Section 7, Arbitration and Conciliation Act 1996 — What Counts as an Arbitration Agreement

What the section does

• An arbitration agreement is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or may arise between them in respect of a defined legal relationship.
• It may take the form of an arbitration clause in a contract or of a separate agreement, and it must be in writing.
• It is in writing if it is contained in a document signed by the parties, in an exchange of letters, telex, telegrams or other means of telecommunication including electronic means that provides a record, or in 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.
• A reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference makes that clause part of the contract.

Requirement

In writing. Electronic records qualify. An oral agreement to arbitrate does not.

Where people go wrong

• Writing a clause that names a seat or a city without agreeing to arbitrate at all.
• Referring to another document’s arbitration clause without making the reference incorporate it.
• Leaving the number of arbitrators and the appointing mechanism unstated, which pushes the parties to court before the arbitration can start.
• Assuming an email chain cannot amount to an agreement — it can, where it provides a record of the agreement.

Common questions

Does an arbitration agreement have to be signed?

Not necessarily. Section 7(4) treats an exchange of letters or electronic communications that provides a record of the agreement, and an exchange of pleadings where one party asserts the agreement and the other does not deny it, as writing.

Can a contract incorporate an arbitration clause from another document?

Yes, under section 7(5), where the contract is in writing and the reference is such as to make that arbitration clause part of the contract.

Is a clause naming a city enough to arbitrate?

No. There must be an agreement to submit disputes to arbitration. A clause that fixes a venue or jurisdiction without that agreement does not satisfy section 7.

Act on this

• Section 73 — damages for breach
• Vendor agreement template

• Section 73 — damages for breach
• Vendor agreement template

About this summary

A plain-English summary of what this provision requires, not a reproduction of it and not legal advice. Read alongside the bare Act, and take advice on anything turning on your own facts.