What constitutes a valid arbitration agreement as per Section 7 of Arbitration & Conciliation Act, 1996? and What conditions on which an arbitration clause printed on a tax invoice/sales receipt, etc. to be considered a valid – R.P. Infosystems Pvt. Ltd. v. Redington (India) Ltd. – Calcutta High Court
In this important judgment, Hon’ble Calcutta High Court held that:
(i) Party autonomy is the cardinal principle of arbitration regime in India, and there is enough flexibility provided for the parties to draft an arbitration clause as per their own convenience and requirement subject to the conditions outlined in Section 7 of the Act.
(ii) What is sine qua non for an agreement to be considered as an arbitration agreement is that the intent of the parties to refer their disputes to arbitration must be clear and absolute.
(iii) For an arbitration clause printed on a tax invoice/sales receipt, etc. to be considered a valid one following conditions must be met(refer details list of condition in complete summary).
(iv) The invoices having been signed and accepted by the award debtor, will override the purchase orders issued earlier.
(v) Words which have been used in an arbitration clause must be “words of choice and determination” to refer the disputes between the parties to arbitration and not words of mere possibility.
(vi) If courts at any particular place have been granted exclusive jurisdiction in an arbitration agreement, all other courts will be barred from hearing any application in relation to any proceedings arising out of such an arbitration agreement even if the words “exclusive”, “exclusive jurisdiction”, “alone”, “only” have not been used in an arbitration agreement.
