Enforceability of Unstamped Arbitration Agreements

The Indian Arbitration and Conciliation Act, which is drawn majorly from the UNCITRAL
Model Law, rests on two pivotal principles. First, the doctrine of kompetenz-kompetenz
empowers the arbitration tribunal to rule on its own jurisdiction. Second, the doctrine of
separability underscores that an arbitration clause remains distinct from the main contract,
surviving even if the contract is terminated or invalidated.

However, the landscape shifted with the NN Global v. Indo Unique case. Previously, M/S Sms
Tea Estates P.Ltd v. M/S Chandmari Tea Co.Pvt Ltd. held that separability applied to
unregistered documents but not unstamped ones, citing the absolute bar imposed by Section 35
of the Indian Stamp Act. Yet, a recent seven-judge bench decision in 2023 in the case of IN
RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER THE
ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN STAMP ACT 1899
has overruled SMS Tea and NN Global. Now, unstamped arbitration agreements are deemed
valid. This paper aims to delve into the implications of enforcing arbitration agreements by
analysing series of cases which led to the recent verdict which answered several questions
about the enforceability, practical challenges and potential consequences of this shift in stance.