Principle: Every agreement, by which any party is restr

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Principle: Every agreement, by which any party is restricted absolutely from enforcing his right in respect of any contract, by the usual legal proceedings in the ordinary Tribunals, is void to that extent. The law also provides that nobody can confer jurisdiction to a civil court by an agreement between parties.

Facts: A and B entered into a valid contract for rendering certain service. A clause in the contract was that in case of any dispute arose out of the contract; it shall be referred to for Arbitration only. Is the contract valid?

[CLAT 2017]

A The contract is valid but the clause regarding Arbitration is void.

B Arbitration is also a valid dispute settlement machinery recognized by law and hence the entire contract is valid.

C The parties were trying to confer jurisdiction to some authority to decide a dispute and hence the clause would be invalid.

D Arbitrator cannot be termed as an ordinary Tribunal. Hence, the agreement is void and would be unenforceable.