Template Description

This arbitration agreement template is a legally binding document designed for parties seeking to resolve disputes through arbitration under the Arbitration and Conciliation Act, 1996. It is 3 page MS Word document crucial for individuals, businesses, and legal professionals aiming to outline the terms of arbitration clearly and concisely, ensuring that disputes are settled efficiently outside the traditional court system.

Understanding an Arbitration Agreement

Terminologies:

Arbitration Agreement: An arbitration agreement under the Arbitration and Conciliation Act, 1996, is a written pact between parties to resolve disputes through arbitration, either entirely or in part. This agreement can be a clause within a contract or a standalone document. It must be in writing, verified by signatures, or substantiated through an exchange of documents like letters, telex, or telecommunication records that establish the agreement.

Key Elements of an Arbitration Agreement:

Written Consent: The crux of the arbitration agreement is the written consent to submit disputes to arbitration. This consent must reflect a conscious decision to resolve disputes as per the Arbitration and Conciliation Act, 1996, and to abide by the resulting award.

Binding Nature: Like any other agreement, an arbitration agreement binds the parties involved, unless invalidated due to fraud, undue influence, or other legal deficiencies.

Voluntary Submission: Arbitration is based on mutual consent, where parties voluntarily agree to submit their disputes to arbitrators for a final and binding resolution. This process is typically less formal, more expeditious, and cost-effective compared to court proceedings.

Pre-requisites of Arbitration:

• A dispute requiring resolution.
• Submission of this dispute to a mutually agreed third party (arbitrator).
• A binding decision made by the arbitrator based on the dispute’s facts and circumstances.

Submission of Dispute: The parties agree to refer their dispute to an arbitrator, who must accept the role to formalize the arbitration process.

Objective of Arbitration: The primary aim of arbitration is to resolve disputes efficiently and cost-effectively, providing a quicker alternative to lengthy civil litigation. The arbitration agreement typically includes a clause that obligates the parties to accept the arbitrator’s decision as final and binding.

Methods of Arbitration: Parties enter into an arbitration agreement, clearly defining the terms of reference that specify the matters the arbitrator will decide. The arbitrator is not bound by the strict rules of evidence that apply in courts but follows a similar process of case presentation. Written evidence is predominant, and witnesses may be cross-examined to verify their statements.

After considering the evidence, the arbitrator issues an award. This award must:

·        Be consistent with the terms of reference.

·        Provide certainty and fairness.

·        Be final and enforceable.

·        Be practically implementable.

Requisites of an Award: The award must be clear, consistent, fair, final, and enforceable, ensuring it serves as an effective resolution to the dispute.

Conclusion:

This streamlined process, governed by the principles of fairness and efficiency, makes arbitration a preferred choice for many commercial disputes.