Question

Under THE ARBITRATION AND CONCILIATION ACT arbitration agreement may be in the form of

• A. an arbitration clause in a contract only
• B. in the form of a separate agreement only
• C. an arbitration clause in a contract or in the form of a separate agreement
• D. commercial custom

Hint:

Remember that an arbitration agreement must be in writing (as per Section 7(3)). It can be a clause embedded in the main contract or a standalone document. Both forms are equally valid.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
The question asks about the permissible forms of an arbitration agreement under the Arbitration and Conciliation Act, 1996. The form and content of an arbitration agreement are defined in Section 7 of the Act.
Step 2: Detailed Explanation:
Section 7(1) of the Arbitration and Conciliation Act, 1996 defines an "arbitration agreement" as 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.
Section 7(2) explicitly states: "An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement."
This clearly allows for two main forms:
1. Arbitration Clause: A clause that is part of a larger, main contract between the parties.
2. Separate Agreement (Submission Agreement): An independent agreement entered into by the parties specifically for the purpose of referring their disputes to arbitration. This can be done before or after a dispute has arisen.
Options (A) and (B) are incorrect because they are too restrictive, each mentioning only one of the possible forms. Option (D) is incorrect because an arbitration agreement must be a formal agreement, not just a custom.
Step 3: Final Answer:
As per Section 7 of the Arbitration and Conciliation Act, 1996, an arbitration agreement can be either an arbitration clause within a contract or a completely separate agreement. Therefore, option (C) is correct.