Arbitration Agreement Not To Be Discharged By Death Of Party

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2. The term of office of an arbitrator shall not end at the death of a party of whom he has been appointed. In Jyoti Gupta v. Kewalsons & Ors, the Delhi Supreme Court ruled that when an arbitration agreement relates to a dispute between “partners”, it does not prevent or eliminate the right to enforce such an agreement, which belongs to the legal heirs of the deceased partner. (3) Nothing in this Division affects the application of a Law by which a right of recourse is extinguished following the death of a person. 40. 1. An arbitration agreement is not respected by the death of a party, neither in respect of the deceased nor in respect of another party, but may, in this case, be enforced by or against the legal representative of the deceased. In this case, Kewalson and Shyam Gupta were in partnership. Following Gupta`s death, his daughter Jyoti Gupta filed a 1996 application, pursuant to section 11 of the Arbitration and Conciliation Act, 1996, for the appointment of a sole arbitrator for the resolution of disputes arising out of a 1974 Partnership Act. The claim was dismissed by Kewalson and other partners on the grounds that the arbitration agreement contained in clause 15 of the partnership deed applied only between the “partners” and that the clause did not include their legal heirs, so Jyoti Gupta could not invoke the arbitration agreement. The Supreme Court allowed the motion for arbitration by referring to section 40 of the Arbitration Act, which provides that an arbitration agreement will not be resolved by the death of a party and may be enforced by or against the legal representatives of the deceased. The court ruled that the death of a partner did not terminate the arbitration provision and that the legal heirs would have the right to avail themselves of the arbitration clause.

Although the legal heirs of the deceased partner may not be allowed to be admitted as partners, the right to pursue a claim under the arbitration clause lapses. The tribunal granted the request for arbitration and appointed an arbitrator to rule on the disputes between the parties. ยง 40: Arbitration agreement which cannot be fulfilled by the death of the party. . . . The Dispute Digest is concocted by Bhasin & Co, Advocates, a New Delhi-based business firm. The authors can be reached in lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice. . . .