RANI DURGAWATI UNIVERSITY JABALPUR

SESSION: 2023-2024

Arbitration, as a preferred
method of alternative
dispute resolution, has
gained significant
prominence over the
years. It offers parties a
private and efficient mea
of resolving disputes
outside the traditional cou
system. The field of
arbitration has witnessed
several significant
judgments that have
shaped and influenced th
practice.

AT ALL EVENTS,
ARBITRATION IS MORE
RATIONAL, JUST AND
HUMANE THAN THE
PROJECT REPORT ON INTRODUCTION TO ARBITRATION
RESORT TO THE SWORD.
BY: RIDA AHMED
– Richard
B.A.LL.B.(HONORS.) 9TH SEMESTER. Cobden

Submitted to:
Prof. Devilata Rawat Ma
 DECLARATION

I hereby declare that the project entitled INTRODUCTION TO

ARBITRATION is a bonafide genuine research work carried
out by me, under the guidance of Dr. Devilata Rawat Ma’am.

Rida Ahmed
B.A.Ll.B. (hons.)
9th Semester

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 METHODOLOGY

The researcher while writing the research has used the non
doctrinal method of the research to understand actually
what is Arbitration. As a law student, the researcher must
make society aware of the availability of an alternative
manner of dispute resolution rather than approaching court
for the traditional method of legal proceedings.

SOURCE OF STUDY

Only Secondary sources are referred for this research

paper.

2
 Abstract

Dispute resolution through arbitration based on the prior alignment of the wills of
the parties has long been known and has a long tradition. This specific way of
resolving disputes has survived throughout this long time as a result of the trust
that the parties have shown in it, presenting to the arbitration for resolution their
disputes. The normative regulation of dispute resolution before international
commercial arbitration in its current form is of modern times. As an alternative
method of resolving disputes, arbitration manages to have recognition and
implementation in both local and international society. Although it is said that
resolving disputes in arbitration proceedings is the same as resolving disputes in
regular courts, which puts into dilemma the conditions that must be met to begin
resolving an issue in arbitration proceedings. One of these conditions is the
arbitration agreement itself, which the parties themselves must establish an
agreement to resolve their disputed issue through arbitration proceedings. Such a
thing does not happen in the procedures conducted in the regular state courts,
since in order to initiate the contentious issue in the regular court, only the
plaintiff is enough to initiate the lawsuit and have a legal interest regarding the
object of the lawsuit. The Arbitration Agreement is of special importance to the
Arbitration Courts, which in case the parties are not created cannot resolve the
issue in the arbitration procedure, since the parties themselves are the ones who
with their agreement determine the essential elements of the arbitration procedure
as well as themselves, the development of the case in arbitration proceedings.

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 Analysis
Considering that the arbitration agreement is the essential clause of the
development of the progress of a pre-arbitration procedure, it therefore began to
address in more detail the importance of the arbitration agreement. For civil
disputes, specifically from commercial law, it was a step towards the
development of the Courts and the Laws on Arbitration, on which always lies the
agreement that the parties create among themselves to find solutions to their
dispute through arbitration.

Now talking about the arbitration agreement, the parties from the beginning of
the main contract must announce that in case of dispute over the object of the
main contract to enter into a second contract which contains the arbitration
agreement, which says that in case of any dispute over this contract must be
resolved through the arbitral tribunal. However, during the whole procedure, the
parties to the agreement must take into account whether that agreement is valid,
since if the agreement is considered invalid, then the arbitral award will be
invalid. Regarding the invalidity of the agreement and the cases when an
agreement can be considered invalid will be addressed in this paper.

