Every agreement, by which any party thereto is restricted absolutely from enforcing
his rights under or in respect of any contract, by the usual legal proceedings in the
ordinary tribunals, or which limits the time within which he may thus enforce his
rights, is void to the extent.
Exception 1 : Saving of contract to refer to arbitration dispute that may arise.This
section shall not render illegal contract, by which two or more persons agree that
any dispute which may arise between them in respect of any subject or class of
subject shall be referred to arbitration, and that only and amount awarded in such
arbitration shall be recoverable in respect of the dispute so referred.
Exception 2: Saving of contract to refer question that have already arisen – Nor shall
this section render illegal any contract in writing, by which two or more persons
agree to refer to arbitration any question between them which has already arisen, or
affect any provision of any law in force for the time being as to reference to
arbitration.
Related Judgements
THYSSEN STAHLUNION GMBH v. STEEL AUTHORITY OF INDIA LTD.