Defective Arbitration Agreement Null,Void, Incapable of Being Performed | Lex Animata Hesham Elrafei
Null and Void, Inoperable or Incapable of Being Performed - Defective Arbitration Agreement | Arbitration simplified, visualized and explained | Lex Animata | Hesham Elrafei
According to The New York Convention, and the Uncitral model law,
A party may ask the court to refer the dispute to Arbitration,
when the arbitration agreement satisfies the enforceability requirements,
unless the agreement is null and void, inoperable or incapable of being performed.
An arbitration agreement is ‘null and void’, if it does not have a legal effect due to the absence of consent.
Furthermore, a lack of capacity, such as when a party does not have the authority or permission to enter into an arbitration agreement, may invalidate the clause.
An arbitration agreement may also be null, where the clause's language is so vague or ambiguous, that the parties’ intention cannot be decided.
Defective arbitration clauses, may nonetheless be interpreted by a court to give meaning to it, to save the parties’ intention to arbitrate, as Courts tend to interpret these clauses narrowly, to avoid giving a ‘back door’ , for a party wishing to escape the arbitration agreement.
An arbitration agreement may be inoperable, if it has lost its legal force,
as a result of the parties' failure to meet a deadline,
or when the same dispute has already been resolved in another legal venue,
or when the parties withdrew from the agreement, or accepted to settle the dispute.
An arbitration agreement could be incapable of being performed,
when there is contradictory language in the main contract, indicating the parties intended to go to court,
Or if it is impossible to establish the arbitral tribunal,
like when the place of Arbitration is no longer available,
or when the parties had chosen an arbitrator, who was at the time of the dispute, dead or unavailable.
The question of whether an arbitration clause is Defective,
is likely to be posed when a party takes action in a national court,
and the defendant seeks to stop the litigation proceedings, based on the existence of the arbitration clause.
In such circumstances, the claim for a stay may be denied by the court,
on the grounds that the arbitration agreement, was ‘inoperative or incapable of being Performed.’
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Null and Void, Inoperable or Incapable of Being Performed - Defective Arbitration Agreement | Arbitration simplified, visualized and explained | Lex Animata | Hesham Elrafei According to The New York Convention, and the Uncitral model law, A party may ask the court to refer the dispute to Arbitration, when the arbitration agreement satisfies the enforceability requirements, unless the agreement is null and void, inoperable or incapable of being performed. An arbitration agreement is ‘null and void’, if it does not have a legal effect due to the absence of consent. Furthermore, a lack of capacity, such as when a party does not have the authority or permission to enter into an arbitration agreement, may invalidate the clause. An arbitration agreement may also be null, where the clause's language is so vague or ambiguous, that the parties’ intention cannot be decided. Defective arbitration clauses, may nonetheless be interpreted by a court to give meaning to it, to save the parties’ intention to arbitrate, as Courts tend to interpret these clauses narrowly, to avoid giving a ‘back door’ , for a party wishing to escape the arbitration agreement. An arbitration agreement may be inoperable, if it has lost its legal force, as a result of the parties' failure to meet a deadline, or when the same dispute has already been resolved in another legal venue, or when the parties withdrew from the agreement, or accepted to settle the dispute. An arbitration agreement could be incapable of being performed, when there is contradictory language in the main contract, indicating the parties intended to go to court, Or if it is impossible to establish the arbitral tribunal, like when the place of Arbitration is no longer available, or when the parties had chosen an arbitrator, who was at the time of the dispute, dead or unavailable. The question of whether an arbitration clause is Defective, is likely to be posed when a party takes action in a national court, and the defendant seeks to stop the litigation proceedings, based on the existence of the arbitration clause. In such circumstances, the claim for a stay may be denied by the court, on the grounds that the arbitration agreement, was ‘inoperative or incapable of being Performed.’
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