INDEX

4
INTRODUCTION
We often hear a plethora of complaints by the petitioners or the plaintiff
of a particular case. The legal fees charged were exorbitantly high, the
dispute was resolved after a number of hearings, or that the verdict did
not provide them with the appropriate remedy. But with the advent of
alternative dispute resolution, we can observe a significant decrease in
such complaints. Arbitration can especially be seen as a recent trend in
commercial contracts and disputes. The term arbitration in very lucid
terms means the disputes of the parties with one another, gets referred
to a neutral party where this neutral party solves the disputes. Arbitration
is a form of alternative dispute resolution, where the settlement of the
5
dispute takes place outside the Courtrooms. This third party who solves
the dispute is known as an arbitrator. His decisions regarding the dispute
are always binding upon the parties. It is an adequate way to save time
and resources. This method of settlement outside the court is governed
by an Act called, “The Arbitration and Conciliation Act, 1966”. This Act
saves the parties from the hassle of spending years in the Courts and
saves them a lot of time and money, which otherwise would have been a
lot to invest. Arbitration is a quasi-judicial process and the parties are
referred to a domestic tribunal. The formation of an arbitration
agreement takes place when two parties, enter into a contract and in
which, the contract states that any dispute arising between the parties
have to be solved without going to the courts with the assistance of a
person, who would be a neutral person, a third party, appointed by both
of the parties, known as the Arbitrator, who would act as a judge. The
arbitrator so appointed should have been previously mentioned in the
contract that they made. They should also state who should select the
arbitrator, regarding the kind of dispute the arbitrator should give
decisions on, the place where the arbitration would take place.
Furthermore, they should also state the other kinds of procedures
mentioned or that has to be required during an arbitration agreement.

RESEARCH QUESTIONS
 Who can enter into Arbitration Agreement?
 In which cases is an arbitration agreement
considered to be invalid?
 Reference to Arbitration?
 Intrim measures by court
 Advantages of Arbitration
 Significance of Arbitration
 Difference between Arbitration and Conciliation

6
ABOUT ARBITRATION AGREEMENT
As per Section 7 of The Arbitration and Conciliation Act, 1996, an
“arbitration agreement” means a promise by parties to settle any
disputes between them about a specific legal relationship using
arbitration. This applies whether the disputes are mentioned in a contract
or not. This type of agreement is also called a submission agreement.

An arbitration agreement is a legal contract made by two or more parties.

It states that if any disagreements or conflicts arise between them, they
will use arbitration to solve the issues instead of going to court. This is an
agreement where all parties decide to present their disagreements to an
arbitrator or an arbitration panel. These arbiters will make a final and
binding decision based on the facts and arguments from both sides.

7
Arbitration is a consensual dispute resolution process based on the
parties' agreement to submit their disputes for resolution to an arbitral
tribunal usually composed, of one or three independent arbitrators
appointed by or on behalf of the parties.

An arbitration is conducted in accordance with the terms of the parties'

arbitration agreement which are often found in the provisions of a
commercial contract or applicable investment treaty.

Arbitration is known for its procedural flexibility, which allows parties to

engage in an efficient, confidential and fair process leading to a final,
binding and enforceable award.

Arbitration awards are enforceable in over 150 countries around the

world due to the application of the New York Convention on the
Recognition and Enforcement of Foreign Arbitral Awards (the New York
Convention)

Usually, an arbitration agreement explains the terms for taking disputes

to arbitration. It might cover things like the types of disputes that can be
addressed, the rules for the arbitration process, how the arbitrator(s) will
be chosen, where the arbitration will happen and any other important
things the parties agree on.

Essentials of an Arbitration Agreement

 There must be a dispute that should take place, only then the
agreement will be valid. The presence of a dispute amongst the
parties is an essential condition for the contract to take place.
When the parties have already settled the dispute, in no case,
they can invoke the arbitration clause to refute the settlement.
 Another essential is the written agreement. An agreement related
to the arbitration must always be in writing. An arbitration
agreement will be considered as a written agreement when:

1. It has been signed by both parties and it is in the form

of a document.
8
 2. It can be the exchange of the telex, the letters, the
telegrams, or any other means of communication which
provides the record of the exchange and the agreement
for arbitration.
3. There must be an exchange of statements between the
parties that gives the statement of claim and defence in
which the existence of the agreement of the arbitration
is agreed by one of the parties and which is not defined
by the other party.
 The third essential intention. The intention of the parties while
forming the contract is of utmost importance and it forms the
basis of the agreement. There have been no prerequisite citations
of terms such as an “arbitrator” or “arbitration” to be imade in the
agreement. Therefore, it is necessary to note that the intention of
both parties plays a very important role in such an agreement.
However, one must keep in mind that even if the words have not
been mentioned, the intention must show that both the parties
have agreed to come to the terms with the Arbitration
Agreement.
 The fourth essential element is the signature of the parties. The
signature of the parties is an essential element to constitute an
arbitration agreement. The signature can be in the form of a
document signed by both the parties to the contract which
comprises all the terms and conditions, or it can also be in the
form of a document which is signed by only one party to the
contract which contains the terms and acceptance by the other
party to the contract. It will be sufficient if one party puts up a
signature in the agreement and the other party accepts that.
TYPES OF ARBITRATION
Unlike civil or criminal cases, a dispute is sent to the arbitration tribunal.
The tribunal resolves the dispute and the final decision cannot be
appealed, making it binding on both parties. No judicial proceedings are
involved to ensure the swift resolution of the disputes. The following are
the different types of arbitration as per the jurisdiction of the case:

Domestic Arbitration

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In domestic arbitration, both the parties must be Indians and the
proceedings take place in India itself. In the Arbitration and Conciliation
Act, 1996 there is no specific definition given to domestic arbitration. A
mere reading of Section 2(2) can lead us to infer that domestic
arbitration is when the parties had agreed to resolve any disputes that
arise in India. The proceedings must be held in the domestic territory and
must be in lieu of the procedural and substantive law in India.

International Arbitration
As the name suggests, international arbitration occurs outside the
domestic territory because of either a clause inserted in the agreement
between the parties or the cause of action that arises from a foreign
element relating to the dispute or to the parties. According to the
circumstances that led to a case being filed foreign or Indian law would
be applicable.

International commercial arbitration

According to Section 2(1)(f), international commercial arbitration can be
understood as arbitration that takes place because of a dispute arising
from a commercial contract where either one of the parties resides in a
foreign country or is a foreign national; or the core management
committee of an association, company or a body of individuals is
controlled by foreign individuals.

Under Indian law, the involvement of a foreign party would attract Part I
of the Act, that is, it would come under the purview of international
commercial arbitration. But it would be inapplicable in case the
international commercial arbitration takes place outside the territory of
India. By virtue of the 2015 Amendment Act, ‘company’ has been
removed from the ambit of ICA. The Supreme Court scrutinized the scope
of Section 2 (1) (f) (iii) wherein, even if a company is in foreign hands, it
would be considered as an Indian company as it was incorporated in
India. Therefore, companies that have Indian nationality and have been

10
registered in India would be excluded from the ambit of foreign body
corporate, regardless of the fact that the company is in foreign hands. 1

On the basis of the established procedure and rules, there are

further three types of arbitration that have been recognized in
India:

Ad-hoc Arbitration
Ad-hoc arbitration refers to when parties with mutual consent opt for
arbitration to resolve the dispute. It is the most common form of
arbitration used in India owing to reasonable costs and adequate
infrastructure. Arbitration is conducted without having any institutional
proceedings, that is, it does not comply with the rules of an arbitral
institution. The parties have the option to choose the rules and the
procedure to be followed. This form of arbitration can be used for
international commercial transactions and domestic disputes. The
jurisdiction is of utmost importance since a majority of the issues are
resolved in conformity with the applicable law in respect to the seat of
arbitration. An example of the same would be if the parties have agreed
to keep the seat in India, the dispute would be resolved in lieu of the
provisions of the Arbitration and Conciliation Act. The Act also
provides that the arbitral tribunal or the parties can determine whether to
receive assistance from an appropriate institution or individuals. In case
the parties are unable to reach a consensus on the number of arbitrators,
one arbitrator would be part of the tribunal after being appointed by the
Chief Justice of a Supreme Court or the Chief Justice of a High Court.

Fast track Arbitration

Fast track arbitration can be seen as an effective solution to solving the
problems faced because of delays and time-consuming proceedings in
other forms of arbitration. It does not involve any procedure that takes
time and upholds the main objective or arbitration, that is, to resolve a
dispute in a short period of time. In the provision of the Act, fast-track
arbitration is given a stipulated time period of six months. The arbitrator
only makes use of the written submission and unlike other forms of
arbitration, one sole arbitrator is sufficient to resolve the dispute.

