KK Modi Vs KN Modi (1998 AIR SC 1297)


This case discussed the attributes which are necessary for considering an agreement as an arbitration agreement. It was held that among the attributes which must be present are:
1. The arbitration agreement must contemplate that the decision of the tribunal will be binding on the parties to the agreement.
2. The jurisdiction of the tribunal to decide the rights of the parties must derive from their consent, or from an order of the Court or from a statute, the terms of which make it clear that the process is to be an arbitration.
3. The agreement must contemplate that substantive rights of the parties will be determined by the agreed tribunal.
4. The tribunal will determine the rights of the parties in an impartial and judicial manner with the tribunal being fair and equal to both sides.
5. The agreement of the parties to refer their disputes to the decision of the tribunal must be intended to be enforceable in law
6. The agreement must contemplate that the tribunal will make a decision upon a dispute which is already formulated at the time when a reference is made to the tribunal.
Other important factors include whether the agreement contemplates that that tribunal will receive evidence from both sides and give the parties opportunity to put forth their issues and hear their contentions; whether the wording of the agreement is consistent with the view that the process was intended to be an arbitration; and whether the agreement requires the tribunal to decide the dispute according to law.
The courts have laid emphasis on (i) existence of disputes as against intention to avoid future disputes; (ii) the tribunal or forum so chosen is intended to act judicially after taking into account relevant evidence and submissions made by parties before it; (iii) the decision is intended to bind parties; (iv) nomenclature used by parties need not be conclusive.

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