Skip to content

CS Professional · Arbitration, Mediation and Conciliation · Arbitration under Investors' Grievances Redressal Mechanism of Stock Exchanges

Ramesh, an investor, opened a trading account with a stockbroker. The account-opening form is signed by both of them and contains a clause that disputes arising from trades will be referred to arbitration under the stock exchange's bye-laws. A dispute later arises over an unauthorised trade. Under the form in which an arbitration agreement must exist, how is this clause treated?

The clause is valid. An arbitration agreement may take the form of a clause in a contract, and it is in writing when contained in a document signed by the parties. The signed account-opening form therefore satisfies the writing requirement without any separate agreement.

  1. AInvalid, because an arbitration agreement can only be a separate agreement and not a clause in a contract
  2. BValid, because an arbitration clause in a contract is an arbitration agreement and it is in writing as a document signed by the partiesCorrect
  3. CInvalid, because arbitration agreements may be made only orally in securities matters
  4. DValid only if the exchange also signs the account-opening form

Explanation

The Act allows an arbitration agreement to be an arbitration clause in a contract or a separate agreement. It must be in writing, and a document signed by the parties satisfies this. Option A is wrong because the clause form is expressly permitted.

Did you get it right without looking?

One question tells you little. A timed set on Arbitration under Investors' Grievances Redressal Mechanism of Stock Exchanges shows your real accuracy, how long you take and where you lose marks.

Practise Arbitration under Investors' Grievances Redressal Mechanism of Stock ExchangesFree diagnostic mock

More Arbitration under Investors' Grievances Redressal Mechanism of Stock Exchanges questions