Principle: Every agreement, by which any party is restricted absolutely from enforcing his right in respect of any contract, by the usual legal proceedings in the ordinary Tribunals, is void to that extent. The law also provides that nobody can confer jurisdiction to a civil court by an agreement between parties.Facts: A and B entered into a valid contract for rendering certain service. A clause in the contract was that in case of any dispute arose out of the contract; it shall be referred to for Arbitration only. Is the contract valid?a)Arbitration is also a valid dispute settlement machinery recognized by law and hence the entire contract is valid.b)The parties were trying to confer jurisdiction to some authority to decide a dispute and hence the clause would be invalid.c)Arbitrator cannot be termed as an ordinary Tribunal. Hence, the agreement is void and would be unenforceable.d)The contract is valid but the clause regarding Arbitration is void.Correct answer is option 'A'. Can you explain this answer?

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Facts: A and B entered into a valid contract for rendering certain service. A clause in the contract was that in case of any dispute arose out of the contract; it shall be referred to for Arbitration only. Is the contract valid?

a)
Arbitration is also a valid dispute settlement machinery recognized by law and hence the entire contract is valid.
b)
The parties were trying to confer jurisdiction to some authority to decide a dispute and hence the clause would be invalid.
c)
Arbitrator cannot be termed as an ordinary Tribunal. Hence, the agreement is void and would be unenforceable.
d)
The contract is valid but the clause regarding Arbitration is void.

Correct answer is option 'A'. Can you explain this answer?

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Principle: Every agreement, by which any party is restricted absolutel...

The arbitration is recognised as a dispute solving device by courts so it is a valid contract with valid clauses.

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Principle: Every agreement, by which any party is restricted absolutel...

Validity of the Contract Clause on Arbitration
Explanation:
The given scenario raises the question of whether the clause in the contract, stating that any disputes will be resolved through arbitration, is valid. Let's analyze the different perspectives on this issue:
A: Arbitration is a recognized dispute settlement mechanism:
- Arbitration is a legally recognized method of resolving disputes, alternative to the usual legal proceedings in civil courts.
- Since arbitration is a valid and accepted method of dispute resolution, the entire contract, including the arbitration clause, would be considered valid.
B: Attempt to confer jurisdiction to an authority:
- The clause in the contract seeks to confer jurisdiction to an arbitration authority to decide any disputes arising from the contract.
- However, the law states that parties cannot confer jurisdiction to a civil court through an agreement.
- It can be argued that conferring jurisdiction to an arbitration authority is akin to conferring jurisdiction to a civil court, which would render the clause invalid.
C: Arbitrator not considered an ordinary Tribunal:
- The principle mentioned in the question states that any restriction on enforcing rights through the usual legal proceedings in ordinary tribunals is void.
- One could argue that an arbitrator is not an ordinary tribunal, as they are specifically chosen by the parties to resolve disputes.
- Therefore, the agreement may be considered void and unenforceable.
D: Validity of the contract but void arbitration clause:
- This perspective suggests that the contract itself is valid, but the specific clause regarding arbitration is void.
- This would mean that any disputes arising from the contract would need to be resolved through the usual legal proceedings in civil courts.
Conclusion:
Based on the given arguments, it can be concluded that the validity of the contract clause on arbitration is a matter of interpretation and may vary depending on the jurisdiction and specific circumstances.

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It is a well settled principle of contract law that parties cannot by contract exclude the jurisdiction of all courts. Such a contract would constitute an agreement in restraint of legal proceedings and contravene Section 28 of the Indian Contract Act, 1872. However, where parties to a contract confer jurisdiction on one amongst multiple courts having proper jurisdiction, to the exclusion of all other courts, the parties cannot be said to have ousted the jurisdiction of all courts. Such a contract is valid and will bind the parties to a civil action. Section 28. Agreements in restraint of legal proceedings, void-Every agreement, -(

