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Arbitration Agreement and Reference to Arbitration under Sections 7, 8 and 45

Updated 11 October 2026 · Fact-checked

An arbitration agreement is a written agreement to submit present or future disputes about a defined legal relationship to arbitration (Section 7). If a party sues despite it, the court must refer the parties to arbitration on application: Section 8 for Part I, Section 45 for foreign-award agreements. Section 40 says death does not discharge the agreement.

Understand Arbitration Agreement and Reference to Arbitration

Arbitration works only because parties agreed to it. That agreement is the arbitration agreement. Without it, a tribunal has no authority and a court will not send the dispute to arbitration.

Section 7(1) defines it as an agreement to submit to arbitration all or certain disputes which have arisen or may arise between the parties, in respect of a defined legal relationship, whether contractual or not. So it can cover existing disputes (a submission agreement) or future ones (a clause in a contract).

Section 7(2) allows two forms: an arbitration clause inside a contract, or a separate agreement. Section 7(3) requires it to be in writing. Section 7(4) says writing exists if it is in a document signed by the parties, in an exchange of letters, telex, telegrams or other telecommunication including electronic means that provide a record of the agreement, or in an exchange of statements of claim and defence where one party alleges the agreement and the other does not deny it. Section 7(5) says a contract in writing that refers to another document containing an arbitration clause makes that clause part of the contract, if the reference is such as to make it part of the contract.

Once there is a valid agreement, a party may still file a civil suit. The law then makes the judicial authority step back. Under Section 8 (Part I), the authority must refer the parties to arbitration if a party applies not later than the date of submitting its first statement on the substance of the dispute, unless it finds that prima facie no valid arbitration agreement exists. Under Section 45 (Part II, agreements referred to in Section 44), the authority must refer at a party's request unless it prima facie finds the agreement null and void, inoperative or incapable of being performed.

Finally, Section 40 protects continuity. The agreement is not discharged by the death of a party. It is enforceable by or against the legal representative. The mandate of an arbitrator is not terminated by the death of the party who appointed him. But rights of action extinguished by death under other law stay extinguished.

Key rules to remember

Definition of arbitration agreement: Agreement to submit present or future disputes + defined legal relationship (contractual or not) + in writing; Section 7(1) and (3). Name all three elements in answers.
Forms of agreement: Arbitration clause in a contract OR separate agreement; Section 7(2).
Writing test: Signed document OR exchange of letters/telecommunication/electronic means providing a record OR claim-defence exchange with no denial; Section 7(4)(a), (b), (c).
Incorporation by reference: Contract in writing + reference making the arbitration clause part of the contract; Section 7(5). A casual mention is not enough.
Section 8 reference: Application not later than first statement on substance of dispute + original agreement or certified copy; refer unless prima facie no valid agreement exists; Section 8(1) and (2). Proviso allows a copy plus a petition to call for the original from the other party.
Arbitration during pendency: Arbitration may commence or continue and award may be made despite pending Section 8 application; Section 8(3).
Section 45 reference: Agreement referred to in Section 44 + request of a party; refer unless prima facie null and void, inoperative or incapable of being performed; Applies notwithstanding Part I and the Code of Civil Procedure, 1908.
Death of a party: Agreement survives; enforceable by or against legal representative; arbitrator's mandate not ended by death of appointing party; Section 40(1) and (2). Section 40(3) saves laws extinguishing rights of action on death.

How to solve Arbitration Agreement and Reference to Arbitration questions

Most questions give a fact pattern and ask whether there is a valid agreement, whether the court must refer, or what happens on death. Use the same sequence each time.

1Identify what is asked: validity of agreement, reference by court, or effect of death.
2Quote the provision: Section 7 for validity, Section 8 or 45 for reference, Section 40 for death.
3Test the agreement against Section 7: dispute covered, defined legal relationship, writing, and which clause of Section 7(4) or 7(5) applies.
4For reference, check which Part applies. Section 8 for Part I, Section 45 if the agreement is one referred to in Section 44.
5Check timing and documents: application before first statement on substance, and original or certified copy (Section 8 only).
6Apply the exception: prima facie no valid agreement (Section 8) or prima facie null and void, inoperative or incapable of being performed (Section 45).
7State a clear conclusion in one line, then add any practical point, such as drafting the clause properly.

Quickest way: Three-check method

When to use it: When time is short and the facts are simple.

Writing check: is there a signed document, a record through emails or letters, or an undenied claim-defence exchange?
Scope check: does the clause cover this dispute and a defined legal relationship?
Route check: Section 8 (timely application, document filed) or Section 45 (foreign-award agreement); then conclude refer or not refer.

