Question

    According to Section 7(1) of the Arbitration and

    Conciliation Act, 1996, what is the essential characteristic of an "arbitration agreement"? 
    A An agreement that must always be in writing and notarized Correct Answer Incorrect Answer
    B An agreement by parties to submit to arbitration all or certain disputes which have arisen or may arise between them in respect of a defined legal relationship, whether contractual or not Correct Answer Incorrect Answer
    C An agreement that automatically creates a binding decision without any dispute resolution process Correct Answer Incorrect Answer
    D An agreement that allows courts to override arbitration at any time Correct Answer Incorrect Answer
    E An agreement that can only relate to contractual disputes and not other relationships Correct Answer Incorrect Answer

    Solution

    Section 7(1) provides: "In this Part, 'arbitration agreement' means 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." This definition is broader than the 1940 Act and encompasses both contractual and non-contractual disputes. The requirement of a "defined legal relationship" ensures clarity about the scope of arbitration, preventing abuse. The flexibility to cover "all" or "certain" disputes allows parties to customize arbitration's scope.

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