Arbitration Agreement for Partnership Disputes in India: Free Download and Drafting Tips

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  • Category: Business
  • Used: 3575 times
  • Last Revision: January 2023
  • Legal Jurisdiction: India
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Sample Contract or Agreement on Arbitration for Partnership Disputes in India

Things we covered for you

  1. What is Arbitration Agreement for Partnership Disputes

  2. Key Components of an Arbitration Agreement for Partnership Disputes

  3. How to Draft an Effective Arbitration Agreement?

  4. Does this Arbitration Agreement require to be Printed on Stamp Paper and be Notarized?

  5. Sample Agreement / Contract Template

What is Arbitration Agreement for Partnership Disputes

In today's complex business world, partnerships are formed with the hope of success and prosperity. However, sometimes disagreements and disputes can arise between partners, leading to the need for a fair resolution process.

In such an event, parties may choose to refer the dispute to an Arbitrator instead of going for litigation for a number of reasons and enter into an Arbitration Agreement. The number of arbitrators can be anything but we usually find it to be two and that's why this contract template also covers that specific scenario.

The agreement outlines the specific terms under which the arbitrators will operate, including the timeline for delivering their award and the possibility of appointing an Umpire in case of disagreements among the arbitrators. The Arbitration & Conciliation Act, 1996, governs the entire reference, ensuring a legal and structured process.

Both parties are bound by this agreement and acknowledge its continued enforceability even in the event of their demise, holding their legal representatives responsible for adhering to its terms. By adhering to the provisions laid down in this agreement, both parties can ensure a timely and equitable resolution, preventing prolonged legal battles and fostering a cooperative approach in business dealings.

Key Components of an Arbitration Agreement for Partnership Disputes

To ensure an effective arbitration process, an agreement must include several key components:

  1. Choice of Law and Jurisdiction

    Partners should specify the governing law and jurisdiction under which the arbitration agreement falls, providing clarity in case of enforcement or challenges.

  2. Selection of Arbitrators

    Partners should agree on the process of selecting arbitrators, considering qualifications, experience, and neutrality, which in this case is two.

  3. Determining the Arbitration Venue

    The agreement should state the location where the arbitration proceedings will take place.

  4. Rules and Procedures

    Partners should select the rules and procedures that will govern the arbitration process, such as those provided by reputable arbitration institutions.

How to Draft an Effective Arbitration Agreement?

Creating a well-crafted arbitration agreement requires a thorough understanding of partnership disputes and tailoring the agreement accordingly.

  1. Understanding Partnership Disputes

    Partners should identify common causes of disagreements within their specific business context, such as profit-sharing, decision-making, or disputes over intellectual property rights.

  2. Addressing Confidentiality

    Partners may explicitly outline provisions for maintaining confidentiality throughout the arbitration process to protect sensitive business information.

  3. Enforcement of the Agreement

    Clearly stipulate the consequences of breaching the arbitration agreement, including potential remedies and enforcement mechanisms.

Does this Arbitration Agreement require to be Printed on Stamp Paper and be Notarized?

No, this is no legal mandate for printing this agreement on a stamp paper of a specific denomination or notarization post-execution. However, notarization is advisable as it provides an extra layer of security.

Sample Agreement / Contract Template

Agreement for Reference to Two Arbitrators for Disputes that Have Arisen in Partnership

This agreement was made on of...between AB, etc., of the one part AND CD, etc., of the other part.

Whereas the aforementioned parties have been engaged as partners in the name and style of a partnership deed dated..........;

And whereas each party has equally contributed to the partnership's capital amounting to RS...and has been sharing the profit and loss in equal shares;

And whereas the partnership business has been operational for the last ...years;
And whereas disputes and differences have arisen between the parties, making it impossible to continue the partnership business;

Now it is hereby agreed as follows:

Arbitration Agreement

whereas the parties have unanimously agreed to refer the following matters for the decision of two arbitrators, namely M/s................ and........................

  1. The amount of profit and loss as per the partnership's books of account;
  2. The liability of the parties to pay the amounts upon settlement of accounts; and
  3. Fixation of the date on which the partnership shall be deemed dissolved.

Arbitrators' Decision

The arbitrators shall commence the reference process and make decisions on the aforementioned matters.

Timely Award

The arbitrators shall produce their award within three months after commencing the reference or after receiving written notice from any party to the submission. The arbitrators may extend the time for making the award through a signed written communication.

Power to Appoint an Umpire

The two arbitrators mentioned above shall have the authority to appoint an Umpire at any time during the period in which they have to render their award.

Unanimous Decision or Umpire's Role

If the arbitrators reach an agreement among themselves, their unanimous decision shall be final and binding on the parties. In the event of a disagreement among the arbitrators, the Umpire shall make their award within one month after the original or extended time for the arbitrators' award has expired. The Umpire may also extend the time for making the award through a signed written communication, and their decision shall be binding on the parties.

Ex Parte Proceedings

The arbitrators may proceed ex parte in case either party fails to appear despite receiving reasonable notice(s).

Continuing Effectiveness in Case of Death

This agreement shall remain effective and enforceable against the legal representatives of either party in the event of death.

Appointment of Accountant and Costs

The arbitrators may appoint an accountant to examine the accounts of the parties if deemed necessary, and the remuneration of the accountant, as determined by the arbitrators, shall be considered as costs in the reference to be paid by the parties as directed by the award.

Enforcement of Award

In case the arbitrators' award that any sum is due from one party to the other, the party to whom the said sum is awarded may apply to the court to have a decree passed in line with the award and can execute the decree to realize the amount from the other party.

Applicability of Indian Arbitration & Conciliation Act, 1996

The provisions of the Indian Arbitration & Conciliation Act, 1996, shall apply to this reference.

Discretionary Costs

The costs incurred during this reference shall be at the discretion of the arbitrators.

Signatures and Execution

In witness whereof, the parties hereto have signed this agreement on the day and year first written above.


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Frequently Asked Questions

An arbitration agreement is a legally binding contract that stipulates the resolution of disputes through arbitration rather than traditional litigation.

Yes, arbitration agreements are generally enforceable in most jurisdictions under international treaties like the New York Convention.

Partners who refuse arbitration may face legal consequences or breach the agreement, potentially leading to damages.

In this agrement, Partners can mutually agree on the two arbitrators or select them from a pre-determined list or arbitration institution.

Yes, confidentiality clauses can be included in the agreement to protect information that is sensitive or confidential in nature.

Partners may amend the agreement if all parties agree to the changes in writing.

Yes, arbitration decisions are usually final and binding on the parties involved.

Arbitration involves a neutral third party making decisions, while mediation focuses on facilitating compromise through a mediator's assistance.

The duration of arbitration varies depending on the complexity and subject matter of the dispute in question. However, it is a popular opinion that arbitration usually takes less time than litigation.
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