Section 7 of ACA : Section 7: Arbitration Agreement

Explanation using Example

Imagine that Sarah and Mike are business partners who have a contract that includes an arbitration clause. This clause specifies that any disputes related to their partnership will be resolved through arbitration rather than going to court. One day, a disagreement arises over the distribution of profits. Mike remembers the "arbitration agreement" in their contract and suggests they initiate the arbitration process to resolve their dispute.

Their agreement to arbitrate is already embedded within their partnership contract (as per Section 7(2) of the Arbitration and Conciliation Act, 1996), so they do not need a separate agreement to arbitrate this particular issue.

However, Sarah insists on confirming the agreement in writing before proceeding. They exchange emails (covered under Section 7(4)(b)), which clearly document their intention to arbitrate the dispute, fulfilling the requirement that the arbitration agreement shall be in writing.

Eventually, they appoint an arbitrator and submit their statements of claim and defence. Mike's claim includes the mention of the arbitration clause from the contract, and Sarah does not deny its existence. According to Section 7(4)(c), this exchange also affirms the existence of their written arbitration agreement.