Essay On Arbitration Agreement

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BINDING THIRD PARTIES TO ARBITRATION: IS THE CORNERSTONE OF ARBITRATION “Consent” – ACTUALLY CORNERED? Like consummated romance, arbitration rests on consent. CHAPTER I: INTRODUCTION Ordinarily, “a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” Consent has long been the foundation of arbitration , giving the process legitimacy and informing decisions about its nature and structure. In corollary, the powers which vest in the arbitrators find its root in the agreement to arbitrate where the parties agree to submit their grievances to arbitration. Hence, plausibly there are two sine qua non conditions for enforcing an arbitration agreement firstly, there should be in-fact an arbitration agreement and secondly, the dispute must fall within the scope of arbitration agreement. But, there is a growing trend where courts have decided that the arbitration is binding even to third parties (i.e. in legal terms a non signatory) which violates both principles set above. While some countries also take the route of pro-arbitration policy to bind third party i.e. any disagreement which relates to an arbitration clause is determined in favour of arbitration , United States Court (who favours arbitration as a federal public policy) acknowledged that the Federal Arbitration Act will not require arbitration unless the parties to the to the dispute have in fact agreed to refer the dispute to arbitration.10 Evidently, there is divergences in practices of countries. The following extracts of Tibor and Dr. Marc when positioned collectively explain the situation this paper seeks to address. "Arbitration is a creature of contract,1 and Consent is the cornerstone upon which the temple of privat... ... middle of paper ... ...tations. Yet, courts have neatly encroached on the conception of privity of contract and carved out exception without sideling the entire concept. To establish a practice of binding non signatory, it is important that we understand the efficiency and contribution of arbitration towards smooth functioning of international businesses. Binding non signatories becomes part and parcel of certain industries like maritime, where you have multiple contracts (bill of lading, charter party and freight forwarder contracts) for achieving a single result: carriage of goods. Obviously, it highlights the requirement of lawyers to draft contracts keeping in mind that a third party might be added. Ultimately, efforts towards establishing a trend of law in international arbitration will help us to progress on a path which valuable of all aims in dispute resolution: predictability.
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