Party Autonomy In Arbitration Agreement

In the arbitration regulation, the autonomy of the party has gained a lot of recognition. In the development of an arbitration agreement, the parties are free to choose ad hoc or institutional arbitrations, the law, seat and place of arbitration, the number of arbitrators (odd number), their qualifications and any other issue relevant to the procedure to be followed. The ability of the parties to determine the procedure to be followed in appointing an arbitrator is an essential manifestation of the autonomy of the party. The unCIT Model Law adopted this principle of autonomy for the parties in that it provides that the parties can agree on the procedure for enforcing the procedure. Arbitration procedures in India are governed by the Arbitration and Conciliation Act 1996 (on the basis of the model law), which also provides for party autonomy. The principle of party autonomy is an internationally recognized standard in arbitration, and is one of the main reasons why parties today choose traditional dispute arbitration as the preferred mechanism for resolving their trade disputes. In arbitration, the parties can adapt and define a mechanism that meets their needs. Nevertheless, the mechanism chosen must be in accordance with legislation and public order. Once the courts are satisfied that such a mechanism is not contrary to the law, it should comply with it and allow the parties to intervene as little as possible in this regard.

Thus, even in this case, the division of the Delhi Supreme Court should not have interfered in the process of appointing an arbitrator if the parties had clearly agreed on a mechanism valid for the same thing. Subsequently, the complainant appealed to the Supreme Court against the Division`s order, the agreement between the parties for a dispute resolution mechanism. Therefore, the appointment of a suo-motorcycle referee by the Bench Division is contrary to such an agreement. In recent years, Indian courts have taken divergent decisions and placed a high priority on party autonomy. This is also the case of a recent Supreme Court decision in the Case of the State Trading Corporation of India Vs Jindal Steel and Power Limited and Ors. (Civil Appeal No. 2747 of 2020), in which the Supreme Court stated that once the parties agreed to respect a particular mechanism for resolving their disputes, including the process of appointing an arbitrator, it is wrong not to see the same thing and to appoint an arbitrator. Invoking the principle of party autonomy in arbitration, the Supreme Court decided that in an agreement that contains an arbitration clause, where the parties decided to follow a particular mechanism to settle their dispute, and in this case, in accordance with the Arbitration Council of India and the rules, the courts should not intervene in this agreed mechanism.

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