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

Meridian Textiles Pvt Ltd and Kavya Exports signed a supply contract in Surat. Its clause 14 says, 'All disputes arising out of this contract shall be referred to arbitration.' Kavya Exports argues there is no arbitration agreement because the parties never signed a separate document on arbitration. Under Section 7, what is the position?

A valid arbitration agreement exists. Section 7(2) allows an arbitration agreement to be an arbitration clause within a contract or a separate agreement, so the signed supply contract containing clause 14 is enough without any separate arbitration document.

  1. ANo valid agreement exists, because arbitration needs a separate agreement apart from the contract
  2. BA valid arbitration agreement exists, because it may take the form of a clause in a contractCorrect
  3. CA valid agreement exists only if it is registered as a separate deed
  4. DA valid agreement exists only if a court approves the clause

Explanation

Section 7(2) provides that an arbitration agreement may be in the form of an arbitration clause in a contract or a separate agreement. A signed contract containing the clause satisfies the writing requirement under Section 7(4)(a). The argument that a separate document is needed is therefore wrong.

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