Dispute settlement is a primary feature of any legal system. One of the major requisites of a peaceful society or group is that the resolution of troubled cases by processes which are non-violent and amicable in character and thus, arbitration is one such mechanism to resolve disputes. Arbitration is the most comprehensive and cooperative way for resolving disputes arising from domestic and international commercial relationships, whereby the parties mutually agree to reconcile their disputes by entering into an agreement.
The parties have an option to incorporate a separate agreement or a clause within the contract defined as the ‘Arbitrration Clause’, which binds a party to a type of resolution outside the court. Generally, the contract between the parties contains the Arbitration clause by which the parties are obliged to resolve the matter only through Arbitration. If the provision of Arbitration is not mentioned in the contract, then parties have recourse to settle their dispute in an amicable manner.
Even though the Arbitration clause is an indispensable part of the particular contract, the three main clauses of Separability, Severabilityor Autonomy of the arbitration clause are distinctive and independent to the underlying contract.
The arbitration agreement is a distinctive agreement, which provides the basis for arbitration as defined under the principle of separability . It is defined as an agreement to submit present or future disputes between the parties and an appoint an appointment of a particular arbitrator to resolve their disputes arising out of a particular business relationship. Having such a principle does not negate the validity of the other contractual obligations and the agreement. With incorporation of the separate arbitration agreement, the solution achieved is binding on the immediate parties to the dispute and the essence lies in providing a fair remedy to the parties. The main focus is given to the choice of law as determined by the parties to the contract which is binding on the arbitration agreement.
Arbitration is generally the most effective and efficient remedy for settling disputes among the parties and is usually not a lengthy process, involving lower costs when compared to a normal and traditional judicial proceeding. According to the nature of the case, the parties have an option to choose their own arbitrator depending upon the abilities to decide the case as per their expertise.
The growth of arbitration signifies the fundamental change in our way of legislating and deciding matters in a very short span of time and the separate clauses within the commercial contract are paving the way for suitable and effective remedy without any recourse to the court. However, there are certain things which have to be kept in the mind while drafting the contract for resolving the dispute through Arbitration with respect to the consent of the parties. In practice, almost all arbitration agreements are concluded in the form mentioned in the arbitration clauses.Copyright 2022 – Helpline Law
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