Common mistakes in Arbitration Agreement and Reference to Arbitration

Saying an arbitration agreement must be a signed document.
Students remember only Section 7(4)(a).
Fix: Section 7(4) lists three ways, including electronic exchanges that provide a record and an undenied claim-defence exchange.
Mixing up Section 8 and Section 45 tests.
Both direct the court to refer parties.
Fix: Section 8: unless prima facie no valid agreement exists, with a timing condition. Section 45: unless prima facie null and void, inoperative or incapable of being performed.
Ignoring the timing condition under Section 8.
Students focus on the existence of the clause.
Fix: Mention that the application must be made not later than the date of submitting the first statement on the substance of the dispute.
Saying the agreement ends when a party dies.
Confusing it with personal contracts.
Fix: Section 40(1): the agreement is enforceable by or against the legal representative. Add the Section 40(3) saving.
Saying arbitration must stop once a Section 8 application is filed.
Assuming the court proceeding blocks the tribunal.
Fix: Section 8(3) lets arbitration commence or continue and an award be made while the application is pending.
Treating any mention of another document as incorporating its arbitration clause.
Section 7(5) is read loosely.
Fix: The contract must be in writing and the reference must make the clause part of the contract.

Worked examples

Example 1

Mehta Textiles Pvt. Ltd. and Sharma Dyes exchanged emails agreeing on a supply and stating that disputes would be settled by arbitration in Surat. No document was signed. A dispute arose. Sharma Dyes says there is no written arbitration agreement. Advise.

Show the solution

Provision: Section 7(3) requires writing; Section 7(4)(b) treats an exchange of letters or other telecommunication, including electronic means, that provides a record of the agreement as writing.
Facts: the emails record the agreement to arbitrate disputes, and they relate to a defined legal relationship, the supply contract.
Section 7(4)(a) is not the only route, so absence of signatures is not fatal.
Conclusion: the writing requirement is met.

Answer: There is a valid arbitration agreement in writing under Section 7(4)(b). Mehta Textiles can invoke arbitration, and Sharma Dyes' objection fails.

Example 2

Ravi Traders sued Kapoor Exports in a civil court on a contract containing an arbitration clause. Kapoor Exports filed its written statement on the merits and only later applied for reference to arbitration. Kapoor also died before the hearing. Discuss the reference and the effect of death.

Show the solution

Provision: Section 8(1) requires the application not later than the date of submitting the first statement on the substance of the dispute.
Facts: Kapoor applied after filing a written statement on the merits, so the timing condition is not met and the court need not refer.
Death: under Section 40(1) the arbitration agreement is not discharged by the death of a party and is enforceable by or against the legal representative.
Section 40(3) keeps any law extinguishing a right of action on death, so check whether the claim survives under other law.

Answer: The Section 8 application is late, so the court is not bound to refer the parties. Separately, the agreement is not discharged by death and can be enforced by or against the legal representative, subject to Section 40(3).

Exam tips

Write the section number and then paraphrase it. Examiners reward correct provisions applied to facts.
For Section 8 versus Section 45, give a short contrast: Part I versus Part II, timing condition, and the wording of the prima facie exception.
In writing-test questions, name the exact clause of Section 7(4) that fits the facts.
In death questions, always add Section 40(2) on the arbitrator's mandate and the Section 40(3) saving.
Finish with a one-line conclusion and, where useful, a drafting point such as specifying a clear clause and the dispute scope.

Practice questions from Arbitration under Investors' Grievances Redressal Mechanism of Stock Exchanges

Arbitration Agreement and Reference to Arbitration: frequently asked questions

Must an arbitration agreement be signed?

No. Section 7(4) accepts a signed document, an exchange of letters or electronic communication that provides a record, or an exchange of claim and defence where the agreement is alleged and not denied. It must be in writing, but signature is only one route.

What is the difference between Section 8 and Section 45?

Section 8 applies under Part I and requires an application not later than the first statement on the substance of the dispute, with the original agreement or certified copy. The court refers unless it finds prima facie that no valid agreement exists. Section 45 applies to agreements referred to in Section 44 and the court refers unless it prima facie finds the agreement null and void, inoperative or incapable of being performed.

Does an arbitration agreement end when a party dies?

No. Section 40(1) says it is not discharged by death and can be enforced by or against the legal representative. An arbitrator's mandate also continues if the party who appointed him dies, but laws extinguishing rights of action on death still apply.

Can arbitration go on while a Section 8 application is pending?

Yes. Section 8(3) allows arbitration to commence or continue and an award to be made even while the application is pending before the judicial authority.