Arbitration Agreement

This Arbitration Agreement is a legally binding contract between two parties as an alternative method to resolve the disputes between them. Civil disputes unless explicitly barred under the applicable laws between two parties can be resolved through arbitration (the process of resolving the dispute by appointing a neutral third party as arbitrator).

Nowadays, with complicated commercial disputes and an increased burden on courts, arbitration is a sought-after method to resolve issues without resorting to the court system.

The parties entering into a contract or business relation can also agree to resolve any dispute by way of mediation before resorting to arbitration. Under mediation, the settlement is between the parties without involving any third party as an arbitrator. Mediation will be less formal than arbitration as parties after discussion settle on a middle ground where they can settle the dispute. Thus, to maintain a long-term good relationship between the parties, the mediation method can be used to resolve the dispute before going to arbitration.

The arbitration can be either institutional or ad-hoc. Under institutional arbitration, the recognized institution will be setting the rules of arbitration and appointing appropriate arbitrators considering the dispute. The main benefit of ad-hoc arbitration is the availability of qualified arbitrators and pre-set rules.

On the other hand, under ad-hoc arbitration, the Parties appoint the Arbitrator from time to time and set their own rules to resolve the Dispute. The main benefit of ad-hoc arbitration is flexibility and reduced cost in comparison to institutional arbitration.

There is no predetermined qualification to be appointed as an arbitrator in India. Even a foreign national can be an arbitrator.

To be enforceable under the law, the arbitration agreement must be in writing and shall be properly stamped. Once agreed in writing for arbitration, the parties cannot directly approach the court before completing the arbitration procedure.

Arbitration agreements are often signed at the beginning of the business relationship. However, the parties can enter into an arbitration agreement later by making the same binding on the master agreement or business transaction.

Advantages of arbitration

• Less time consuming: in comparison to litigation, the arbitration procedure is less time-consuming.
• Cost-effective: by resolving the issue through arbitration, the huge litigation cost can be mitigated.
• Less formal: the arbitration procedures are more flexible than litigation. Thus, the proceedings can be conducted in accordance with the nature of the Dispute.
• Privacy: the proceedings of the arbitration will not be on public record. It is the duty of arbitrators and all other parties involved to keep the proceedings and documents confidential. The proceedings or outcome of the Arbitration shall not be published unless both the Parties give their consent.
• Custom rules: parties to the arbitrator can set their own rules and code of conduct.
• Expertise: Availability of subject experts to resolve complex disputes.

This arbitration agreement can be used for any type of entity including a company, LLP, Partnership, NGO, etc. for resolving issues/disputes not excluded under the applicable law. Some matters cannot be resolved through arbitration including the following:

• Matrimonial disputes (e.g. separation, divorce, child custody)
• Criminal offences (e.g. theft, assault, murder)
• Guardianship matters (e.g. parent's right over the child, parent's duty towards the child)
• Insolvency petitions (e.g. winding up the company due to non-payment of the debt)
• Testamentary suits (e.g. disputes relating to wills)
• Trust disputes (e.g. disputes over trust deed)
• Labour and industrial disputes (e.g. termination of employment, non-payment of salary)
• Intra-company disputes (e.g. disputes between the owners, disputes between the management and employees)
• Tenancy and eviction matters are controlled under respective rent control acts (e.g. eviction of the tenant under Delhi Rent Control Act 1958)

How to use this Agreement?

This Agreement covers the following major areas:

• The details of the existing agreement or business transaction to which this Arbitration Agreement is applicable.
• The details and summary of the existing dispute between the Parties if any.
• The details of arbitrators have already been appointed to resolve an existing dispute between the Parties.
• Procedures to be followed in case of arbitration.
• Applicable laws and rules to arbitration.
• Arbitrator details including the number of arbitrators, minimum qualification, experience, etc.
• The seat of arbitration.
• Language of arbitration.
• Communication details
• Confidentiality of the Agreement and arbitration.

The Arbitration Agreement should be printed on non-judicial stamp paper and then both the Parties will need to sign the document and keep a copy for their records.

This Agreement can also be Notarized by a public notary for more authenticity and recording of the date and time of the execution of the Agreement.

Applicable laws

The laws of The Limitation Act, 1963 applicable to civil laws also applies to arbitration.

The arbitration with the seat of arbitration in India will be governed under The Arbitration and Conciliation Act, 1996.

How to modify the template?

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.