Specimen Arbitration Agreement — Two Arbitrators and Common Arbitrator Format 2026

What Is an Arbitration Agreement?

An arbitration agreement is a written agreement between parties to refer disputes to arbitration instead of litigation in courts. Under Section 7 of the Arbitration and Conciliation Act, 1996: "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." The agreement can be: (a) a separate arbitration agreement — a standalone document specifically for dispute resolution, or (b) an arbitration clause within a larger contract (most common). The arbitration agreement must be in writing — oral arbitration agreements are not valid under the Indian Arbitration Act.

Types of Arbitration Arrangements

1. Sole Arbitrator: One arbitrator appointed by mutual consent or by an appointing authority. Suitable for: smaller disputes, faster resolution, lower costs.

2. Three Arbitrators (Two Party-Appointed + One Common): Each party appoints one arbitrator, and the two appointed arbitrators appoint the third (presiding) arbitrator. This is the most common arrangement for significant disputes — it balances party autonomy with independent adjudication.

3. Institutional Arbitration: The dispute is administered by an arbitral institution (ICC, SIAC, LCIA, MCIA, ICA) that provides: arbitration rules, appointment of arbitrators, administrative support, and facilities. Institutional arbitration is more structured and reliable than ad hoc arbitration.

Specimen Arbitration Agreement — Two Arbitrators + Common Arbitrator

[Illustrative format — based on ICSI Drafting material]

ARBITRATION AGREEMENT

This Arbitration Agreement is made on [Date] at [City]

BETWEEN:

[Party A Name], [Individual/Company], having address/registered office at [Address] (hereinafter called "Party A")

AND

[Party B Name], [Individual/Company], having address/registered office at [Address] (hereinafter called "Party B")

RECITALS

WHEREAS Party A and Party B have entered into a [Contract/Agreement] dated [Date] (hereinafter called the "Main Agreement") relating to [subject matter].

WHEREAS the parties desire to provide for resolution of any disputes arising out of or in connection with the Main Agreement through arbitration, in accordance with the Arbitration and Conciliation Act, 1996.

NOW IT IS AGREED AS FOLLOWS:

1. Arbitration of Disputes: Any dispute, difference, or controversy arising out of or in connection with the Main Agreement, including any question regarding its existence, validity, interpretation, performance, breach, or termination, shall be resolved by arbitration under the Arbitration and Conciliation Act, 1996 (as amended).

2. Number of Arbitrators: The arbitral tribunal shall consist of THREE (3) arbitrators, appointed as follows:

(a) Party A shall appoint one arbitrator within [15/30] days of the notice of arbitration.

(b) Party B shall appoint one arbitrator within [15/30] days of the notice of arbitration.

(c) The two arbitrators so appointed shall appoint the third arbitrator (the Presiding Arbitrator) within [15/30] days of the appointment of the second arbitrator.

(d) If either party fails to appoint an arbitrator within the prescribed time, or if the two arbitrators fail to agree on the Presiding Arbitrator: either party may apply to the [High Court / Supreme Court / designated appointing authority] under Section 11 of the Act for the appointment.

3. Qualifications of Arbitrators: Each arbitrator shall be: (a) independent and impartial — with no financial or personal interest in the dispute, (b) a person with expertise in [relevant field — commercial law, construction, technology, etc.], (c) not related to either party or their counsel, (d) the Presiding Arbitrator shall be a retired Judge of the High Court or Supreme Court / a senior advocate with at least [20] years' experience [as agreed].

4. Seat and Venue: The seat (legal place) of arbitration shall be [City, Country]. The hearings may be conducted at any place convenient to the parties. The law governing the arbitration shall be the Arbitration and Conciliation Act, 1996 (India).

5. Language: The language of arbitration shall be English.

6. Procedure: The arbitral tribunal shall determine its own procedure, subject to the provisions of the Act. The tribunal may: (a) hold oral hearings, (b) receive written submissions, (c) appoint experts, (d) conduct site inspections, (e) grant interim relief under Section 17.

7. Applicable Law: The substantive law governing the dispute shall be the laws of India. The procedural law governing the arbitration shall be the Arbitration and Conciliation Act, 1996.

8. Award: The arbitral tribunal shall render its award within [6/12] months from the date of completion of pleadings (or such extended time as the parties or the court may allow under Section 29A). The award shall be in writing, reasoned, and signed by the majority of arbitrators. The award shall be final and binding on the parties.

9. Costs: Each party shall bear the costs of its own appointed arbitrator. The costs of the Presiding Arbitrator and administrative expenses shall be shared equally. The tribunal may award costs to the successful party in the final award.

10. Confidentiality: All proceedings, documents, evidence, and the award shall be kept confidential by both parties, the arbitrators, and any person involved in the arbitration — except as required by law or for enforcement of the award.

11. Enforcement: The award shall be enforceable as a decree of the court under Section 36 of the Arbitration and Conciliation Act, 1996.

Arbitration Clause for Contracts

Instead of a standalone agreement: most contracts include an arbitration clause. Model clause: "Any dispute arising out of or in connection with this Agreement shall be resolved by arbitration under the Arbitration and Conciliation Act, 1996. The arbitral tribunal shall consist of [one/three] arbitrator(s). The seat of arbitration shall be [City]. The language shall be English. The substantive law shall be the laws of India."

Section 11 — Appointment by Court

If the parties cannot agree on the appointment of arbitrators: Section 11 provides for court appointment. For domestic arbitration: application to the High Court or the Supreme Court. For international commercial arbitration: application to the Supreme Court. The 2015 Amendment introduced: (a) appointment within 30 days of the application, (b) designation of arbitral institutions for appointment, (c) 2019 Amendment: Supreme Court designated SIAC and other institutions as appointing authorities. The court examines: independence, impartiality, availability, and expertise of the proposed arbitrator.

Key 2015 and 2019 Amendments

(a) Section 29A — Time limit: Award must be made within 12 months (extendable by 6 months by parties, and further by court). (b) Section 12(5) — Ineligibility: Persons with specified relationships with parties (employees, legal advisors, relatives) are ineligible to be arbitrators — strengthening independence. (c) Section 17 — Interim relief: Arbitral tribunals can grant interim relief equivalent to court orders (injunction, attachment, preservation). (d) Section 34 — Limited grounds for setting aside: Awards can be set aside only on narrow grounds (incapacity, invalid agreement, public policy, lack of proper notice). (e) Institutional arbitration: The Arbitration Council of India established to promote institutional arbitration.