Arbitration, Mediation and Conciliation · Arbitration: Introduction, Agreements and its Institutions

Arbitration Agreement and Death of a Party under Section 40

Updated 11 October 2026 · Fact-checked

Under Section 40 of the Arbitration and Conciliation Act, 1996, an arbitration agreement is not discharged by the death of any party. It binds and can be enforced by or against the deceased's legal representative. The arbitrator's mandate also continues. Rights of action that die with a person under other laws are unaffected.

Understand Arbitration Agreement and Death of a Party

An arbitration agreement is a contract. Ordinary contract thinking might suggest that if a party dies, the agreement ends. Section 40 says otherwise for arbitration. Death does not discharge the agreement, either for the deceased's side or for the surviving party.

The agreement is enforceable by or against the legal representative of the deceased. This is usually the executor, administrator or heir who represents the estate. So the dispute can still go to arbitration, with the legal representative taking the dead party's place.

Section 40(2) protects the tribunal. The mandate of an arbitrator is not terminated by the death of the party who appointed him. The arbitrator stays in office and the proceedings go on.

Section 40(3) is a limit. The section does not affect any other law under which a right of action is extinguished by a person's death. If the substantive claim itself dies with the person under such a law, Section 40 does not revive it. Section 40 saves the agreement, not every claim.

Section 41 deals with a related situation, the insolvency of a party. If a contract has an arbitration term and the receiver adopts the contract, the term is enforceable by or against the receiver for such disputes. If the receiver does not adopt it, sub-section (2) lets the other party or the receiver apply to the judicial authority handling the insolvency for an order sending the matter to arbitration. The authority decides having regard to all the circumstances.

Key rules to remember

Section 40(1): agreement survives death: Death of a party ⇒ arbitration agreement NOT discharged (for the deceased or any other party); enforceable by or against the legal representative; Quote the words 'not discharged' and 'legal representative' in your answer.
Section 40(2): arbitrator's mandate: Death of the appointing party ⇒ arbitrator's mandate NOT terminated; This covers the arbitrator appointed by the party who died.
Section 40(3): saving of other laws: Section 40 does not affect any law that extinguishes a right of action on death; Use this to separate the agreement surviving from the claim surviving.
Section 41(1): insolvent, contract adopted: Receiver adopts contract ⇒ arbitration term enforceable by or against the receiver, as far as it relates to such disputes; Receiver includes an Official Assignee (Section 41(3)).
Section 41(2): insolvent, contract not adopted: Matter needed for insolvency proceedings ⇒ other party or receiver may apply to the insolvency judicial authority ⇒ authority may order arbitration if it so opines, on all the circumstances; This is discretionary, not automatic.

How to solve Arbitration Agreement and Death of a Party questions

Use this method for any fact-based question on death or insolvency of a party to an arbitration agreement.

1Identify who died or became insolvent, and whether they were claimant, respondent or the party who appointed the arbitrator.
2Confirm there is a valid arbitration agreement between the parties.
3For death, state Section 40(1): the agreement is not discharged and is enforceable by or against the legal representative.
4If the question mentions the arbitrator, apply Section 40(2): the mandate does not end because the appointing party died.
5Check whether the claim is one that is extinguished on death under another law. If so, apply Section 40(3) and say the agreement survives but that claim may not.
6For insolvency, ask whether the receiver adopted the contract. If yes, Section 41(1) applies. If no, apply Section 41(2).
7Conclude clearly: state who can be a party now and whether the proceedings continue.
8Add a practical point, such as substituting the legal representative on record.

Quickest way: Three-line Section 40 answer

When to use it: Short-answer questions or when you are short of time.

Line 1: Death does not discharge the arbitration agreement; it is enforceable by or against the legal representative (Section 40(1)).
Line 2: The mandate of an arbitrator is not terminated by the death of the appointing party (Section 40(2)).
Line 3: Section 40(3) saves laws extinguishing a right of action on death. For insolvency, add Section 41: adopted by receiver means enforceable; otherwise the judicial authority may order arbitration.

