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CS Professional · Arbitration, Mediation and Conciliation · Conceptual Framework of International Commercial Arbitration

Tata Projects Ltd (incorporated in India) and Hanseatic GmbH (incorporated in Germany) have a supply contract with a clause: 'All disputes shall be referred to arbitration.' The clause is part of the document signed by both parties. Which statement is correct about the arbitration agreement under the Act?

The agreement is valid. The Act allows an arbitration agreement to be an arbitration clause within a contract, and it must be in writing. A contract document signed by both parties meets the writing requirement, and the foreign party's status does not affect validity.

  1. AIt is invalid because an arbitration agreement must be a separate document from the main contract
  2. BIt is valid because an arbitration clause in a contract signed by the parties satisfies the writing requirementCorrect
  3. CIt is valid only if the parties have also exchanged statements of claim and defence
  4. DIt is invalid because one party is a foreign body corporate

Explanation

An arbitration agreement may take the form of a clause in a contract or a separate agreement. It must be in writing, and a document signed by the parties satisfies this. The foreign party's incorporation does not invalidate it; it only makes the arbitration international commercial. The separate-document view is wrong because the Act expressly allows a clause.

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