Incorporation by reference of arbitration clauses requires clear intent; general contract references do not create arbitration agreements.

Section 7(5) requires a clear intention to incorporate an external arbitration clause; a mere reference to another contract is not enough. Where a sub-contract stated that work would be carried out on the terms and conditions of the main contract, that reference was treated as adopting only execution and performance terms, not the dispute resolution mechanism. The main contract's arbitration clause was also framed for the employer-contractor relationship and its tribunal procedure was unsuitable for contractor-sub-contractor disputes. The arbitration clause was therefore not incorporated into the sub-contract, and no arbitration agreement arose between the parties.

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Issues: Whether an arbitration clause contained in the main contract between the employer and the contractor stood incorporated by reference into the sub-contract, so as to constitute an arbitration agreement between the contractor and the sub-contractor under section 7(5) of the Arbitration and Conciliation Act, 1996.

Analysis: Section 7(5) requires more than a mere reference to another document containing an arbitration clause. The reference in the contract must evince an intention to make that arbitration clause part of the contract. A distinction was drawn between a general reference to another contract and incorporation of that contract in entirety. Where the sub-contract stated that it shall be carried out on the terms and conditions as applicable to the main contract, the reference was construed as adopting only those terms relating to execution and performance of the work, not the dispute resolution mechanism. The arbitration clause in the main contract was also found to be tailored to the relationship between the employer and the contractor, with a procedure and composition of arbitral tribunal that were inapt for disputes between contractor and sub-contractor.

Conclusion: The arbitration clause in the main contract was not incorporated into the sub-contract, and no arbitration agreement existed between the parties.

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