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The primary objective of the Micro Small and Medium Enterprises Development Act, (“MSME Act”) is to facilitate the promotion and development and enhance the competitiveness of micro, small and medium enterprises. The MSME Act contains provisions for dispute resolution which are applicable to disputes involving suppliers. Section 18 of the MSME Act provides that any party with a dispute regarding amount due to a Supplier may make a reference to the MSME Facilitation Council (“Council”) for conciliation. If conciliation is unsuccessful, the Council may either take up the dispute itself for arbitration or refer the parties to an arbitral institution. Section 18(4) further provides that the Council or center providing the alternative dispute resolution services shall have jurisdiction to act as an arbitrator or conciliator in a dispute between the Supplier located within its jurisdiction and a buyer located anywhere in India.Section 18 became contentious when multiple cases arose where a party involved in a dispute with a Supplier filed proceedings in court challenging its applicability to their dispute in light of the arbitration agreement entered between the parties. In general, presence of an arbitration agreement would not invalidate arbitration proceedings that have been initiated under the MSME Act, since the MSME Act is a special statute which would override any agreement between the parties. This position was also upheld by the Supreme Court. However, in those cases, the Supplier had initiated proceedings under section 18 of the MSME Act before the Buyer invoked arbitration under the agreement. These cases did not deal with a scenario where the Buyer invoked arbitration under the agreement where there was no reference of a dispute to the Council. For such situations, it has been held that, if the intention of section 18(4) of the MSME Act was to create a legal bar on a party who has a contract with a Supplier under the MSME Act from invoking section 11 of the Arbitration Act, then the legislature would have expressly provided that the MSME Act overrides any arbitration agreement entered under the MSME Act. Section 18(4) would come into play only in cases where a reference was made to the Council under section 18(1). The Court noted the use of the word “may” in section 18(1) and held that in light of the language used, it cannot be said to be mandatory for a Buyer to refer its dispute to the Council under section 18. Since the jurisdiction of the Council had not yet been invoked, there was nothing barring the court from appointing an arbitrator in terms of the arbitration agreement between the parties.By making section 18 of the MSME Act directory, Buyers have been given a way out to circumvent the provisions under the MSME Act.Q. Porwal Sales, the Buyer in this case, filed an application under section 11 of the Arbitration Act for appointment of an arbitral tribunal under an arbitration agreement between the parties. One of the objections raised by Flame Control Industries was that since it was a supplier within the meaning of the MSME Act, and in light of section 18(4), the jurisdiction of the court to entertain an application under section 11 of the Arbitration Act would be ousted. On the reading of the passage, determine whether the pleading of the Supplier would be entertained?

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Principle: Every agreement, by which any party is restricted absolutely from enforcing his right in respect of any contract, by the usual legal proceedings in the ordinary Tribunals, is void to that extent. The law also provides that nobody can confer jurisdiction to a civil court by an agreement between parties.Facts: A and B entered into a valid contract for rendering certain service. A clause in the contract was that in case of any dispute arose out of the contract; it shall be referred to for Arbitration only. Is the contract valid?a)Arbitration is also a valid dispute settlement machinery recognized by law and hence the entire contract is valid.b)The parties were trying to confer jurisdiction to some authority to decide a dispute and hence the clause would be invalid.c)Arbitrator cannot be termed as an ordinary Tribunal. Hence, the agreement is void and would be unenforceable.d)The contract is valid but the clause regarding Arbitration is void.Correct answer is option 'A'. Can you explain this answer?

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Principle: Every agreement, by which any party is restricted absolutely from enforcing his right in respect of any contract, by the usual legal proceedings in the ordinary Tribunals, is void to that extent. The law also provides that nobody can confer jurisdiction to a civil court by an agreement between parties.Facts: A and B entered into a valid contract for rendering certain service. A clause in the contract was that in case of any dispute arose out of the contract; it shall be referred to for Arbitration only. Is the contract valid?a)Arbitration is also a valid dispute settlement machinery recognized by law and hence the entire contract is valid.b)The parties were trying to confer jurisdiction to some authority to decide a dispute and hence the clause would be invalid.c)Arbitrator cannot be termed as an ordinary Tribunal. Hence, the agreement is void and would be unenforceable.d)The contract is valid but the clause regarding Arbitration is void.Correct answer is option 'A'. Can you explain this answer? for CLAT 2024 is part of CLAT preparation. The Question and answers have been prepared according to the CLAT exam syllabus. Information about Principle: Every agreement, by which any party is restricted absolutely from enforcing his right in respect of any contract, by the usual legal proceedings in the ordinary Tribunals, is void to that extent. The law also provides that nobody can confer jurisdiction to a civil court by an agreement between parties.Facts: A and B entered into a valid contract for rendering certain service. A clause in the contract was that in case of any dispute arose out of the contract; it shall be referred to for Arbitration only. Is the contract valid?a)Arbitration is also a valid dispute settlement machinery recognized by law and hence the entire contract is valid.b)The parties were trying to confer jurisdiction to some authority to decide a dispute and hence the clause would be invalid.c)Arbitrator cannot be termed as an ordinary Tribunal. Hence, the agreement is void and would be unenforceable.d)The contract is valid but the clause regarding Arbitration is void.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CLAT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Principle: Every agreement, by which any party is restricted absolutely from enforcing his right in respect of any contract, by the usual legal proceedings in the ordinary Tribunals, is void to that extent. The law also provides that nobody can confer jurisdiction to a civil court by an agreement between parties.Facts: A and B entered into a valid contract for rendering certain service. A clause in the contract was that in case of any dispute arose out of the contract; it shall be referred to for Arbitration only. Is the contract valid?a)Arbitration is also a valid dispute settlement machinery recognized by law and hence the entire contract is valid.b)The parties were trying to confer jurisdiction to some authority to decide a dispute and hence the clause would be invalid.c)Arbitrator cannot be termed as an ordinary Tribunal. Hence, the agreement is void and would be unenforceable.d)The contract is valid but the clause regarding Arbitration is void.Correct answer is option 'A'. Can you explain this answer?.

