Section 7 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 7 defines the arbitration agreement, the document on which everything else in Part I of the Act depends. It says what the agreement is, what form it may take, that it must be in writing, and when a reference to another document is enough. This explainer follows the section as per the India Code consolidated text consulted; later amendments should be checked. If you want a dispute clause read against these requirements before you sign or before you invoke it, our legal consultation team can do that.
An arbitration agreement is an agreement by the parties to submit to arbitration all or certain disputes, present or future, in respect of a defined legal relationship, whether contractual or not (section 7(1)). It may be a clause in a contract or a separate agreement (section 7(2)). It shall be in writing (section 7(3)), and section 7(4) lists three ways in which it is in writing. A contract in writing that refers to a document containing an arbitration clause can also create one (section 7(5)).
Where section 7 sits
Section 7 opens Chapter II of Part I, headed "Arbitration agreement". Section 2(1)(b) defines "arbitration agreement" as an agreement referred to in section 7, and section 2(1)(h) defines "party" as a party to an arbitration agreement. So the meaning of both words across Part I comes back to this section. The definitions are explained in section 2: definitions and scope of Part I.
Sub-section (1): what the agreement is
Section 7(1) says an arbitration agreement means 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. Four points follow from those words.
- An agreement by the parties. It is made by the persons who will be bound by it.
- All or certain disputes. The parties may send every dispute to arbitration or only some.
- Have arisen or may arise. The agreement may cover an existing dispute or future disputes.
- A defined legal relationship, whether contractual or not. The relationship must be identified, but it need not be a contract.
Sub-section (2): clause or separate agreement
Section 7(2) says an arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. Both stand on the same footing. Where it is a clause in a contract, section 16(1) adds that the clause is treated as an agreement independent of the other terms of the contract, and that a decision that the contract is null and void does not by itself make the clause invalid. See section 16: the tribunal's power to rule on its own jurisdiction.
Sub-sections (3) and (4): the agreement must be in writing
Section 7(3) is one sentence: an arbitration agreement shall be in writing. Section 7(4) then says when it is in writing.
| Clause | The agreement is in writing if it is contained in | What to keep |
|---|---|---|
| 7(4)(a) | a document signed by the parties | The signed contract or the signed separate agreement |
| 7(4)(b) | an exchange of letters, telex, telegrams or other means of telecommunication, including communication through electronic means, which provide a record of the agreement | The whole exchange, in a form that shows both sides |
| 7(4)(c) | an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other | The two statements |
The words "including communication through electronic means" in clause (b) carry a footnote showing them as inserted by Act 3 of 2016, s. 3, with effect from 23-10-2015.
Two things about clause (b) are easy to miss. It speaks of an exchange, so one party's message alone is not what the clause describes. And the means used must provide a record of the agreement.
Clause (c) covers the case where no earlier document is produced: one party alleges in its statement of claim or defence that an arbitration agreement exists and the other does not deny it. A party who does not accept that there is an agreement should therefore say so in its statement. Section 16(2) separately requires a plea that the tribunal has no jurisdiction to be raised not later than the submission of the statement of defence.
Sub-section (5): arbitration clause in another document
Section 7(5) says the reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if two conditions are met: the contract is in writing, and the reference is such as to make that arbitration clause part of the contract.
Example. Kaveri Fabrics places a written purchase order on Malwa Yarns which states that the supplier's standard terms of sale, including the arbitration clause in them, form part of the order. The order is in writing and the reference is worded to make the clause part of the contract, which is what section 7(5) asks for. A purchase order that only mentions the standard terms in passing leaves room for argument about the second condition. Whether a given reference is sufficient is a question on the wording of that contract.
What section 7 does not prescribe
Section 7 prints no set form of words, no required number of arbitrators, no place, no language and no procedure. Those are dealt with elsewhere in Part I, and for most of them the parties may agree their own terms:
- the number of arbitrators, which must not be an even number (section 10);
- the appointment procedure (section 11(2)), explained in section 11: appointment of arbitrators;
- the place and the language (sections 20 and 22).
Section 2(8) adds that where Part I refers to an agreement of the parties, that agreement includes any arbitration rules referred to in it. Section 2(3) keeps intact any other law under which certain disputes may not be submitted to arbitration.
How the agreement is used later
| Stage | Provision | What the agreement is needed for |
|---|---|---|
| A suit is filed despite the clause | Section 8(1), (2) | The judicial authority refers the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists; the application must be accompanied by the original agreement or a duly certified copy |
| An arbitrator has to be appointed | Section 11(6A) | The Supreme Court or the High Court confines itself to examining the existence of an arbitration agreement |
| The tribunal's jurisdiction is questioned | Section 16(1) | The tribunal may rule on objections to the existence or validity of the agreement |
| The award is challenged | Section 34(2)(a)(ii) | One ground is that the agreement is not valid under the law to which the parties have subjected it |
The proviso to section 8(2) deals with the party who does not hold the original or a certified copy because the other side has kept it. See section 8: power to refer parties to arbitration.
Example. Tapti Logistics and Sarayu Traders agreed by an exchange of emails that disputes under their freight arrangement would go to arbitration, but never signed a single document. Under section 7(4)(b) the question is whether the exchange provides a record of the agreement. Tapti should keep the full chain, since section 8(2) asks for the original agreement or a certified copy when a reference is sought.
Common mistakes
- Treating a clause in an unsigned draft as enough without an exchange that records agreement (section 7(4)).
- Referring to "our standard terms" without wording that makes the arbitration clause in them part of the contract (section 7(5)).
- Leaving an allegation that an arbitration agreement exists unanswered in the statement of defence (section 7(4)(c)).
- Naming an even number of arbitrators, which section 10(1) does not allow.
Need help with an arbitration agreement?
A clause that meets section 7 on paper can still be hard to operate if the appointment steps, place and language are left open. Our legal consultation service reviews the clause or the exchange you rely on and tells you, in writing, how it reads against sections 7, 8, 10 and 11.
Key takeaways
- Section 7(1): an agreement to submit all or certain disputes, present or future, in respect of a defined legal relationship.
- Section 7(2): a clause in a contract or a separate agreement.
- Section 7(3): it shall be in writing.
- Section 7(4): a signed document, an exchange that provides a record, or an exchange of statements of claim and defence where the agreement is alleged and not denied.
- Section 7(5): a written contract may bring in an arbitration clause from another document by a reference that makes it part of the contract.
Read next
- Section 8: power to refer parties to arbitration
- Sections 10 and 11A: number of arbitrators
- Specimen arbitration agreement for a tribunal of three
- Section 28 of the Indian Contract Act, 1872 and the arbitration saving
Disclaimer: Based on the India Code consolidated text of the Arbitration and Conciliation Act, 1996, whose footnotes show amendments up to Act 3 of 2021 and a latest date of 12 October 2023, as consulted on 2 October 2026. Rules, regulations and notifications under the Act, later amendments and the commencement of the Mediation Act, 2023 should be checked. This article is general information, not legal advice; check the official text before acting.