The Government of Puducherry on September 16, 2022, issued a circular regarding the insertion of a new clause in the Contract Agreement towards Inter-se Priority of Arbitration over Courts in Resolution of Disputes.
Section 8 of the Arbitration and Reconciliation Act, 1996 resolves this issue by making it abundantly clear that any Judicial Authority shall refer the parties in dispute to arbitration unless it finds prima facie that no valid arbitration agreement exists. With the model Arbitration Agreement getting inserted in all contract agreements, the ambiguity is largely tackled.
The following clause has been inserted in the contract agreement in addition to the clause containing the 'Model Arbitration Agreement’:
"All legal proceedings arising out of and in connection with this Agreement shall be subject to the jurisdiction of the courts of Puducherry and the High Court of Madras, Chennai, irrespective of the place of performance/ execution of the Agreement."
[Circular No. 726/FD/F3/2022-23]