Common mistakes in Arbitration Agreement and Death of a Party

Writing that the arbitration agreement ends on a party's death.
Students carry over the idea that personal contracts end with the person.
Fix: Remember Section 40(1) opens with 'shall not be discharged'. Death does not end the agreement.
Saying the arbitrator's appointment lapses when the appointing party dies.
The arbitrator is seen as the agent of the party who chose him.
Fix: Cite Section 40(2): the mandate is not terminated by that death.
Ignoring Section 40(3) and saying every claim survives.
Students stop reading after sub-section (1).
Fix: State that the agreement survives, but a right of action extinguished by death under another law is not revived.
Treating the legal representative as a new party with a fresh agreement.
Confusion between succession and making a new contract.
Fix: The legal representative enforces or is bound by the same agreement. No fresh agreement is needed.
Applying Section 41 as an automatic reference to arbitration when the receiver has not adopted the contract.
Sub-sections (1) and (2) are blended together.
Fix: Under 41(2) the judicial authority may make the order if it thinks the matter ought to be decided by arbitration. It has discretion.
Applying Section 41 to a death case, or Section 40 to an insolvency case.
Both sections deal with a party's change of status.
Fix: Section 40 covers death. Section 41 covers insolvency. Match the section to the facts.

Worked examples

Example 1

Rohan Textiles and Meera Traders have a supply contract with an arbitration clause. Meera, the sole proprietor of Meera Traders, dies after the dispute arises and before the arbitrator gives an award. Her son, her legal representative, says the clause has ended and that he is not bound. Advise Rohan Textiles.

Show the solution

Facts: a valid arbitration agreement exists; one party died during proceedings.
Rule: under Section 40(1) the arbitration agreement is not discharged by the death of any party, either as respects the deceased or any other party.
The agreement is enforceable by or against the legal representative of the deceased.
Application: Meera's son, as her legal representative, can be brought on record and is bound by the clause for this dispute.
Section 40(3) check: unless some other law extinguishes this right of action on death, the claim continues. A money claim under a supply contract is not shown to be extinguished here.

Answer: The son's contention fails. The arbitration agreement is not discharged by Meera's death. Rohan Textiles can enforce it against her legal representative, and the proceedings continue with him substituted, subject to Section 40(3).

Example 2

Anil and Bhavna agreed to arbitration, and Anil appointed Mr. Sharma as arbitrator. Anil dies before the hearings conclude. Bhavna argues that Mr. Sharma's authority has ended. Is she right?

Show the solution

Issue: effect of the death of the appointing party on the arbitrator's mandate.
Rule: Section 40(2) states that the mandate of an arbitrator is not terminated by the death of any party by whom he was appointed.
Application: Anil appointed Mr. Sharma, and Anil's death does not end that mandate.
Also note Section 40(1): the agreement continues and is enforceable by or against Anil's legal representative.
Result: the legal representative takes Anil's place and the tribunal continues.

Answer: Bhavna is wrong. Under Section 40(2) Mr. Sharma's mandate is not terminated by Anil's death. The proceedings continue with Anil's legal representative as a party.

Exam tips

Quote Section 40(1), (2) and (3) separately. Examiners reward each sub-section applied to the facts.
In case questions, name the legal representative and say the party is substituted on record. This adds a practical point.
Always mention Section 40(3) as the limit on the rule. It shows you know the agreement and the claim are different things.
If the facts mention insolvency, switch to Section 41 and test whether the receiver adopted the contract.
Use the order: provision, application to the facts, conclusion. Keep each answer short and direct.

Practice questions from Arbitration: Introduction, Agreements and its Institutions

Arbitration Agreement and Death of a Party: frequently asked questions

What does Section 40 of the Arbitration and Conciliation Act say?

It says an arbitration agreement is not discharged by the death of any party. It is enforceable by or against the legal representative of the deceased. The mandate of an arbitrator is not ended by the death of the party who appointed him, and laws that extinguish a right of action on death remain unaffected.

Who is the legal representative in arbitration after a party dies?

It is the person who represents the estate of the deceased, such as an executor, administrator or heir. That person steps in to enforce the arbitration agreement or to be bound by it. The Act's text in Section 40 uses the term without a separate definition.

Does a claim always survive after the death of a party?

No. Section 40 saves the arbitration agreement, but sub-section (3) says it does not affect any law under which a right of action is extinguished by death. If another law ends the claim, Section 40 does not bring it back.

How is Section 41 different from Section 40?

Section 40 deals with the death of a party. Section 41 deals with the insolvency of a party. If the receiver adopts the contract, the arbitration term is enforceable by or against him. If not, the judicial authority may order arbitration on application, if it thinks the matter ought to be so decided.