Since we have already understood the meaning of International Commercial Arbitration and the basic process of conducting any commercial arbitration, we can now start with how a party can invoke an arbitration clause when a dispute arises from a commercial contract.
To start an arbitration process, or we can say, to invoke the arbitration clause of the commercial contract, a request for arbitration or notice of arbitration must be filed. The name of this initial document depends on the rules of the institution administering the arbitration. This initial document is named as request for arbitration by the arbitral institutions like ICC, LCIA, ICSID, DIAC whereas it is named as notice of arbitration under SIAC, HKIAC and the UNCITRAL rules. The main difference between these two is the name since the required content for both the request and notice for arbitration is similar.
So in both the request for arbitration and notice for arbitration, there are various information which have to be mentioned in the document which depend on the rules of the institution administering the dispute. Generally, it must contain names of each of the parties, names of the representatives of the parties, a description of the dispute giving rise to claims, a statement of the relief sought, a description of the agreement containing the arbitration clause, the choice of one or more arbitrators, a description of the place of arbitration and lastly there should be an indication of the applicable rule of law governing the arbitration and an indicator of the language of the arbitration.
Now parties generally submit the supporting documents with their request for arbitration or notice fof arbitration. However, the supporting documents are not required under all the rules of arbitration and generally a very limited evidence has to be produced during the course of arbitration.
If any International Commercial Arbitration is being conducted in India, that is, the seat of arbitration is in India, generally the parties opt for the rules of International Commercial Arbitration, 2016 which are adopted by the Indian Council of arbitration. These rules provide for the information which has to be mentioned in the request for arbitration and the notice of arbitration to the respondent.
Apart from this, if the the dispute is not referred to arbitration by the parties themselves, then the court can do so if the subject matter of the dispute is governed by arbitration clause. This has been mentioned in the Section 8 of Arbitration and Conciliation Act. However, there is one exception here. In the conditions where the dispute settlement clause in the contract grants an option of getting the dispute adjudicated by arbitration or by Court, the party has to make a formal application to the Court for referring the dispute to arbitration which would be accompanied by a duly certified or original copy of the arbitration agreement. However, the agreement need not be signed to be considered as a valid agreement.
Also, there is no requirement for filing a formal application seeking a specific prayer for reference as long as the party raised an objection on the maintainability of suit in the light of the arbitration clause.
Validity of arbitration agreement:
Now you must be curious about who exactly would check the validity of any arbitration agreement? So, the 2015 Amendment Act narrowed the scope of the power of the judicial authority to examine or check the validity of any arbitration agreement between parties to agreement. It was decided that a mere incorporation of a document or clause relating to arbitration will be considered as a valid arbitration agreement. However, intention of the parties as well as consensus-ad-idem of the parties will be very important even if the same is implied from their conduct.
Non-signatories as a party to arbitration:
Since International Commercial Arbitration and its rules are developing day by day with every award, now the process has become very flexible. In one of the very important case of Supreme Court namely Chloro Controls Private Limited v. Severn Trent Water purification Inc & Ors, it was held that in any foreign seated arbitration the definition of the word ‘party’ to an arbitration agreement will also include persons claiming through or under such party, specially when there is a clear intention of the parties to bind both the signatory as well as the non-signatory parties. Therefore, even non-signatories to the arbitration agreement, whether in a domestic arbitration or India-seated International Commercial Arbitration, are concerned may also participate in arbitration proceedings as long as there are proper and necessary parties to the agreement. However this will depend on the nature of relief claimed by or against a party.
So this was all about notice of arbitration or request for arbitration and reference of the dispute to arbitration.
Question of the Week:
In what cases the court denies to refer a dispute for arbitration despite the presence of arbitration clause in the agreement?
As we discussed in the previous blog post, if the subject matter of the dispute is not arbitrable, the court can deny to refer the dispute to arbitration.
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