Before deciding on a seat, thorough investigations must be carried out with the courts and how they have dealt with these important aspects, especially in cross-border disputes. Please note that contract law (lex contractus), arbitration agreement law (lex arbitri) and procedural law applicable to arbitration (law of the curia or lex fori) are important aspects in arbitration and may become both contested and extremely relevant to the determination of the registered office if that seat is not expressly indicated. It is not unknown to see long legal battles over the determination of the seat. The issues become more complex when international courts are involved. Therefore, especially in cases of international commercial arbitration, think carefully about each of these laws and keep them as far away from the same country as possible. I cannot stress enough that the term “seat” should be defined, especially if the lex contractus, the lex arbitri and the lex fori or one of them are different. The parties must explicitly mention the law governing the arbitration between them. An arbitration clause is a separate agreement that becomes a clause when added to the contract, so that even if the contract is null and void, the arbitration clause is retained because it is considered an independent and separate contract. It should be mentioned in the clause if there is an obligation to exclude something from the arbitration. Sometimes companies don`t think about arbitrating on specific or minor issues and want to exclude all small claims, intellectual property claims, and injunctive claims only. This must be done with the utmost care. Arbitration is one of the growing forms of alternative dispute resolution in the country. Arbitration clauses are being added to more and more contracts.
So far, consumers have not been willing to take active action against businesses in court. The arbitration resulted in an effective redress procedure for them. For sellers, arbitration is the biggest advantage because it is a very fast and confidential redress mechanism. Arbitration proceedings may be administered and monitored on an institutional or ad hoc basis. In institutional arbitration, supervision and administration are carried out by a designated institute agreed upon by both parties. It is carried out with the institution`s arbitration rules and the appointment of an arbitrator, and the conduct of the appeal procedure is carried out by an institution for a fee. It is also advisable and important to mention the timetable within which the parties must comply with the rules. Because if they are not mentioned, the parties will gain an undue advantage and take a long time, and the fundamental benefit of arbitration will be sacrificed. Under subsection 7(3) of the Arbitration and Conciliation Act, 1996, the only requirement for the validity of an arbitration agreement is that it must be in writing. It does not have to be signed by the parties to be valid and binding. Standard Clause: In the event of a dispute, each party must appoint an arbitrator within 7 (seven) days of the date of the dispute.
The two arbitrators shall appoint a third arbitrator by mutual agreement within 15 (fifteen) days of their appointment. The arbitrator appointed by the parties shall have the characteristics described in Annex 1 to the Agreement. In order to enforce an arbitration clause, it is mandatory to pay a reasonable amount of stamp duty. According to the judgment of 10 April 2019 in the case of Garware wall ropes Ltd.c. Coastal Marine Construction and Engineering Ltd. The Honourable Supreme Court has ruled that an arbitration clause will not be applied until it is stamped. Model Clause: In the event of a dispute, the parties agree to appoint a single arbitrator from the list of arbitrators set out in Schedule 1 of the Agreement within 7 (seven) days of the date of the dispute. Number of arbitrators: The number of arbitrators in the arbitral tribunal must be carefully considered.
As a general rule, it is advisable to opt for a single arbitrator rather than a panel of arbitrators, especially for low-value contracts. Arbitration fees can be prohibitive. Coordinating consensual appointments and the times of three or five referees can be a challenge in itself. Unless there is a well-thought-out convincing strategy behind the arbitration decision, a single arbitrator should be the norm. It is advisable to review the fee schedules of the Arbitration and Conciliation Act 1996 (Fourth Schedule) as well as the fee schedules in the case of institutional arbitration and to perform a comparative analysis of the fees before drafting the clause. If the clause provides for words such as “the courts meet, hear witnesses” in the XYZ, that place can only be designated as a place if reference is made to the seat in the agreement […].