Court held that, ‗There must be an international relinquishment
of a known right or the voluntary relinquishment or abandonment of a known
existing legal right , or conduct such as warrants an inference of relinquishment of a
known right or privilege‘. In Union of India vs. MAA Agency,26 it was held that, it
was open to the petitioner to challenge either the jurisdiction of the arbitral tribunal
to adjudicate upon the third claim or to raise the plea that the tribunal was exceeding
its scope of authority. However, the petitioner did not raise any such objection and
on the contrary, proceeded with a defense to the claim on merits, thereafter, which
an award was passed.

This being the case, it may be deemed that the petitioner had waived its rights under
Section 4, to object on the ground that any requirement of the arbitration agreement
had not been complied with.

22
2004 (3) SCC 155.
23
2000(4) SCC 543.
24
Section 4, The Arbitration and Conciliation Act, 1996.
25
AIR 1959 SC 149.
26
2003(3) RAJ 335 (Bom).
The Supreme Court of India in P. Anand Gajapathi Raju vs. PVG Raju,27 held that
Section 5 of the Arbitration and Conciliation Act, 1996 brings out clearly the object of
the Act, namely that of encouraging resolution of disputes expeditiously and less
expensively and when there is an arbitration agreement, the Court‘s intervention
should be minimal.

In BHEL vs. CN Garg & Ors.28 case, it was held that, Section 5 was inserted to
discourage judicial intervention. It is seen that a party having grievances against an
arbitrator on account of bias or prejudice is not without remedy. It only has to wait
till the award is made and then it can challenge the award on various grounds under
Section 34 of the Arbitration and Conciliation Act, 1996.

Determination on the applicability of Section 2(1)(f) of the Indian Arbitration and


Conciliation Act, 1996 the Supreme Court of India in the case of TDM Infrastructure
Private Limited vs. UE Development India Private Ltd.29 held that, when both the
companies are incorporated in India, and have been domiciled in India, the
arbitration agreement entered into by and between them would not be an
international commercial arbitration agreement. The MM Acqua Technologies Ltd.
vs. Wig Brothers Builders Ltd.,30 case helps in explaining the definition of a binding
agreement between parties. In order to be a binding arbitration agreement between
the parties, the same must be in writing and the parties should have specifically
agreed to settle their disputes by arbitration. An arbitration agreement cannot be
inferred by implication.

Essentials Of Arbitration Agreement:

 It must be in writing, though it need not be in formal document. Signatures of the


parties to the agreement are not necessary but it must be shown that they have
agreed to the settlement of disputes by arbitration.
 It must have all the essentials of a valid contract.
 It must refer to a dispute, present or future, between the parties to arbitration.
 It may be in the form of an arbitration clause in a contract or in the form of
separate agreement.
 The reference in a contract to a document containing an arbitration clause
constitutes an arbitration agreement if the contract is in writing and reference is
such as to make that arbitration clause part of the contract.

27
AIR 2000 SC 1886.
28
2001(57) DRJ 154 (DB).
29
(2008) SCC 2263.
30
95 (2002) DLT 818.