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CS Professional · Arbitration, Mediation and Conciliation · Arbitration: Introduction, Agreements and its Institutions

Sunrise Textiles Pvt Ltd (Surat) and Kaveri Dyes Ltd (Chennai) agreed that any dispute would be resolved under the rules of a named permanent arbitral institution, which would also decide how the arbitrators are appointed. Kaveri argues that the proceeding is not an 'arbitration' under the Act because it is institution-administered. Under Section 2 of the Act, what is the correct position?

The proceeding is an arbitration under the Act. Section 2(1)(a) defines arbitration as any arbitration, whether or not it is administered by a permanent arbitral institution, so institutional administration neither excludes it from the Act nor requires court approval or a statutory institution.

  1. AIt is not an arbitration, because the Act covers only ad hoc arbitrations
  2. BIt is an arbitration, because the definition applies whether or not a permanent arbitral institution administers itCorrect
  3. CIt is an arbitration only if the institution is set up by statute
  4. DIt is an arbitration only if the Court approves the institutional rules

Explanation

Section 2(1)(a) defines arbitration as any arbitration whether or not administered by a permanent arbitral institution. Hence institutional administration does not take the proceeding outside the Act. Limiting the Act to ad hoc arbitrations contradicts this definition.

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