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ASYMMETRICAL ARBITRATION CLAUSE
ASYMMETRICAL ARBITRATION CLAUSE
INTRODUCTION
With the rise in the popularity of arbitration more and more people are resorting to arbitration for the resolution of a dispute. One of the most important principles of arbitration is that parties enter into an agreement where they mutually decide how to resolve their dispute, their agreement is resembling a contractual promise to refer the dispute to arbitration. such an agreement is symmetric where each party has an equal right to invoke arbitration, but that is not the case with every arbitration agreement. One such method is the inclusion of the Asymmetric Arbitration clause or Unilateral Option Arbitration Clause (ACC) in the Arbitration Agreement for the resolution of the dispute between the parties. Therefore, an Asymmetric Arbitration Clause is one under which only one party can choose the method of resolution of a dispute between the parties, the clause authorizes only one party with the power to appoint a sole arbitrator. At first instance, one may think that these clauses appear to be patently unfair, but when we look at the judicial perspective the same has held enforceable by various jurisdictions.
One of the common objections raised while dealing with the Asymmetric Arbitration Clause is that the clause is in clear violation of the fundamental principle of fair and equal treatment of parties in arbitration. the principle of fair and equal treatment is enshrined under Article 18 of the UNCITRAL MODEL LAW, it says that each party to the arbitration agreement shall be treated equally and should have an equal opportunity of presenting its case before the arbitral tribunal. Thus, the clause provides the right to one party to go to the court as well as it recognizes the stand of the party regarding the decision of resolution of the dispute through arbitration.
The enforceability of the Asymmetric Arbitration Clause is a dicey question in the first place. Some jurisdictions are in favor of such clauses whereas some depart from the ideological principle of an arbitration agreement between the parties. One such example is of China where inclusion if such a clause is prohibited in an arbitration agreement.
JURISDICTIONS THAT RECOGNISE THE ASYMMETRIC ARBITRATION CLAUSE
The said clause has been recognized by various jurisdictions one such is Singapore, the Singapore Court of Appeal in the case of Dyna-Jet Pte Ltd v Wilson Taylor Asia Pacific Pte Ltd [2017] SGCA 32, the court considered and accepted the validity of an asymmetrical arbitration clause. The court held that while establishing the existence and validity of arbitration agreement it is immaterial that the arbitration clause in the agreement is asymmetrical and that the arbitration under such agreement is completely optional and the parties are free to arbitrate their dispute if they want to.
Similarly, the English Court has also successfully recognized the validity and enforceability of the asymmetrical arbitration clause. In the case of NB Three Shipping v Harebell Shipping [2004] EWHC 2001 (Comm), the court held that the asymmetrical arbitration clause will stand valid. There are other jurisdictions as well like France, Russia, and India.
In India the position of Asymmetrical Arbitration Clause is unclear, in the case of Union of India vs Bharat Engineering Corporation ILR 1977 Delhi 57, the Delhi High Court held that the asymmetrical arbitration is not valid until the party the agreement exercises their power to arbitrate the dispute through arbitration. the same was upheld by the Calcutta High Court in the case of New India Assurance Co Ltd v Central Bank of India & Ors AIR 1985 Cal 76. But the Calcutta High Court declined the reasoning of the Delhi High Court on the validity of asymmetrical arbitration clauses.
- INTRODUCTION
- JURISDICTIONS THAT RECOGNISE THE ASYMMETRIC ARBITRATION CLAUSE
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