Section 7 in THE ARBITRATION AND CONCILIATION ACT, 1996 defines arbitration agreement.
Arbitration agreement. —
(1) In this Part, “arbitration agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) 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 which provide a record of the agreement; or
(c) an exchange of statements of claim and defense in which the existence of the agreement is alleged by one party and not denied by the other.
(5) 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.
These agreements are present everywhere and probably you have signed some without realization. Let’s understand what arbitration is first:
“Arbitration is a way of resolving a dispute without filing a lawsuit and going to court. The arbitration process is similar to the proceedings in a court case: the parties may have lawyers, they exchange information, and there is a hearing where they question witnesses and present their cases. After the hearing, the arbitrator will make a decision. But arbitration is more informal than litigation and the procedures are simplified.”
In arbitration people, limited rights to the documents also other important information. Mostly these arbitrations take place in a conference room instead of a courtroom. The arbitrator can be a lawyer a person with experience or even a retired judge. Much arbitration is binding which means you cannot approach the court for the very same matter.
What’s In an Arbitration Agreement?
Before arbitration can cross forward, the events should have agreed to arbitrate the dispute.
Arbitration agreements are usually signed at the beginning of a commercial enterprise dating – long before there’s a confrontation. They are often just a few sentences lengthy, and are generally located close to the stop of a bigger contract beneath a heading together with “Arbitration” or “Dispute Resolution.” Employee arbitration agreements can be buried in an employment agreement or worker guide.
An arbitration clause will commonly say that all disputes springing up below the bigger settlement may be submitted to binding arbitration. Sometimes a settlement will say that simplest positive disputes can be arbitrated.
The settlement may additionally say how the arbitration might be performed. It can also specify positive arbitration rules, along with the American Arbitration Association (AAA) rules, and it can say whether or not there might be one arbitrator or a panel of arbitrators. The settlement may additionally specify how the arbitrator can be selected.
The parties to a dispute might also conform to arbitration after a struggle has arisen, or maybe after a lawsuit has been filed.
Advantages of Signing an Arbitration Agreement
- Arbitration is normally faster and less highly-priced than litigating a case in court.
- Arbitrations are confidential, which means that you’ll no longer have to publicly testify. The specifics of your dispute will not be within the public court records.
- In arbitration, you can pick out who will determine your dispute. This can be especially useful in case you want a choice-maker who has specialized technical knowledge or experience in your enterprise.
- Some employers will now not rent you in case you refuse to signal an employment arbitration settlement.
Disadvantages of Signing an Arbitration Agreement
- Arbitration awards cannot be appealed. You need to be given the arbitrator’s decision as very last.
- You cannot have a jury trial. This can result in a worse end result if you have an employment dispute because juries are frequently sympathetic to personnel.
- The events’ trade of data is extra limited in arbitration. This can make it more difficult to broaden your case in employment arbitration or in some other scenario wherein the opposite birthday party has maximum of the records and files.
- If you’re requested to agree to arbitration before you actually have a dispute, you could not understand whether or not you want to arbitrate or not. If you sign the agreement and determine later which you might as an alternative pursue a claim in court, you receiver’s be able to – or you will rack up prison expenses looking to invalidate the arbitration settlement.
Like all contracts, arbitration agreements can be one-sided in chooses of the celebration who wrote the settlement. You have to be looking for this and ensure the settlement gives you an equal voice in deciding on the arbitrator, does now not restrict the remedies to be had to you, and does not deny you the proper to a legal professional.
Arbitration agreements are a manner to limit litigation expenses and maintain disputes personal. But signing an arbitration settlement additionally means giving up important rights. Before signing, it will pay to examine arbitration clauses and reject or renegotiate something which you’re uncomfortable with.
This Article Written By- Muskan Singh, 2nd Year BBA LLB Student at JEMTEC, IP University.
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