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1. WHAT IS ARBITRATION?

Arbitration is a form of Alternate Dispute Resolution Mechanism in which parties to the agreement mutually decide to refer the matter to an appointed third person (known as arbitrator), in case any dispute arises between them. Arbitration is speedy, less procedural, cost effective and can be tailored according to the choices of parties. The parties to the agreement can add an Arbitration clause in their original agreement or can enter into a separate arbitration agreement.

The arbitration process begins when one party breaches the terms of contract. The other can invoke arbitration by serving a notice under Section 21 of Arbitration and Conciliation Act, 1996 informing the defaulting parties of his intention to appoint a mutual arbitrator or arbitral tribunal and to decide the place and seat of arbitration.

2. WHY NOTICE IS IMPORTANT UNDER SECTION 21?

Section 21 of Arbitration Act, 1996 states that “Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent”.

According to this section, the proceeding of arbitration will commence on the day on which the other party has received the notice from the claimant party stating his intentions to invoke arbitration. The Courts in India through their landmark judgments have explained the importance of serving section 21 arbitration notice format. The notice helps the party to the arbitration agreement against whom a claim is made to understand what the claims are. The notice under Section 21 arbitration act format serves an important purpose of facilitating a consensus on the appointment of an arbitrator. Lastly, as per Section 11(6) of the Act, without the notice under Section 21 arbitration act, a party seeking reference of disputes to arbitration will be unable to demonstrate that there was a failure by one party to adhere to the procedure and accede to the request for the appointment of an arbitrator.

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