In order to reduce the delay in courts in the process of traditional adjudication mechanism, the Alternative Disposal Mechanism (ADR) was mooted. The dispute resolution through Conciliation, Arbitration and Mediation etc., is regarded as alternative mechanism to resolve the disputes between or among the parties in a defined legal relationship. The dispute resolution through Arbitration has occupied great significance in
Now-a-day, in all transactions and the pursuant documents, the Arbitration clause is incorporated mechanically. Admittedly, the Arbitration mechanism is useful for resolving the disputes and it is costly. In commercial transactions, where there is a genuine dispute and where the stakes are very high, the Arbitration mechanism is useful. But, the common man may not benefit much from the Arbitration mechanism as it is costly.
Section 7 of Arbitration and Conciliation Act, 1996 deal with the “Arbitration Agreement” and the same is extracted below:
“7.Arbitration Agreement. – (1) In this Part, “arbitration agreement” means 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.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
(3) An Arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained in –
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams, or other means of telecommunications which provide a record of the agreement; or
(c) an exchange of statements of a claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.
(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.”
Whether an Arbitration clause ousts the jurisdiction of Company Law Board/Tribunal and the Company Court?
When there was a dispute between the company and other, between the company and its shareholder and between two companies, then, the issue will be complicated and stakes will be high very often. The parties in a company dispute may require immediate orders having the binding nature. Generally speaking, there is no bar on referring a company dispute to an Arbitrator, but, the question is as to whether the Arbitration clause will oust the jurisdiction of Company Law Board/National Company Law Tribunal or the
Normally, unless there is a specific bar on the party concerned in providing an arbitration clause, the parties concerned may have an arbitration clause with regard to the contractual relation between or among them or otherwise. But, the arbitration clause may not come in the way of Company Law Board/Tribunal or
Complications – conclusion:
The reason assigned by the courts as can perceived for saying that the Arbitration Clause will not oust the jurisdiction of