Dispute between more that two parties can be referred to Arbitrators by mutual consent of the parties. The parties can decide who will be the Arbitrator and they can also appoint the arbitrator through the agreement. The decision of Arbitrator is bound to all the parties. Appointment of Arbitrator governs section 7 of The Arbitration and Reconciliation Act 1976. Relevant provision is also given here.
Sample Format of Agreement to refer a dispute of 3 parties to Arbitrators is given below.
This Agreement made at ____ on this __ day of _______ between Mr. A __________ son of ___________ aged ___________ Resident of _________________________of the ONE PART
Mr. B Son of ___________ aged ___________ Resident of _______________of the SECOND PART
Mr. c Son of ___________ aged ___________ Resident of _______________of the THIRD PART
Whereas the parties hereto have been carrying on business in partnership
under a Deed
of Partnership dated ______ entered into by the parties hereto and in the name of M/s ___________. And
Whereas disputes and differences have arisen between the parties regarding the management of the business of the partnership accounts and the legality of certain transactions entered into. and
Whereas one of the partners has given notice of dissolution of the partnership, the validity of which is disputed by the others. and
Whereas each of the parties in terms of the arbitration clause contained in the said Deed of Partnership has appointed an arbitrator being Mr. D______. Mr. E______ and Mr. F ________. and
Whereas the parties have agreed to enter into a separate submission paper or Arbitration agreement in the manner following:
Now It Is Agreed Between The Parties hereto as Follows:
1. The parties hereto agree to refer to the said three Arbitrators M/s. D, E and F all their disputes and differences 'inter se' touching the business of the said partnership, its properties and accounts and arising out of or in connection with the said Deed of Partnership and without prejudice to the generality of this clause, to decide the following questions:_
a. To decide whether the notice of dissolution given by one partner Mr. A___ is valid if so, the date of dissolution and If not to decide whether the other parties are entitled to continue the said business without the said Mr. A and to decide the date of his retirement.
b. In the event of the arbitrator holding that the partnership is dissolved, to divide and partition the moveable and immovable assets of the Firm among the parties according to their respective rights under the Deed of Partnership with power to the Arbitrator to sell any part of the said assets for equitable distribution among the parties.
c. To take accounts of the partnership for the last three years that is from
_______ and to ascertain the amount payable by one to the other or others If any.
d. To make provisions for payment of debts and liabilities of the Firm including Income-tax liabilities.
2. The Arbitrators shall direct the parties to file statements of their respective claims, legal submissions and reliefs claimed and each party to file his statement of defence in reply to the statements of claims of others.
3. The Arbitrators shall allow the parties to produce documents in support of their claims.
4. The Arbitrators shall direct the books of account and other papers of the Firm to be produced before them and arrange for their safe custody. The Arbitrators will have power to appoint a qualified accountant to inspect the accounts and to draw a balance sheet,.
5. The Arbitrators shall allow the parties to be represented by their respective advocates.
6. The Arbitrators shall not be bound to take oral evidence but if any party
witness is examined he will be allowed to be cross-examined.
7. If there is difference of opinion between the Arbitrators during the Arbitration proceedings or in making the award the decision of the majority will prevail and binding on the parties.
8. The Arbitrators shall be entitled to make one or more Interim Awards.
9. The Arbitrators shall make their award within four months from their
the reference but can extend the said period from time to time with the consent of all the parties hereto obtained in writing.
10. In the event of any party refusing to participate in the Arbitration proceedings or remaining absent without valid cause, the Arbitrator shall have power to proceed ex-parte against such party.
11. The costs of the Arbitration proceedings will be in the discretion of the Arbitrators.
12. The Arbitration, subject to what is herein provided shall be governed by the Arbitration &Conciliation Act, 1996.
In Witness Whereof the parties hereto have put their hands the day and year first hereinabove written.
In the presence of Witnesses
(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 including communication through electronic means 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.
(1) The parties are free to determine the number of arbitrators, provided that such number shall not be an even number.
(2) Failing the determination referred to in sub-section (1), the arbitral tribunal shall consist of a sole arbitrator.
(1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties.
(2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators.
(3) Failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator.
(4) If the appointment procedure in sub-section (3) applies and-
(a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or
(b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court;
(5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Supreme Court or,
as the case may be, the High Court or any person or institution designated by such Court.
(6) Where, under an appointment procedure agreed upon by the parties,-
(a) a party fails to act as required under that procedure; or
(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or
(c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.
(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.
(6B) The designation of any person or institution by the Supreme Court or, as the case may be, the High Court, for the purposes of this section shall not be regarded as a delegation of judicial power by the Supreme Court or the High Court.
(7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or
sub-section (6) to 3 the Supreme Court or, as the case may be, the High Court or
the person or institution designated by such Court is final and no appeal
including Letters Patent Appeal shall lie against such decision.
(8) The Supreme Court or, as the case may be, the High Court or the person or institution designated by such Court, before appointing an arbitrator, shall seek a disclosure in writing from the prospective arbitrator in terms of sub-section (1) of section 12, and have due regard to-
(a) any qualifications required for the arbitrator by the agreement of the parties; and
(b) the contents of the disclosure and other considerations as are likely to secure the appointment of an independent and impartial arbitrator.
(9) In the case of appointment of sole or third arbitrator in an international commercial arbitration, the Supreme Court or the person or institution designated by that Court may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities.
(10) The Supreme Court or, as the case may be, the High Court, may make such scheme as the said Court may deem appropriate for dealing with matters entrusted by sub-section (4) or sub-section (5) or
sub-section (6), to it.
(11) Where more than one request has been made under sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justices of different High Courts or their designates, different High Courts or their designates, the High Court or its designate to whom the request has been first made under the relevant sub-section shall alone be competent to decide on the request.
(12) (a) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and sub-section (10) arise in an international commercial arbitration, the reference to the "Supreme Court or, as the case may be, the High Court" in those sub-sections shall be construed as a reference to the "Supreme Court"; and
(b) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and sub-section (10) arise in any other arbitration, the reference to "the Supreme Court or, as the case may be, the High Court" in those sub-sections shall be construed as a reference to the "High Court" within whose local limits the principal Civil Court referred to in clause (e) of sub-section (1) of section 2 is situate, and where the High Court itself is the Court referred to in that clause, to that High Court.
(13) An application made under this section for appointment of an arbitrator or arbitrators shall be disposed of by the Supreme Court or the High Court or the person or institution designated by such Court, as the case may be, as expeditiously as possible and an endeavour shall be made to dispose of the matter within a period of sixty days from the date of service of notice on the opposite party.
(14) For the purpose of determination of the fees of the arbitral tribunal and the manner of its payment to the arbitral tribunal, the High Court may frame such rules as may be necessary, after taking into consideration the rates specified in the Fourth Schedule.
Explanation.-For the removal of doubts, it is hereby clarified that this sub-section shall not apply to international commercial arbitration and in arbitrations (other than international commercial arbitration) in case where parties have agreed for determination of fees as per the rules of an arbitral institution.