CS Professional · Arbitration, Mediation and Conciliation

Arbitration: Introduction, Agreements and its Institutions

This chapter covers what arbitration is, how it differs from other ADR methods, and what makes an arbitration agreement valid under Section 7. It also covers when a court must refer parties to arbitration, the seat of arbitration, the effect of a party's death, and arbitral institutions. Answer each question in order: provision, facts, conclusion.

What this chapter covers

This chapter is the base of Paper 7.1, Arbitration, Mediation and Conciliation. It starts with arbitration as a form of ADR (alternative dispute resolution). It then moves to the Arbitration and Conciliation Act, 1996, and to the arbitration agreement, which is the starting point of every arbitration. Without a valid agreement, there is no arbitration.

The chapter then shows how the agreement works in practice. You learn when a court or judicial authority must send parties to arbitration, how the place or seat of arbitration is fixed, and what happens to the agreement if a party dies. It ends with arbitral institutions and the Arbitration Council of India, which show who administers arbitration.

Later chapters on the tribunal, proceedings, awards, challenges and enforcement all assume the ideas here. Conciliation and mediation also link back, because the Act itself bars starting arbitral or judicial proceedings during conciliation, with one exception. Arbitration and Conciliation carries 70 marks in this paper, so this chapter feeds the larger part of it.

The paper is written and case-based, and many questions here are short fact problems: is this clause a valid arbitration agreement, must the court refer the parties, does the agreement survive a death. These need exact provisions and clean application, so marks are fairly predictable if you know the conditions of each section. The ideas also recur in later chapters, so time spent here pays back across the paper. As an elective, it is also open book, so you must know where to find the rule and how to apply it quickly.

Arbitration: Introduction, Agreements and its Institutions: topics in the order to study them

1Introduction to Arbitration and ADRStart with the concept and the ADR methods so that later sections have context.
2Arbitration and Conciliation Act, 1996 OverviewLearn the structure of the Act and which Parts deal with what before reading individual sections.
3Arbitration Agreement under Section 7The agreement is the foundation, and its definition, form and writing rules are tested often.
4Reference to Arbitration by Judicial AuthorityOnce you know what a valid agreement is, you can see when a court must refer parties to arbitration.
5Arbitration Agreement and Death of a PartyA short, rule-based topic that builds on the agreement and is easy to score on.
6Place of Arbitration and SeatRead this after the agreement and referral topics, since the seat is usually fixed in the agreement.
7Arbitral Institutions and Arbitration Council of IndiaFinish with the institutions, as this is descriptive and easier once the process is clear.

How to prepare Arbitration: Introduction, Agreements and its Institutions

Work from concept to section to application. Keep the Act open while you study, since the paper is open book and you must find provisions fast.

Read the introduction and ADR topics once. Note the difference between arbitration, conciliation and mediation in your own words.
Read Section 7 line by line. List its parts: defined legal relationship, clause or separate agreement, writing, and the ways writing is satisfied, including electronic communication.
Study the referral provisions side by side. Compare Section 8 (domestic) with Sections 45 and 54 (foreign awards frameworks). Note who applies, the timing, the documents and the ground on which a court may refuse.
Learn Section 40 and its three sub-sections. Note what survives the death of a party and what does not.
Practise short case questions in the form: provision, facts, conclusion. Write each in under ten minutes.
Make a one-page chart of sections and their key conditions, and revise it weekly.
Before the exam, check that your open-book copy of the Act is marked and tabbed for these sections.

Common mistakes in Arbitration: Introduction, Agreements and its Institutions

Saying an arbitration agreement can be oral or implied.
Fix: State that Section 7 requires writing, then list the ways writing is satisfied.
Missing the time limit in a Section 8 application.
Fix: Check the facts for the date of the first statement on the substance of the dispute, and say if the application is within time.
Mixing up Section 8 with Sections 45 and 54.
Fix: Tie each section to its type of agreement, and compare the test the court applies in each.
Saying that a pending Section 8 application stops the arbitration.
Fix: Quote Section 8(3): arbitration may commence or continue and an award may be made.
Writing that death of a party ends the arbitration agreement.
Fix: State Section 40(1), then add that Section 40(3) leaves intact any law that extinguishes a right of action on death.
Writing general theory without applying it to the facts.
Fix: Use the three-step format every time: provision, analysis of facts, conclusion.

Last-day revision: Arbitration: Introduction, Agreements and its Institutions

Arbitration agreement means an agreement to submit present or future disputes to arbitration in respect of a defined legal relationship, contractual or not.
It may be a clause in a contract or a separate agreement.
It must be in writing.
Writing is met by a signed document, an exchange of letters or electronic communication that records the agreement, or an exchange of claim and defence where one alleges the agreement and the other does not deny it.
A reference in a written contract to a document with an arbitration clause makes that clause part of the contract if the reference is such as to do so.
Under Section 8, the application to refer must be made not later than the date of submitting the first statement on the substance of the dispute.
Under Section 8, the court refers parties unless it finds that prima facie no valid arbitration agreement exists.
The application must come with the original agreement or a certified copy, with a proviso if the other party holds it.
Arbitration may begin or continue even if a Section 8 application is pending before the court.
Death of a party does not discharge the arbitration agreement; it is enforceable by or against the legal representative.
The mandate of an arbitrator is not ended by the death of the party who appointed him.
During conciliation, parties cannot start arbitral or judicial proceedings on that dispute, except to preserve their rights.

Arbitration: Introduction, Agreements and its Institutions practice questions

Arbitration: Introduction, Agreements and its Institutions: frequently asked questions

Is an arbitration clause in an email exchange valid?

It can be. Section 7(4)(b) accepts an exchange of letters, telex, telegrams or other means of telecommunication, including electronic communication, that provides a record of the agreement. The test is whether the exchange records the agreement to arbitrate.

Can arbitration agreement exist without a contract?

Yes. Section 7(1) refers to a defined legal relationship, whether contractual or not. The agreement can also be a separate agreement and not only a clause in a contract.

Until when can a party apply to the court to refer the dispute to arbitration?

Under Section 8(1), the application must be made not later than the date of submitting the first statement on the substance of the dispute. After that point, the right under this section is lost.

What happens to an arbitration agreement if a party dies?

It is not discharged. Section 40(1) says it is enforceable by or against the legal representative of the deceased. The arbitrator's mandate also does not end because the appointing party died.

How should I study this chapter for an open-book paper?

Know the structure of the Act so that you can find sections quickly. Mark Sections 7, 8, 40, 45, 54 and 77, and practise applying them to short facts instead of memorising text.