Arbitration Agreements

Background

An “arbitration agreement” is an agreement between two or more parties to have any and all disputes arising out of or in connection with a specified legal relationship (whether contractual or not) resolved through arbitration. Arbitration is the most formal alternative to going to court, and it has many advantages. A neutral third party hears both sides of the argument and then makes a ruling. Disputes can be arbitrated between private parties or between private and public entities. There’s every chance that one has signed an arbitration agreement if ever one had purchased a cell phone or a credit card and such agreements are ubiquitous. While taking up a job or purchase of consumer durable goods or similar contracts of any nature, arbitration agreements have become common now considering the ease of settling disputes or the need for the avoidance of conflicts right at the threshold. It is pertinent to note that the National Employment Lawyers Association, reports that approximately 36 million Americans worked for one of the 27% of U.S. businesses that required employees to sign arbitration agreements as of 2010. Arbitration agreements are such that well-known negotiators discuss unorthodox methods of resolving conflicts that can transform enemies into allies. An arbitration clause in a larger contract is that which states that the parties to the contract will resolve any legal disputes between them through binding arbitration. Although arbitration clauses are most frequently seen in consumer and employment contracts, they can be proposed as an addendum to any contract negotiation in which one or both parties wish to avoid the risk of a future lawsuit. Businesses often require customers and employees to sign an arbitration agreement to reduce costs and improve the efficiency of dispute resolution. It is often unknowingly entered into arbitration agreements because arbitration clauses are included in the “fine print” of lengthy standard contracts. In arbitration, a third-party neutral arbitrator acts as a judge and issues a binding ruling to settle the case. While many arbitrators are former judges, that doesn't mean they always adhere to the letter of the law. When compared to mediation, arbitration is actually a much more malleable process, with rules that can be negotiated.

This chapter aims to achieve the following objectives:

• i.

  To discuss the significance of arbitration agreements

• ii.

  To analyse the forms of arbitration agreements, their definitions, validity, and foreign arbitration agreements to be executed in a domestic environment

• iii.

  To study the jurisdiction of the arbitral tribunal, the doctrine of Kompetenz-kompetenz, and international commercial arbitration agreements

The methodology used here is analytical and descriptive. It is a qualitative analysis of material available from secondary sources like published books, journals, articles and web sources.