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

Arbitration Agreement under Section 7 Explained

Updated 11 October 2026 · Fact-checked

Under Section 7 of the Arbitration and Conciliation Act, 1996, an arbitration agreement is an agreement to submit present or future disputes in a defined legal relationship, contractual or not, to arbitration. It must be in writing. It can be a clause in a contract or a separate agreement.

Understand Arbitration Agreement under Section 7

Arbitration is a private process. A tribunal, not a court, decides the dispute. The only source of the tribunal's power is the parties' agreement. That is why Section 7 matters: without a valid arbitration agreement, there is nothing to refer.

Section 7(1) defines the agreement. It is 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. So the agreement can cover disputes that already exist or disputes that may come up later. It can cover all disputes or only some kinds.

Section 7(2) gives two forms. It can be an arbitration clause inside a contract, made before any dispute. Or it can be a separate agreement, often called a submission agreement, usually made after a dispute has arisen. Both are equally valid arbitration agreements.

Section 7(3) requires writing. Section 7(4) says when the writing requirement is met: a document signed by the parties; an exchange of letters, telex, telegrams or other telecommunication, including electronic communication, which provides a record of the agreement; or an exchange of statements of claim and defence where one party alleges the agreement and the other does not deny it. Section 7(5) covers incorporation by reference. A reference in a written contract to a document containing an arbitration clause is an arbitration agreement if the reference makes that clause part of the contract.

In answers, remember that the agreement must show the parties' intention to have disputes decided by arbitration. The text of Section 7 does not use that wording, so do not attribute it to the section. Present it as a general principle.

Key rules to remember

Definition (Section 7(1)): Agreement to submit to arbitration all or certain disputes (arisen or may arise) in respect of a defined legal relationship, contractual or not; Cover both existing and future disputes. Legal relationship can be non-contractual, such as a tort-based relationship.
Forms (Section 7(2)): Arbitration clause in a contract OR separate agreement; Clause is usually pre-dispute. Separate agreement (submission agreement) is usually post-dispute, but the section does not fix the timing.
Writing (Sections 7(3) and 7(4)): Must be in writing: (a) document signed by parties; (b) exchange of letters, telex, telegrams or other telecommunication including electronic means providing a record; (c) exchange of statements of claim and defence, existence alleged by one and not denied by other; Electronic communication was added by the 2015 amendment (effective 23-10-2015).
Incorporation by reference (Section 7(5)): Contract in writing + reference to a document containing an arbitration clause + reference makes the clause part of the contract = arbitration agreement; A casual mention of a document is not enough. The reference must make the clause part of the contract.

How to solve Arbitration Agreement under Section 7 questions

Use this method for any fact-based question on whether a valid arbitration agreement exists under Section 7.

1State Section 7(1) in one line: an agreement to submit defined-relationship disputes, present or future, to arbitration.
2Identify the form: clause in a contract or separate agreement under Section 7(2).
3Check writing under Section 7(3), then match the facts to Section 7(4)(a), (b) or (c).
4If the clause sits in another document, test Section 7(5): is the main contract in writing, and does the reference make the clause part of it?
5Check scope: does the clause cover the dispute in question, and does it concern a defined legal relationship?
6Check whether the facts show that the parties agreed to submit disputes to arbitration, not merely that they may do so or may discuss the matter.
7Conclude clearly: valid or not, and what follows, such as a reference to arbitration under Section 8.

Quickest way: Four-question Section 7 test

When to use it: Short-answer or case questions where you have under ten minutes.

Is there a defined legal relationship and an agreement to arbitrate? Section 7(1).
Is it in writing under 7(4) or 7(5)? Name the clause.
Does the dispute fall within the scope of the clause?
Conclude: valid or invalid, with the exact sub-section.

Common mistakes in Arbitration Agreement under Section 7

Saying an arbitration agreement must be signed by the parties.
Section 7(4)(a) mentions a signed document, so students assume it is the only route.
Fix: Signature is only one route. Exchange of communications under 7(4)(b) and exchange of claim and defence under 7(4)(c) also satisfy the writing requirement.
Treating an oral arbitration agreement as valid.
Students think that parties' consent alone is enough.
Fix: Section 7(3) says an arbitration agreement shall be in writing. Without writing under 7(4) or 7(5), the agreement fails the section.
Limiting the agreement to contractual disputes.
Arbitration clauses usually appear in contracts.
Fix: Section 7(1) says the legal relationship may be contractual or not. Quote those words.
Assuming any mention of another document incorporates its arbitration clause.
Students overlook the wording of Section 7(5).
Fix: Check two things: the contract is in writing, and the reference makes the arbitration clause part of the contract. Argue both from the facts.
Confusing a clause with a submission agreement as different in validity.
Textbooks stress the difference in timing.
Fix: Both are arbitration agreements under Section 7(2). The difference is form and usual timing, not legal effect.
Forgetting the 2015 addition of electronic communication.
Older notes mention only letters, telex and telegrams.
Fix: Cite the words including communication through electronic means in Section 7(4)(b). Emails and messages that provide a record of the agreement can qualify.

