Specimen Arbitration Agreement 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.
Many commercial contracts provide for each side to name one arbitrator and for the two to choose a third, often called the "common" arbitrator. In the words of the Arbitration and Conciliation Act, 1996 that third member is the presiding arbitrator, and the tribunal is a tribunal of three. This post gives a short specimen clause set for that arrangement and ties each clause to the section that allows it, as per the India Code consolidated text consulted; later amendments should be checked. A specimen is a starting point, not a substitute for advice on your contract, and our legal consultation team can adapt it to your deal.
An arbitration agreement must be in writing (section 7(3)) and the number of arbitrators must not be an even number (section 10(1)). A clause for "two arbitrators" therefore needs a third: each party appoints one, and the two appoint the presiding arbitrator (section 11(3)). The parties may also agree the place (section 20), the language (section 22) and the appointment steps (section 11(2)). Costs are left to the tribunal under section 31A, because an advance agreement that one party bears the costs in any event is valid only if made after the dispute has arisen (section 31A(5)).
Why "two arbitrators" means three
Section 10(1) leaves the number of arbitrators to the parties, provided that the number shall not be an even number. Section 10(2) says that if the parties fix no number, the tribunal consists of a sole arbitrator. Section 11(3) then gives the default for three: each party appoints one arbitrator, and the two appointed arbitrators appoint the third, who acts as the presiding arbitrator. The specimen below writes that arrangement into the contract so that the dates and steps are clear. See sections 10 and 11A.
The specimen clauses
The wording below is a specimen for a contract between two parties in an arbitration seated in India. Words in square brackets are to be completed. It is drafting, not a quotation from the Act.
Clause 1: agreement to arbitrate
Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the Arbitration and Conciliation Act, 1996.
Section behind it: section 7(1) allows the parties to submit all or certain disputes, present or future, in respect of a defined legal relationship; section 7(2) allows the agreement to be a clause in a contract. Because the clause is in a signed contract it is in writing under section 7(4)(a). See section 7.
Clause 2: number of arbitrators
The arbitral tribunal shall consist of three arbitrators.
Section behind it: section 10(1).
Clause 3: appointment
The party commencing the arbitration shall appoint one arbitrator in its written request for arbitration. The other party shall appoint one arbitrator within thirty days from receipt of that request. The two arbitrators shall, within thirty days from the date of their appointment, appoint the third arbitrator, who shall act as the presiding arbitrator. If an appointment is not made within the time stated, either party may request that it be made in accordance with section 11 of the Act.
Section behind it: section 11(2) lets the parties agree a procedure, subject to section 11(6); the steps follow section 11(3), and the two thirty-day periods are those printed in section 11(4)(a) and (b). Where a step under an agreed procedure is not taken, section 11(6) lets a party request the Supreme Court or, as the case may be, the High Court, or any person or institution designated by such Court, to take the necessary measure. See section 11.
Clause 4: disclosure and eligibility
Each arbitrator shall, before accepting appointment, make the written disclosure required by section 12 of the Act. No person whose relationship with the parties, their counsel or the subject-matter of the dispute falls within the Seventh Schedule to the Act shall be appointed.
Section behind it: section 12(1) requires the disclosure, in the form in the Sixth Schedule; section 12(5) makes a person within the Seventh Schedule ineligible notwithstanding any prior agreement to the contrary, and allows waiver only by an express agreement in writing after the dispute has arisen. See section 12.
Clause 5: place
The place of arbitration shall be , India. The tribunal may meet at any other location it considers appropriate for hearings, consultation or inspection.
Section behind it: section 20(1) lets the parties agree on the place; section 20(3) lets the tribunal meet elsewhere unless otherwise agreed. Under section 31(4) the award states the place and is deemed to have been made there.
Clause 6: language
The language of the arbitration shall be . Any document in another language shall be accompanied by a translation into that language.
Section behind it: section 22(1) lets the parties agree on the language or languages; section 22(4) lets the tribunal order translations. See sections 20 and 22.
Clause 7: time
The parties shall complete the statement of claim and defence within the period in section 23(4) of the Act and shall co-operate so that the award is made within the period in section 29A(1). Any extension under section 29A(3) shall be by consent recorded in writing.
