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Validity of Arbitration Agreements

MV Baltic Confidence v. STC, (2001) 7 SCC 473

ISSUE:

Whether a valid arbitration clause could be incorporated in the bill of lading?

RULE:

In order to decide whether bill of lading can include a valid arbitration clause, attempt should be made to ascertain the intention of the parties and give effect to the incorporating clause. It should be invalidated giving a literal and technical reading of the clause.

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Validity of Arbitration Agreements

Jagdish Chander v. Ramesh Chander, (2007) 5 SCC 719

ISSUE:

Whether clause 16 of the Deed of Partnership is a valid 'arbitration agreement'?

RULE:

Arbitration agreement must disclose a determination through words used in the agreement and obligation on behalf of parties to refer disputes to arbitration.

Where there is merely a possibility of the parties agreeing to arbitration in the future, in contrast to an obligation to refer disputes to arbitration, there is no valid and binding arbitration agreement.

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Validity of Arbitration Agreements

Enercon India Ltd. v. Enercon GmBH, AIR 2014 SC 3152

ISSUE:

Whether there is a properly concluded contract between the parties?

Where would the seat of arbitration be?

RULE:

Courts have to adopt a practical and flexible approach and think like a “reasonable business person.”

It is the court’s duty to make an ‘unworkable’ clause workable by looking into the intention of the parties and by making necessary changes.

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Validity of Arbitration Agreements

Caravel Shipping Services Private Limited v. Premier Sea Foods Exim Private Limited, (2019) 11 SCC 461

ISSUE:

Whether an arbitration clause will not form a part of the Bill of Lading merely because it is formed in the annexure to the agreement?

Whether an arbitration clause is required to be signed by all parties in order for it to be binding on the parties?

RULE:

The arbitration clause in an annexure of an agreement is considered to be part of the main agreement based on the intention of the parties.

The only pre-requisite for valid arbitration agreement is it must be in writing as stated in Section 7(3) of the Arbitration and Conciliation Act, 1996. Signing by the parties is not necessary.

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