Dear Friends
In a commercial agreement to supply certain goods, there was not any arbitration clause. The agreement and terms and conditions of supply of goods were duly signed and agreed upon by both the parties. However, in the invoice sent by the seller after supply of the goods, he introduced the arbitration clause. There was never any explicit or implicit acceptance to such arbitration clause.
Now when the transaction is complete and in terms of the agreements, the buyer has made payments after deducting penalty amount. This penalty amount (for delayed and incomplete supply) was also one of the conditions of agreement agreed upon between the parties. The Seller has accepted in several emails that there is a delay in supply, but he has asked for full payment without any deduction of penalty amount. The Buyer has not agreed to this and deducted the penalty amount (but considering the case of the seller, major part of the penalty was waived).
The seller has, then, sent a legal notice to the buyer to release the entire amount and gave the name of sole arbitrator, to whom he intends to refer the matter for arbitration. In reply, the buyer has clearly indicated that he is not willing to go for any arbitration as there was no arbitration clause in the agreement between the parties. The buyer has also opposed the appointment of arbitrator in absence of any arbitration clause in the agreement.
After receiving the reply from the buyer, the seller has referred the matter to the sole arbitrator. The buyer has received a notice of hearing from the arbitrator now. The seller, as indicated above, is not willing to refer the matter to the arbitration. He has indicated the same to the arbitrator and also questioned his appointment in absence of any arbitration clause in the agreement between the parties.
Now my questions are-
1. When the buyer has rejected the proposal of referring the matter to arbitrator, was the seller right in referring the matter to sole arbitrator?
2. When there was no arbitration clause in the agreement, whether arbitration can be forced upon the buyer?
3. When the buyer has opposed the appointment of arbitrator and also question his appointment in a reply sent to the arbitrator, can arbitrator proceed in the matter ex-parte?
4. If the arbitrator decides to proceed in the matter and passes an award, whether such awards will be binding on both the parties?
5. What other course of action should I suggest to the buyer now?
Thanks in advance.
Divya Jyoti Jaipuriar
