Date:May 27, 2022
How can parties go to arbitration ?
For adjudication of dispute through arbitration, as per section 7 of the Arbitration & Conciliation Act, 1996 an arbitration agreement must exists between the parties.
As per section 7 of the Arbitration & Conciliation Act, 1996
1. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
2. An arbitration agreement shall be in writing.
3. An arbitration agreement is in writing if it is contained in—
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of telecommunication including
communication through electronic means which provide a record of the agreement; or
(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.
4. The reference in a contract to a document containing an arbitration clause constitutes an
arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.
Thus, there has to be an arbitration agreement as per the scheme of section 7 for a parties to go for arbitration.
Sometimes court may refer disputes to arbitration. In case commercial transaction where supplier or service provider is Micro, Small or Medium enterprises, the matter is referred to arbitration.