Arbitration Agreement

Concept involve in an arbitration agreement

• Definition
• Doctrine of Separability (separation of arbitration
clause from the contract)
• identity, non-signatory and capacity
• Defined legal Relationship
• consolidation, joinder and intervention of third party
• Enforcement
• Arbitrability
• How to draft an arbitration agreement
Arbitration Agreement
DEFINITION
 New York Convention
• Article II
• 1. Each Contracting State shall recognize an agreement in writing under
which the parties undertake to submit to arbitration all or any differences
which have arisen or which may arise between them in respect of a defined
legal relationship, whether contractual or not, concerning a subject matter
capable of settlement by arbitration.
• 2. The term “agreement in writing” shall include an arbitral clause in a
contract or an arbitration agreement, signed by the parties or contained in
an exchange of letters or telegrams.
• 3. The court of a Contracting State, when seized of an action in a matter in
respect of which the parties have made an agreement within the meaning of
this article, shall, at the request of one of the parties, refer the parties to
arbitration, unless it finds that the said agreement is null and void,
inoperative or incapable of being performed.
Definition and formal Requirement of Arbitration Agreement
Model Law- 1985

• Article 7 Definition and form of arbitration

• ‘Arbitration agreement’ is an agreement by the
parties to submit to arbitration all or certain
dispute which have arisen or which may arise
between them in respect of a defined legal
relationship, whether contractual or not. An
arbitration agreement may be in the form of an
arbitration clause in the contract or in the form
of a separate agreement.
 Cont...
• The arbitration agreement shall be in writing.
– An agreement is in writing if it is contained in a document
signed by the parties or in a exchange of letter, telex,
telegrams or other means of telecommunication which
provide a record of the agreement, or in an exchange of
statement of claim and defence which the existence of an
agreement is alleged by one party and not denied by
another. The reference in a contract to document containing
an arbitration clause constitutes an arbitration agreement
provided that the contract is in written and the reference is
such as to make that clause part of the contract.
 Indian Law
• 7 Arbitration agreement. —
• 1) In this Part, “arbitration agreement” means an agreement by the parties to submit to
arbitration all or certain disputes which have arisen or which may arise between them in
respect of a defined legal relationship, whether contractual or not.
• (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in
the form of a separate agreement.
• (3) An arbitration agreement shall be in writing.
• (4) An arbitration agreement is in writing if it is contained in—
• (a) a document signed by the parties;
• (b) an exchange of letters, telex, telegrams or other means of telecommunication which
provide a record of the agreement; or
• (c) an exchange of statements of claim and defence in which the existence of the
agreement is alleged by one party and not denied by the other.
• (5) The reference in a contract to a document containing an arbitration clause constitutes
an arbitration agreement if the contract is in writing and the reference is such as to make
that arbitration clause part of the contract.
 Model Law- 2006
• Option I
• Article 7.
• Definition and form of arbitration agreement (As adopted by the
Commission at its thirty-ninth session, in 2006)
• (1) “Arbitration agreement” is an agreement by the parties to submit to
arbitration all or certain disputes which have arisen or which may arise
between them in respect of a defined legal relationship, whether
contractual or not. An arbitration agreement may be in the form of an
arbitration clause in a contract or in the form of a separate agreement.
• (2) The arbitration agreement shall be in writing.
• (3) An arbitration agreement is in writing if its content is recorded in any
form, whether or not the arbitration agreement or contract has been
concluded orally, by conduct, or by other means
• . (4) The requirement that an arbitration agreement be in writing
– is met by an electronic communication if the information contained therein is
accessible so as to be useable for subsequent reference; “electronic
communication” means any communication that the parties make by means of
data messages; “data message” means information generated, sent, received or
stored by electronic, magnetic, optical or similar means, including, but not limited
to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy.
• (5) Furthermore, an arbitration agreement is in writing
– if it is contained in an exchange of statements of claim and defence in which the
existence of an agreement is alleged by one party and not denied by the other.
• (6) The reference in a contract to any document containing an arbitration
