Arbitration agreement requires present mutual consent; a clause making reference contingent on later agreement cannot support arbitrator appointment.

A clause operates as an arbitration agreement only if it shows a clear, present intention to submit disputes to a private tribunal and to be bound by its decision. Clause 16 required the parties to decide later whether disputes would be referred to arbitration, so fresh mutual consent was still needed before any reference could be made. That absence of consensus ad idem meant there was no valid arbitration agreement under the Arbitration and Conciliation Act, 1996, and the power to appoint an arbitrator could not be invoked. The reference to the Code of Civil Procedure did not cure the lack of mutual consent.

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Issues: Whether clause 16 of the partnership deed constituted an arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996, so as to permit appointment of an arbitrator under Section 11 of the Act.

Analysis: An arbitration agreement must disclose a clear intention to submit disputes to a private tribunal and an obligation to be bound by its decision. Mere use of the word "arbitration" is insufficient if the clause contemplates a further mutual decision before reference can be made. Clause 16 stated that disputes shall be referred for arbitration only if the parties so determine, which meant that fresh consent was required before arbitration could commence. The essential element of consensus ad idem to refer disputes to arbitration was therefore absent. In the absence of a valid arbitration agreement, the power under Section 11 could not be invoked. The reference to Section 89 of the Code of Civil Procedure, 1908 did not assist the first respondent because that provision could not override the requirement of mutual consent for arbitration.

Conclusion: Clause 16 was not an arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996, and the appointment of the arbitrator under Section 11 could not be sustained.

Ratio Decidendi: A clause is an arbitration agreement only when it evinces a binding, present intention to refer disputes to arbitration without requiring further consent; a provision making arbitration contingent on a later mutual determination is not sufficient to found jurisdiction under Section 11.

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