Section behind it: section 23(4) prints six months from the date the arbitrators received written notice of appointment. Section 29A(1) prints twelve months from completion of pleadings for matters other than international commercial arbitration, and section 29A(3) lets the parties, by consent, extend that period by not more than six months. Beyond that the mandate terminates unless the Court extends the period (section 29A(4)). The clause cannot shorten the Court's role; it only records how the parties will act. See section 29A.
Clause 8: decisions and costs
Any decision of the tribunal shall be made by a majority of all its members. Questions of procedure may be decided by the presiding arbitrator. The costs of the arbitration shall be determined by the tribunal in accordance with section 31A of the Act.
Section behind it: section 29(1) and (2) on majority decisions and procedure; section 31(8) and section 31A on costs. The specimen does not say that one side pays the costs whatever the result, because section 31A(5) makes such an agreement valid only if made after the dispute in question has arisen. See section 31A.
The clauses against the Act
| Clause | Subject | Provision | What the provision leaves to the parties |
|---|---|---|---|
| 1 | Agreement to arbitrate | 7(1), (2), (4) | Which disputes are covered |
| 2 | Number | 10(1) | Any number that is not even |
| 3 | Appointment | 11(2), (3), (4), (6) | The procedure and its time limits |
| 4 | Disclosure | 12(1), (5) | Qualifications; not the Seventh Schedule bar before a dispute |
| 5 | Place | 20(1), (3) | The place of arbitration |
| 6 | Language | 22(1), (4) | The language or languages |
| 7 | Time | 23(4), 29A(1), (3) | A consent extension of up to six months |
| 8 | Decisions and costs | 29, 31A | Majority rule may be varied; costs in any event only after the dispute |
Optional additions
- Governing law of the contract. Where the place is in India and the arbitration is not an international commercial arbitration, section 28(1)(a) requires the tribunal to decide in accordance with the substantive law in force in India. In an international commercial arbitration, section 28(1)(b) applies the rules of law designated by the parties, so the contract should name them.
- Notices. Section 3 says when a written communication is deemed received; stating each party's address in the contract makes the thirty-day periods easier to prove.
- Arbitration rules. If the parties refer to a set of arbitration rules, section 2(8) treats those rules as part of their agreement.
- Fast track. Section 29B lets the parties agree in writing, before or at the time of appointment of the tribunal, to a fast track procedure, and to a sole arbitrator for it.
- Confidentiality. Section 42A already binds the arbitrator, the arbitral institution and the parties; a clause can restate it for employees and advisers.
An example
Penganga Steel and Rushikulya Traders sign a supply contract with the clauses above. A dispute arises and Penganga sends a written request for arbitration naming its arbitrator. Rushikulya receives it on a given date and has thirty days from that date to name its own. Once both are appointed, they have thirty days from the date of their appointment to choose the presiding arbitrator. If either step is missed, clause 3 and section 11(6) allow a request to the authority named in section 11.
Common mistakes
- Providing for "two arbitrators" with no third; section 10(1) does not allow an even number.
- Counting the thirty days from dispatch instead of receipt of the request.
- Naming as arbitrator a person within the Seventh Schedule, such as an employee of a party.
- Fixing in advance that one party will bear all costs in any event (section 31A(5)).
- Leaving place and language open, which hands both to the tribunal under sections 20(2) and 22(2).
Need help drafting an arbitration agreement?
A specimen fits no contract exactly: the parties, the value, the place and the governing law all change the wording. Our legal consultation service adapts the clause set to your contract and checks it against sections 7, 10, 11, 12, 20, 22, 29A and 31A.
Key takeaways
- The arbitration agreement must be in writing (section 7(3)).
- The number of arbitrators must not be even (section 10(1)); "two and a common arbitrator" is a tribunal of three.
- Thirty days is the period printed in section 11(4) for each appointment step.
- Place and language are for the parties to agree (sections 20 and 22).
- Costs clauses are limited by section 31A(5).
Read next
- Arbitration clause draft for commercial contracts
- Seventh Schedule: relationships that make a person ineligible as arbitrator
- Sections 28 and 29: substantive law and decision by a panel
- Usual clauses in commercial agreements
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.