clause constitutes an arbitration agreement in writing, provided that the
reference is such as to make that clause part of the contract.
• Option II Article 7. Definition of arbitration
agreement (As adopted by the Commission at
its thirty-ninth session, in 2006) “Arbitration
agreement” is an agreement by the parties to
submit to arbitration all or certain disputes
which have arisen or which may arise between
them in respect of a defi ned legal
relationship, whether contractual or not.
Article
 The writing requirement
• The requirement that an arbitration agreement be in writing
(“writing requirement”) under article 7 (2), as adopted in 1985,
seeks “to ensure that parties do not get forced into arbitration
unless it is clear beyond doubt that they have agreed to it.”
• When the Model Law was adopted in 1985, it had been
decided that an arbitration agreement had to be in writing even
though oral arbitration agreements were, at the time, not
unknown in practice and even recognized by some national
laws.
• Yet, it is not required under article 7 (2) that arbitration
agreements be signed by all parties.
 Cont...
• An agreement is also to be considered in writing if it is contained “in an
exchange of letters, telex, telegrams or other means of telecommunication
which provide a record of the agreement,” and this exchange need not be
between the parties.
• Further broadening the notion of writing, article 7 (2) provides that an
agreement would also be in writing where the parties have exchanged
“statements of claim and defence in which the existence of an [arbitration]
agreement [was] alleged by one party and not denied by the other.”
• The Supreme Court of India has ruled that, in light of the principle of party
autonomy and the “need to minimize the supervisory role of courts in the
arbitral process,” courts should refrain from adding formal requirements of
validity of arbitration agreements that are not enumerated in article 7 (2).
(Great Offshore Ltd. v. Iranian Offshore Engineering & Construction
Company, Supreme Court),2008
• If this Court adds a number of extra requirements such as stamps,
seals and originals, we would be enhancing our role, not minimising it.
Moreover, the cost of doing business would increase. It takes time to
implement such formalities. What is even more worrisome is that the
parties' intention to arbitrate would be foiled by formality. (Para 70)
• Such a stance would run counter to the very idea of arbitration,
wherein tribunals all over the world generally bend over backwards to
ensure that the parties' intention to arbitrate is upheld. Adding
technicalities disturbs the parties' "autonomy of the will" (l'
autonomie de la volonti), i.e., their wishes. [For a general discussion
on this doctrine see Law and Practice of International Commercial
Arbitration, Alan Redfern and Martin Hunter, Street & Maxwell,
London, 1986 at pages 4 and 53]. (para 71)
• Technicalities like stamps, seals and even signatures are red tape that have
to be removed before the parties can get what they really want - an
efficient, effective and potentially cheap resolution of their dispute. The
autonomie de la volonti doctrine is enshrined in the policy objectives of
the United Nations Commission on International Trade Law ("UNCITRAL")
Model Law on International Commercial Arbitration, 1985, on which our 
Arbitration Act is based. [See Preamble to the Act]. The courts must
implement legislative intention. It would be improper and undesirable for
the courts to add a number of extra formalities not envisaged by the
legislation. The courts directions should be to achieve the legislative
intention. The courts must implement legislative intention. It would be
improper and undesirable for the courts to add a number of extra
formalities not envisaged by the legislation. The courts directions should
be to achieve the legislative intention. (para 72)
• One of the objectives of the UNCITRAL Model Law reads as
under:-
• "the liberalization of international commercial arbitration by
limiting the role of national courts, and by giving effect to the
doctrine "autonomy of will," allowing the parties the freedom
to choose how their disputes should be determined." [See
Policy Objectives adopted by UNCITRAL in the preparation of
the Model Law, as cited in Law and Practice of International
Commercial Arbitration, Alan Redfern and Martin Hunter,
Street & Maxwell, London (1986) at page 388 (citing UN
doc.A/CN.9/07, paras 16-27]. (para 73)
Domestic laws of Foreign countries
• Position in New Zealadn (statue) and Hong
Kong-(Arbitration Ordinance, section 2AC)
• The law between- Winbond Electronic (HK) Ltd
v Achieva Components China Ltd and H Smal
ltd v Goldroyce Garment Ltd.
• In the words of Neil Kaplan
• A key question arising in connection with the writing requirement is whether
consent not expressed in writing may suffice where the content of the agreement
is recorded in a document, or whether consent must always be expressed in a
writing—albeit not necessarily in a writing containing the parties’ signature.

