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Role of Signature in Arbitration Agreement

This Article discusses the role of signature in arbitration agreement and how enormously it has validity in arbitration agreement. The Indian law in arbitration deals under Arbitration and Conciliation Act, 1996 which has been later amended in 2005'. Arbitration agreement is one the major and important Document while performing or defining the legal relationship of parties while contractual or not arbitration.

This paper will discuss comprehensively about validity or role of signature and its usage. Does unsigned agreement bar to unauthorized or invalid agreement or not? Or whether other factors or other way can be considered as parties' intention.

This paper reviews to seek answer to that question or till how much extent does it affect agreement it also refers to the validity of signature in exchange letters, electronic arrangement, telegrams, fax. The Part- I of this paper comprises with Introduction of arbitration agreement and Part-II talks about the role and validity of Signature in Arbitration agreement and finally Part- III wraps up with the case law related to the Role of signature in arbitration agreement.

In India, the Arbitration and conciliation Act, 1996 later on amended in 2005 deals with the matter of arbitration agreement[1]. Where it has been found that the consent of parties is requires to conduct arbitral proceedings and sanction of consent is to be found in arbitration agreement but agreeing to it is considered as final step where Signature is one source and confirmation of it[2]. This is the situation where non-signatories are founded to be in dilemma or led to debate in the world.

Though this act talks about the signatures of parties in section 7(4)(a) which is required.[3] The signature is a form of expressing consent in a good faith rather than wrong intention and it also gives effect to the arbitration agreement and confers the intention of party. Thus, to ensure the commitments of parties and if any reasonable consequences which may arise are to be taken resolved by arbitral proceedings properly, has kept the procedure of signatures which makes sure legitimacy envisaged which is not given under any Act.

Well-drafted agreements contain signature authority section and proper clauses by signing agreement parties are bound to follow the agreement clauses and its rules as long as the sign is not forged or done fraudulently for example Any business owner can put up with the arbitration agreement in business if any consequences related to profit or supply are to be solved through arbitration instead of litigation and in case of more serious business conflicts, it can be put up with the mandatory arbitration clause[4].

Some analysis on arbitration agreement on New York convention and Model Law which is based in UNICTRAL as per Model Law discusses arbitration agreement defines as article 7.1-
As per Model Law agreement
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[5]

As per New York convention agreement

Each Contracting states shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or 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[6]

The Model law and New York has a mandatory requirement in agreement to be duly signed and stamped but it has debated that it creates conflicts in modern laws which is a mere disadvantage in relation because modern laws do not concerned signature as a validity clause or requirement which creates all the way different scenario whereas compared to English arbitration clause which says that in English Arbitration clause 1996[7]

Later on as per article 2 which talks about Electronic signature' which e-signature and is on trend these days moreover e-agreements have become staple of e-world. E-signature is related to data text or message which provides electronic signatory approval. The UNICTRAL provision has widened the concept for the arbitration agreements in purposes of signature' Though without signature it is slightly confusing or may be impossible to prove the consent of parties.

Signature makes Document authenticate and effective

But as per law it is not necessary for parties to signed the arbitration Agreement for instance a father made a Will for family and stated that further disputes are to be resolved by the arbitration matters relating to joint family and even if the sons are not signatories in that Will where award are to be bound to be made upon it and father has a power to define as he desire to be and sons are bound to it as per however clause incorporated in will.

Where two parties enter into a contract and made an arbitration agreement where future disputes are to be resolve by arbitration but it was not signed by any one of parties and sent it to other party who have signed now in future disputes if respondent denies or refuse to appoint arbitrator on ground of absence of signature then it will be rejected because valid arbitration agreement have been already held and accepted too.

Now, in case arbitration agreement drafted vaguely or contains uncertainty and not duly signed by parties so mere vagueness and non-clarity would not be subject to take aid of section 11(5) for petitioner.

The section reads as-

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 Chief Justice or any person or institution designated by him

For that matter it is essential to constitute the intention of parties for adopting arbitration as a method of dispute resolving. Therefore, any party in future dispute rely on absence of signature or makes it ground then it shall be rejected. (trimex Int FZE ltd v Vedanta aluminium 2010) citation

In Arbitration and Conciliation Act 1940, it was not a clause or requirement of signature for an effective arbitration agreement or it ought to have formatted in agreement but in section 7 sub section 4 of arbitration agreement reads as:

An arbitration agreement is in writing if it is contained in:

  1. a document signed by the parties;
  2. an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or
  3. an exchange of statements of claim and defense in which the existence of the agreement is alleged by one party and not denied by the other.
Therefore, a plain reading of this act indicates that provision of section 7 of 1996 of Act must be in writing which is to be in the form of arbitration clause and may be contained a signature by parties.

Written and signature agreement in E-electronic contract

In world and trend of e-technology and internet the agreement has taken place in form of electronic also and drastic change and development has brought major changes in a way of work these days so as it has brought change in agreement too, transaction now conducted by way of electronic means.

The Information Technology, 2000 Act has given guidelines for all electronic transaction which came into effect 17,October, 2000 it provides legal recognition by all means it is an alternative method for hand written and books method but it online facilitate legal formation by electronic method and electronic way of filling method with storage procedure but it is not any essential and legal requirement in law or act it is only alternative method of electronic data.

Therefore, validity of e-contract and agreement cannot be questioned after enactment of this Act any company, arbitration proceeding, and dealings can be done by forming agreement and document by this way. So far as the as per Indian Contract Act has requirement of signing and recording where signature asserts the careful thinking and validity of agreement. Now in this new era it has made easy to sign agreement and document electronically.

Section 15 of IT Act provides digital signature which deemed to be alternative of manual signature. The digital signature can be verified through crypto system and hash function so authentication of signature cannot be questioned as long as it is not forged. Such act and provisions are now complying with section 7 of IT Act and contract entered through electronic way is valid so as signature but in arbitration act there is no requirement as such.

Even if we see English Arbitration Act 1996, agreement need no to be sign exchange of communications are valid and agreement through electronic method as well.

In case of TVC Sky Shop Ltd. V Sahar Airlines Ltd 2010(1)

It was found that appeal was filed in Supreme Court stating that they were agreed in agreement to appoint Justice S. Ranganathan as a sole arbitrator for any disputes arising in future. All parties even signed this appeal before filing now after signing they all have agreed to compliance with the requirement of Section 7 of the Act and carefully Arbitration agreement has been made.

Now, Respondent revert and opposed this and contended that arbitration clause was not duly signed by petitioner but only signed by respondent and respondent forwarded the copy to the appellant showing his willingness for disputes arising in future should be resolved through arbitration and respondent even accepted the goods and services by petitioner and agreement came into existence and stated that section 7 (3) us the only requirement which is agreement should be in writing. Therefore, arbitrator was appointed, and application was accepted.

End-Notes:
  1. The Arbitration And Conciliation Act, 1996
  2. Principle XIV.1 - Law Applicable to International Arbitration Agreements | Trans-Lex.Org
  3. What Is an Arbitration Agreement? accessed 17 April 2019
  4. What Is an Arbitration Agreement? (FreeAdvice)
  5. UNCTAD/EDM/MISC232/ADD39 Dispute Settlement 70
  6. UNCTAD/EDM/MISC232/ADD39 Dispute Settlement 70
  7. AA 1996—the Arbitration Agreement—England and Wales—Overview - Lexis®P

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