1
TDM Infrastructure Pvt. Ltd. v. UE Development India Pvt. Ltd., AIR 2008
11
Institutional Arbitration
In Institutional Arbitration, the parties are free to choose a particular
arbitral institution in the arbitration agreement itself. The institution’s
governing body or the parties can appoint one or more arbitrators from a
panel of arbitrators that had been previously agreed upon. Part I of the
Act gives parties the freedom to appoint an arbitrator to deal with a
specific issue.

The institution selects one or more arbitrators who possess the skills and
experience stipulated applicable in a given case when the parties do not
appoint an arbitrator themselves. On the other hand, if the parties
choose to appoint one themselves they can choose from the list provided
by the institution.

It is mainly used by business organizations worldwide owing to a specific

procedure being deployed as well as an efficient dispute resolution
procedure provided by the institutions. A few prominent arbitration
centres are the Chartered Institute of Arbitrators UK, the London Court of
International Arbitration, the National Arbitration Forum USA, Singapore
International Arbitration Centre, and the International Court of Paris.

In a case, the parties had agreed to resolve any dispute arising from the
agreement via institutional arbitration. The Supreme Court assessed the
validity of the agreement and whether the absence of a specific
institution would make the agreement invalid. It was held that the parties
had expressly desired to settle the disputes through institutional
arbitration, making the agreement between them valid. 2

 Who Can Enter into an Arbitration

Agreement?
The rules for who can make an arbitration agreement are the same as for
any regular contract. If someone isn’t capable, the agreement won’t
count.

2
M/S Nandan Biomatrix Limited vs D 1 Oils Limited, AIR 2009
12
Just like with other contracts, only people who are capable of making
contracts in the first place can enter into an arbitration agreement. For
an agreement to be valid, the people involved need to be legally able to
make contracts. If they’re not able, the law says the agreement is no
good.

According to the law, these kinds of people can make an arbitration

agreement:

 Adults (as defined in Section 3 of the Indian Majority Act, 1875).

 People who are mentally sound (as defined in Section 12 of the
Indian Contract Act, 1872).
 Anyone who isn’t disqualified by the law.
Both parties involved in the contract need to give their written agreement
to enter into the contract. This is usually done by signing the arbitration
agreement. The signature must be given willingly, without any unfair
pressure.

 Competent to Contract
As per Sections 11 and 12 of the Indian Contract Act, the following
people are competent to contracts:

 Anyone who’s reached majority: Section 11 states that anyone

who’s 18 years old or older can make a contract.
 People who are mentally well: Section 12 says that people who
are mentally healthy can make contracts. If someone is mentally
unwell when they’re making the contract, they can’t make a
contract.
 People who aren’t banned by the law: According to Section 11,
anyone not prohibited by the law can make a contract.

 IN WHAT CASES AN ARBITRATION

AGREEMENT CONSIDERED TO BE
INVALID?
An arbitration agreement shall be invalid in the following circumstances:

o Disputes that arise in a field beyond the jurisdiction of the

arbitration institution;

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 o The parties to the arbitration agreement do not have
competence in accordance with the law;
o The parties to the arbitration agreement do not have civil
capacity to act in accordance with the Civil Code;
o The form of the arbitration agreement is not in compliance with
Article 16 of the 2010 Law on Commercial Arbitration;
o A party is deceived, intimidated, or coerced during the
execution of the arbitration agreement and requests a
declaration that such arbitration agreement is invalid; and
o The arbitration agreement violates prohibitions specified by the
law.