• This question is of significant practical importance in cases where the parties

engaged in a contractual relationship further to a written contractual offer
containing an arbitration clause that was never responded to in writing.
• In one case, the court refused to find that the writing requirement had been met,
pointing out that article 7 “cannot be complied with unless there is a record
whereby the [party against whom the agreement is invoked] has in writing
assented to the agreement to arbitrate.”(CLOUT case No. 64 [H. Small Limited v.
Goldroyce Garment Limited, High Court—Court of First Instance, Hong Kong, 13
May1994], [1994] HKCFI 203)
• However, other courts have interpreted the
requirement less strictly and found, on similar facts,
that because “in this age of electronic international
business transactions, (…) a liberal interpretation
should be given” to article 7 (2), tacit consent to an
arbitration agreement set out in writing is sufficient.
(CLOUT case No. 365 [Schiff Food Products Inc. v.
Naber Seed & Grain Co. Ltd., Court of Queen’s
Bench, Saskatchewan, Canada, 1 October 1996],
1996 CanLII 7144 (SK QB)])
• Another controversial question is whether documents
which are not contemporaneous with the agreement to
arbitrate may be considered records of the agreement
within the meaning of article 7 (2). One court ruled that
they could not, on the ground that “[a]rticle 7 (2)
precludes the adoption of memoranda in writing being
relied upon which postdate the agreement to arbitrate.
• CLOUT case No. 43 [Hissan Trading Co. Ltd. v. Orkin
Shipping Corporation, High Court—Court of First
Instance, Hong Kong, 8 September 1992], [1992] HKCFI
• However, that finding was subsequently criticized in decisions
pointing out, interalia, that oral arbitration agreements later
evidenced through writings emanating from the parties did comply
with the writing requirement set out in article 7 (2). CLOUT case No.
44 [William Company v. Chu Kong Agency Co. Ltd. and Guangzhou
Ocean Shipping Company, High Court—
• Court of First Instance, Hong Kong, 17 February 1993], [1993] HKCFI
215, also available on the Internet at http://www.hklii.hk/eng/
hk/cases/hkcfi/1993/215.html; P.T. Wearwel International v. Vf Asia
Ltd., High Court—Court of First Instance, Hong Kong, 19 August 1994,
[1994] 3 HKC 344; Indowind Energy Ltd. v. Wescare (I) Ltd. & Anr.,
Supreme Court, India, 27 April 2010, available on the Internet at
http://www.indiankanoon.org/doc/997909/.
• Finally, courts have tended to interpret
broadly the words “statements of claim and
defence,” concluding that they included not
only formal submissions to an arbitral tribunal
or a court, but also claims asserted between
the parties outside of the litigation or
arbitration context
 Incorporation by reference to a document containing
an arbitration clause

• When the situation arises , when parties have not include

a reference to another document which contains an
arbitration agreement.
• It comes with first question- whether the arbitration
agreement in the other document in the other document
is the other document is binding on the parties to the
contract.
• The second question, that arises in connection with the
last sentence of article 7 (2) is whether the arbitration
agreement contained in the document must be explicitly
referred to in the reference.
 What the model law says
• The last sentence of article 7 (2) addresses the situation
where the parties, instead of including an arbitration
clause in their contract, include a reference to a
document containing an arbitration agreement. Article
7 (2) confirms that an arbitration agreement may be
formed in that manner provided,
– firstly, that the contract in which the reference is found
meets the writing requirement discussed above and,
– secondly, that “the reference is such as to make that clause
part of the contract.” The document referred to need not to
be signed by or to emanate from the parties to the contract
• “the text clearly states [that] the reference need
only be to the document; thus, no explicit
reference to the arbitration clause contained
there in is required.” While a similar conclusion
has been reached by several courts,
• other courts have found that an explicit mention
of the arbitration agreement was needed in order
for the reference to be operative.
 Lets consider a situation
• bill of lading had incorporated all the terms
set out in the charter party under which it had
been issued. The charter party contained an
arbitration clause, but that clause was limited
to disputes arising under the charter party.
 Can be a case ...
• because the reference made no explicit mention of the
arbitration clause, and because the arbitration clause made
no reference to disputes relating to any bill of lading issued
under the charter party, the parties could not be said to
have intended to incorporate the arbitration clause so as to
make it applicable to disputes relating to the bill of lading.
The court stated that its conclusion would have been
different if the arbitration clause had expressly provided
that it applied to disputes relating to bills of lading issued
under the charter party, or if the reference in the parties’
contract had explicitly mentioned the arbitration clause.
Specific reference- the traditional argument

• In support of specific reference

• The position of domestic courts in this regard.