Section 40 of the Arbitration and Conciliation Act, 1996 - Effect of Death of a Party

Current explanation of survival of an arbitration agreement after death, rights of legal representatives and continuation of the arbitrator's mandate.

Section 40 ensures that an arbitration agreement does not automatically come to an end merely because a party to it dies. Where the underlying right of action survives, the arbitration agreement may be enforced by or against the legal representative of the deceased party. The death of the appointing party also does not by itself terminate the arbitrator's mandate.

Text of Section 40 - Arbitration agreement not to be discharged by death of party thereto

What Section 40 means

1. Arbitration agreement survives the death of a party

Section 40(1) prevents an arbitration agreement from being discharged merely because one of the parties dies. The agreement continues to operate, subject to the nature of the underlying right or claim and any law that may cause that right to end on death.

2. Legal representatives may enforce or be bound by the arbitration agreement

Where the cause of action survives, the arbitration agreement may be enforced by or against the legal representative of the deceased. This allows arbitral rights and obligations relating to the deceased party's estate to continue without requiring a fresh arbitration agreement merely because of the death.

3. Meaning of "legal representative"

Section 2(1)(g) of the Arbitration and Conciliation Act, 1996 defines "legal representative" as a person who in law represents the estate of a deceased person. It also includes a person who intermeddles with the estate of the deceased and, where a party acted in a representative character, the person on whom the estate devolves after that party's death.

4. Arbitrator's mandate does not automatically terminate

Section 40(2) makes clear that an arbitrator's mandate does not end merely because the party who appointed that arbitrator has died. The arbitration may therefore continue subject to the other provisions of the Act and the procedural steps required to bring the legal representative on record where necessary.

5. Exception where the underlying right of action is extinguished by death

Section 40(3) is an important limitation. The section does not override another law under which a particular right of action is extinguished by the death of a person. The survival of the arbitration agreement does not, by itself, revive a substantive claim that has legally ceased to exist.

Section 40 and survival of the cause of action

The practical question is not only whether the arbitration clause survives, but also whether the underlying substantive right survives. If the right to sue continues after death, the legal representative may ordinarily invoke, continue or be bound by the arbitration agreement. If the applicable substantive law causes the right itself to end on death, Section 40(3) preserves the operation of that law.

Supreme Court position

The Supreme Court has held that legal representatives are entitled to enforce, and may also be bound by, an arbitration agreement where the right to sue survives. The Court has explained that it is not always necessary for an arbitration clause to expressly name "legal heirs", "representatives", "assigns" or similar categories for Section 40 to operate.

See the official Supreme Court judgment dated 21 February 2025 concerning Section 40 and the rights of legal representatives under an arbitration clause: Supreme Court of India judgment - 21 February 2025.

Related provisions

Section 40 should be read with the definition of "legal representative" in Section 2(1)(g), the binding effect of an arbitral award under Section 35, and the general provisions governing arbitration agreements and arbitral proceedings under the Act.

Official statutory reference

The official text of the Arbitration and Conciliation Act, 1996 is available through India Code - Section 40.

Key points at a glance

• Death of a party does not automatically discharge an arbitration agreement.
• The agreement may be enforced by or against the deceased party's legal representative where the right of action survives.
• The arbitrator's mandate does not end merely because the appointing party dies.
• Section 40 does not preserve a substantive right of action that another law extinguishes on death.
• A legal representative is defined in Section 2(1)(g) of the Arbitration and Conciliation Act, 1996.
• The survival of the arbitration clause and the survival of the underlying cause of action are related but distinct legal questions.

This page provides general legal information. The effect of death on a particular arbitration may depend on the nature of the claim, succession to the estate, the arbitration agreement, applicable substantive law and procedural orders in the case.