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

Verma Pharma and Dutta Exports have an arbitration clause. Mr. Dutta died, and his legal representative, Ms. Dutta, was served notice by Verma Pharma. Ms. Dutta says she never signed anything, so she is not bound. Meanwhile Verma Pharma files a suit in a court on the same dispute, and Ms. Dutta applies to the court before her first statement on the substance of the dispute, with the original agreement. Which view is correct under the Act?

The court must refer the parties to arbitration. Under section 40(1) the agreement binds the legal representative, and under section 8(1) a timely application before the first statement on substance requires reference unless prima facie no valid agreement exists. Ms. Dutta's application was timely and accompanied by the original, as section 8(2) requires.

1. AMs. Dutta is not bound because only signatories are bound after death
2. BThe court must refer the parties to arbitration unless it finds prima facie that no valid arbitration agreement existsCorrect
3. CThe court must decide the dispute because the suit was filed first
4. DThe court may refer only if Ms. Dutta first signs a new agreement