Worked examples

Example 1

Mehta Exports Pvt. Ltd. and Sundaram Logistics Ltd. negotiated by email. Mehta's email offered services on stated terms, including: all disputes shall be referred to arbitration in Chennai. Sundaram replied by email: accepted on these terms. No document was signed. A dispute arises. Sundaram says there is no valid arbitration agreement because nothing was signed. Advise.

Show the solution

Rule: Section 7(3) requires writing. Section 7(4)(b) says an agreement is in writing if contained in an exchange of letters, telex, telegrams or other telecommunication, including electronic means, which provide a record of the agreement.
Facts: the offer containing the arbitration term and the acceptance were exchanged by email. Both emails are a record of the agreement.
Analysis: signature is only one route under Section 7(4)(a). The email exchange satisfies Section 7(4)(b). The clause covers all disputes in the contractual relationship.
Conclusion: the arbitration agreement is in writing and valid.

Answer: Sundaram's objection fails. The email exchange satisfies Section 7(4)(b), so there is a written arbitration agreement under Section 7, and the dispute can go to arbitration.

Example 2

Kaveri Builders Ltd. signed a works contract with Rao Steel Ltd. The contract says: this supply is on the terms of Rao Steel's standard conditions of sale. Those standard conditions, a separate printed document, contain an arbitration clause. A dispute arises and Kaveri argues that there is no arbitration agreement as it did not sign the standard conditions. Discuss.

Show the solution

Rule: Section 7(5) provides that a reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that clause part of the contract.
Condition 1: the works contract is signed, so it is in writing.
Condition 2: the contract expressly says the supply is on the standard conditions of sale. That wording is capable of making the conditions part of the contract. Still, the exact wording matters, so you should examine it.
Analysis: separate signature of the standard conditions is not required under Section 7(5). The question is whether the reference makes the clause part of the contract.
Conclusion: on these facts the arbitration clause is likely to be incorporated.

Answer: Kaveri's argument is weak. Under Section 7(5) the written contract's reference to the standard conditions can make the arbitration clause part of the contract. It likely constitutes an arbitration agreement, subject to the exact wording of the reference.

Exam tips

Quote the sub-section number with each point: 7(1) definition, 7(2) forms, 7(3) writing, 7(4) tests, 7(5) incorporation.
For case-based questions, follow the order of provision, facts, analysis and conclusion. Name the 7(4) limb that fits the facts.
Be ready to draft a model arbitration clause, covering disputes, seat, number of arbitrators and language. Draft it as a separate point if asked.
Write a short comparison of arbitration clause and submission agreement. Use the headings timing, form and scope, but remember that both fall under Section 7(2).
Link to Section 8: a valid Section 7 agreement is the base for a judicial authority to refer parties to arbitration.

Practice questions from Arbitration: Introduction, Agreements and its Institutions

Arbitration Agreement under Section 7: frequently asked questions

What are the essentials of an arbitration agreement under Section 7?

The agreement must be between parties, concern disputes arising from a defined legal relationship, and show that they agree to submit those disputes to arbitration. It must be in writing under Section 7(3). It can be a clause or a separate agreement.

What is the difference between an arbitration clause and a submission agreement?

An arbitration clause is a term inside a contract, usually agreed before any dispute arises. A submission agreement is a separate agreement, usually made after a dispute has arisen. Section 7(2) treats both as arbitration agreements.

Can an arbitration agreement be made through email or WhatsApp?

Section 7(4)(b) covers an exchange of communications, including electronic means, which provide a record of the agreement. So an email exchange can qualify. Whether a particular message qualifies depends on whether it records the agreement.

When does incorporation by reference create an arbitration agreement?

Under Section 7(5), the main contract must be in writing, and the reference to the other document must make its arbitration clause part of the contract. A mere passing mention is not enough.