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

Meera Textiles Pvt Ltd and Kaveri Dyes signed a supply contract containing the clause: 'Any dispute arising out of this contract shall be referred to arbitration at Surat.' Kaveri Dyes later argues that no valid arbitration agreement exists because there is no separate arbitration deed. Which position is correct under the Act?

The clause is valid. Section 7(2) allows an arbitration agreement to take the form of an arbitration clause within a contract or a separate agreement, so no separate deed, court registration or named arbitrator is required.

  1. AThe clause is valid because an arbitration agreement may be an arbitration clause in a contractCorrect
  2. BThe clause is invalid because the Act requires a separate agreement signed after the dispute arises
  3. CThe clause is valid only if it is registered with the court
  4. DThe clause is invalid because it does not name the arbitrator

Explanation

Section 7(2) says an arbitration agreement may be in the form of an arbitration clause in a contract or a separate agreement. A separate deed is therefore not needed. The Act does not require naming the arbitrator or registration.

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