Correct Option: 1 (shall be in writing).

Under Section 7 of the Arbitration and Conciliation Act, 1996, an arbitration agreement shall be in writing. This provision ensures that the agreement to resolve disputes through arbitration is formalized in written form, providing clear documentation of the parties' intent to arbitrate. The written agreement can be in the form of a contract, exchange of letters, or even an exchange of electronic communication. However, it is essential that the agreement be documented in writing to ensure its enforceability under the law.