Solutions for Principle: Every agreement, by which any party is restricted absolutely from enforcing his right in respect of any contract, by the usual legal proceedings in the ordinary Tribunals, is void to that extent. The law also provides that nobody can confer jurisdiction to a civil court by an agreement between parties.Facts: A and B entered into a valid contract for rendering certain service. A clause in the contract was that in case of any dispute arose out of the contract; it shall be referred to for Arbitration only. Is the contract valid?a)Arbitration is also a valid dispute settlement machinery recognized by law and hence the entire contract is valid.b)The parties were trying to confer jurisdiction to some authority to decide a dispute and hence the clause would be invalid.c)Arbitrator cannot be termed as an ordinary Tribunal. Hence, the agreement is void and would be unenforceable.d)The contract is valid but the clause regarding Arbitration is void.Correct answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for CLAT. Download more important topics, notes, lectures and mock test series for CLAT Exam by signing up for free.

Here you can find the meaning of Principle: Every agreement, by which any party is restricted absolutely from enforcing his right in respect of any contract, by the usual legal proceedings in the ordinary Tribunals, is void to that extent. The law also provides that nobody can confer jurisdiction to a civil court by an agreement between parties.Facts: A and B entered into a valid contract for rendering certain service. A clause in the contract was that in case of any dispute arose out of the contract; it shall be referred to for Arbitration only. Is the contract valid?a)Arbitration is also a valid dispute settlement machinery recognized by law and hence the entire contract is valid.b)The parties were trying to confer jurisdiction to some authority to decide a dispute and hence the clause would be invalid.c)Arbitrator cannot be termed as an ordinary Tribunal. Hence, the agreement is void and would be unenforceable.d)The contract is valid but the clause regarding Arbitration is void.Correct answer is option 'A'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of Principle: Every agreement, by which any party is restricted absolutely from enforcing his right in respect of any contract, by the usual legal proceedings in the ordinary Tribunals, is void to that extent. The law also provides that nobody can confer jurisdiction to a civil court by an agreement between parties.Facts: A and B entered into a valid contract for rendering certain service. A clause in the contract was that in case of any dispute arose out of the contract; it shall be referred to for Arbitration only. Is the contract valid?a)Arbitration is also a valid dispute settlement machinery recognized by law and hence the entire contract is valid.b)The parties were trying to confer jurisdiction to some authority to decide a dispute and hence the clause would be invalid.c)Arbitrator cannot be termed as an ordinary Tribunal. Hence, the agreement is void and would be unenforceable.d)The contract is valid but the clause regarding Arbitration is void.Correct answer is option 'A'. Can you explain this answer?, a detailed solution for Principle: Every agreement, by which any party is restricted absolutely from enforcing his right in respect of any contract, by the usual legal proceedings in the ordinary Tribunals, is void to that extent. The law also provides that nobody can confer jurisdiction to a civil court by an agreement between parties.Facts: A and B entered into a valid contract for rendering certain service. A clause in the contract was that in case of any dispute arose out of the contract; it shall be referred to for Arbitration only. Is the contract valid?a)Arbitration is also a valid dispute settlement machinery recognized by law and hence the entire contract is valid.b)The parties were trying to confer jurisdiction to some authority to decide a dispute and hence the clause would be invalid.c)Arbitrator cannot be termed as an ordinary Tribunal. Hence, the agreement is void and would be unenforceable.d)The contract is valid but the clause regarding Arbitration is void.Correct answer is option 'A'. Can you explain this answer? has been provided alongside types of Principle: Every agreement, by which any party is restricted absolutely from enforcing his right in respect of any contract, by the usual legal proceedings in the ordinary Tribunals, is void to that extent. The law also provides that nobody can confer jurisdiction to a civil court by an agreement between parties.Facts: A and B entered into a valid contract for rendering certain service. A clause in the contract was that in case of any dispute arose out of the contract; it shall be referred to for Arbitration only. Is the contract valid?a)Arbitration is also a valid dispute settlement machinery recognized by law and hence the entire contract is valid.b)The parties were trying to confer jurisdiction to some authority to decide a dispute and hence the clause would be invalid.c)Arbitrator cannot be termed as an ordinary Tribunal. Hence, the agreement is void and would be unenforceable.d)The contract is valid but the clause regarding Arbitration is void.Correct answer is option 'A'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice Principle: Every agreement, by which any party is restricted absolutely from enforcing his right in respect of any contract, by the usual legal proceedings in the ordinary Tribunals, is void to that extent. The law also provides that nobody can confer jurisdiction to a civil court by an agreement between parties.Facts: A and B entered into a valid contract for rendering certain service. A clause in the contract was that in case of any dispute arose out of the contract; it shall be referred to for Arbitration only. Is the contract valid?a)Arbitration is also a valid dispute settlement machinery recognized by law and hence the entire contract is valid.b)The parties were trying to confer jurisdiction to some authority to decide a dispute and hence the clause would be invalid.c)Arbitrator cannot be termed as an ordinary Tribunal. Hence, the agreement is void and would be unenforceable.d)The contract is valid but the clause regarding Arbitration is void.Correct answer is option 'A'. Can you explain this answer? tests, examples and also practice CLAT tests.

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