Arbitration agreement
Also called: Arbitration clause
An agreement by the parties to submit to arbitration all or certain disputes, present or future, arising out of a defined legal relationship (Section 7 of the Arbitration and Conciliation Act, 1996).
Explained
Section 2(1)(b) of the Arbitration and Conciliation Act, 1996 refers to Section 7, which defines an arbitration agreement as an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. Under Section 7(2) it may be a clause in a contract or a separate agreement.
Section 7(3) requires the agreement to be in writing, and Section 7(4) treats it as in writing if it is contained in (a) a document signed by the parties, (b) an exchange of letters, telex, telegrams or other means of telecommunication, including electronic communication, which provide a record of the agreement, or (c) an exchange of statements of claim and defence in which one party alleges the agreement and the other does not deny it. Under Section 7(5), a reference in a written contract to a document containing an arbitration clause makes that clause part of the contract if the reference is such as to do so.
The agreement is treated as independent of the main contract. Section 16(1) lets the arbitral tribunal rule on its own jurisdiction, including objections to the existence or validity of the arbitration agreement; an arbitration clause is treated as independent of the other terms, and a finding that the contract is void does not by itself invalidate the clause. Courts give effect to the agreement: under Section 8 a judicial authority must refer the parties to arbitration if a party applies not later than his first statement on the substance of the dispute, unless it finds prima facie that no valid arbitration agreement exists, and under Section 11(6A) a court appointing an arbitrator confines itself to examining the existence of an arbitration agreement.
A seven Judge Bench has held that an unstamped agreement is inadmissible in evidence until stamped but is not void, and that stamping objections are for the tribunal. Examiners test the forms in Section 7(4), the timing under Section 8, separability under Section 16, and the limited review at the referral stage.
What the law says
(1) In this Part, “arbitration agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained in—
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of telecommunication [including communication through electronic means] which provide a record of the agreement; or
Defines arbitration agreement and its written form
(b) “arbitration agreement” means an agreement referred to in section 7;
Clause (1)(b) refers to Section 7
[(1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.]
(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof:
[Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court.]
Judicial authority must refer parties to arbitration
[(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.
(6B) The designation of any person or institution by the Supreme Court or, as the case may be, the High Court, for the purposes of this section shall not be regarded as a delegation of judicial power by the Supreme Court or the High Court.]
(7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or sub-section (6) to [the Supreme Court or, as the case may be, the High Court or the person or institution designated by such Court is final and no appeal including Letters Patent Appeal shall lie against such decision].
Sub-section (6A): review confined to existence of agreement
(1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,—
(a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and
(b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.
Competence of tribunal; separability of the clause
For the exam
- Defined in Section 7(1); Section 2(1)(b) refers to it.
- Must be in writing; Section 7(4) lists signed document, exchange of communications, and undenied pleadings.
- May be a clause in the contract or a separate agreement (Section 7(2)).
- Arbitration clause survives a finding that the main contract is void (Section 16(1)).
- Section 8 application must be made no later than the first statement on the substance of the dispute.
79 questions in the Law Maker question bank use this term. Practise Arbitration and Conciliation Act, 1996 questions
Judgments
- In Re: Interplay between Arbitration Agreements under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act 1899 (2023)A seven-judge bench held that an unstamped or insufficiently stamped agreement is inadmissible in evidence but not void, and that objections about stamping are for the arbitral tribunal, not the referral court under Sections 8 or 11.
- Vidya Drolia v. Durga Trading Corporation (2020)The Court laid down a four-fold test for non-arbitrability, overruled Himangni Enterprises to hold landlord-tenant disputes under the Transfer of Property Act arbitrable, and confined courts under Sections 8 and 11 to a prima facie review.
- Cox and Kings Ltd. v. SAP India Pvt. Ltd. (2023)The group of companies doctrine is valid in Indian arbitration law and can bind a non-signatory group company where the parties' mutual intention shows it, but it cannot rest on the phrase "claiming through or under".
- SBI General Insurance Co. Ltd. v. Krish Spinning (2024)A full and final settlement does not end the arbitration agreement; a plea of accord and satisfaction is for the arbitral tribunal, and the referral court under Section 11 only checks the prima facie existence of the arbitration agreement.
Related terms
- Arbitral tribunalA sole arbitrator or a panel of arbitrators (Section 2(1)(d) of the Arbitration and Conciliation Act, 1996). It decides the dispute and may rule on its own jurisdiction.
- Arbitral awardThe decision of an arbitral tribunal on the dispute referred to it, including an interim award (Section 2(1)(c) of the Arbitration and Conciliation Act, 1996).
- International commercial arbitrationAn arbitration of a dispute arising from a legal relationship considered commercial under Indian law, where at least one party is foreign in nationality, residence, incorporation or control. Section 2(1)(f) of the Arbitration Act.
- Foreign awardAn award on commercial differences made on or after 11 October 1960 under a written New York Convention agreement, in a territory notified by the Central Government. Section 44, Arbitration Act, 1996.
- AgreementUnder Section 2(e) of the Contract Act, every promise and every set of promises forming the consideration for each other. An agreement enforceable by law is a contract.
- Commercial disputeA dispute arising out of any of the transactions listed in Section 2(1)(c) of the Commercial Courts Act, 2015, such as mercantile documents, construction contracts, IP rights and sale of goods.
Further reading
Checked 6 November 2026. Statutory text is quoted from the Bare Acts library, taken from India Code. See the full glossary.