Sunday, 17 September 2017

When parties can approach court even in presence of arbitration agreement?

Arbitration is increasing method of dispute resolution. With increasing number of cross border transactions and international trade contracts, arbitrability of arbitration agreements now holds a prominent place in resolution of international and domestic arbitrations.

In India, traditionally the parties move to court when the the dispute relating to an arbitration agreement arises

The Golden Rule is that if the dispute is covered by an Arbitration agreement, the said dispute should be resolved by Arbitration. However, there are following exceptions to this Rule. 
 1. If a party institute an action in the Court in respect of a dispute, which is covered by an arbitration agreement, the Court may continue with the said action if the other party doesn't object to the Court's jurisdiction.
2. If there is an immediate urgency, the Court may hear the case. (Textile v Hydro Industries)
3. If the dispute is in respect of Oppression and Mismanagement under the Company law, the Court may hear the action.
4. The Court may hear disputes in respect of unjust enrichment and compensation for improvements.
5. The Court may also hear disputes which are not covered under the Agreement and the Arbitration Clause.
6. The Court may hear disputes if non parties to arbitration agreement are involved.
7. The Court should hear dispute if dispute arising out of arbitration agreement in criminal in nature.
8. The Court should hear if dispute is relating to status such as divorce, judicial separation, restitution of conjugal rights, child custody etc.
9. The Court should hear dispute if it is relating to competition law, insolvency, winding up, bribery, corruption
10. The Court should hear dispute if it is relating to   guardianship matters.
11. The Court should hear dispute if it is relating to testamentary matters.
12. The Court should hear dispute if it is disputes relating to trust.

Points 1-5 have been contributed by Mr. Yasith Hirimburegama, Lawyer based in Sri Lanka. 

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