 Reference to Arbitration Clause

Section 7 defines an Arbitration Agreement wherein parties agree to
submit all/any of disputes whether contractual or not in a
written format for purposes of evidence, in same or separate Agreement
intended to apply to main contract. Section 8 states reference to
Arbitration by a Judicial Authority before which matter is brought that is
originally covered under Arbitration. Either Party to the Arbitration
Agreement or claiming under him, upto submission of 1st statement on
substance of dispute proves existence of a valid Arbitration
Agreement. Judicial Authority on being satisfied of such presence of
Agreement on same subject is bound to send the other party for
Arbitration. Arbitration may be initiated, continue and Award passed even
while such application is pending before Judicial Authority.

It is to be noted that the language of Section 8 is mandatory after

fulfilling conditions prescribed. It diverges from Model Law, Geneva
Convention and New York Convention as Judicial Authority instead of
Courts is used and that merit-based analysis of legality is not provided to
any Judicial Body. Words “Prima Facie” indicate that not to delve into a
detailed examination of Arbitration Agreement or Clause, rather observe
its sufficiency to refer to Arbitration. As clearly mentioned, reference of
disputes whether contractual or not can be made, i.e. not limited solely
to commercial ones but be extended to certain civil disputes as
well. Arbitration Agreement, in essence, being a contract has to impliedly
comply with capacity and validity preconditions of the Indian Contract
Act. Locus Standi requirement has been a bit relaxed and that a non-

14
signatory can also be a party in Arbitration Proceedings, provided proves
himself to be a necessary and proper party.

Case Laws on Section 7

1. In M.R. Engineers and Contractors Pvt. Ltd. v. Som Datt
Builders Ltd, a general reference in a sub-contract between
contractor and a sub-contractor to an Arbitration Clause
incorporated by reference in a main contract between contractor
and PWD was not allowed since reference to Arbitration shall
always be in precisely unequivocal terms, unless it is some sort of
Standard Form of Contract whose terms are generally understood
by members of Trade or any Regulatory Institution and hence a
general reference shall also suffice.3
2. Inox Wind Limited v. Thermocables Limited further added a
wide scope to earlier mentioned standard clause exception, when
it held that even if 1 party which need not be a Trade or
Regulatory Institution, using Standard Form of Contract, forming
part of a single contract shall suffice for a general reference to
Arbitration. It diluted prudent classification that members of Trade
or Regulatory Body are aware of standard terms which might not
be the case for any other ordinary individual. Hence binding any
person who might not be aware of standard terms by general
reference to any Organization’s Standard Reference altogether
has a different impact.4
3. Subsequent Cases upholding the MR Engineers Case but reflecting
subtle differences wherein an unsigned Bill of Lading mandating
Arbitration under its Standard Printed Terms was made binding on
parties. Contrasting viewpoints highlighted when a Draft
Agreement mentioning Arbitration are attached at time of inviting
bids and thereafter focus is on Acceptance /Approval Letter
issuance to make it a binding contract , in order to make
Arbitration compulsory.
4. In GIRIRAJ v COAL INDIA5, Reference to Arbitration as per
previous terms and conditions regarding any dispute for coal
allocation via single e window was considered binding as and
when Petitioner entered into contract to lift coal after depositing

3
M.R. Engineers and Contractors Pvt. Ltd. v. Som Datt Builders Ltd AIR2009
4
Inox Wind Limited v. Thermocables Limited AIR 2018
5
GIRIRAJ v COAL INDIA AIR 2019
15
 earnest money. Relying on MR Engineers, Inox Cables and Habas
Sanai Case, it fairly distinguished 1 from 2 contract case.

 Interim relief Under Arbitration:

Under the Arbitration Act, 1940, a party could commence proceedings in
a Court by moving an application under Section 20 for appointment of an
arbitrator and simultaneously it could move an application for interim
relief under the Second Schedule read with Section 41(b) of the old Act.
Under the New Act 1996, Section 9 empowers the court to order a party
to take interim measure or protection when an application is made.
Besides this Section 17 gives power to the Arbitral Tribunal to order
interim measures unless the agreement prohibits such power.

 Interim relief under section 9

A plain reading of the section 9 indicates that a party may before or
during the arbitral proceedings or at any time after making of the arbitral
award but before it is enforced in accordance with Section 36, may apply,
to the court for interim measure of protection. Prayers for interim
measures of protection may include:
– Appointment of a guardian for a minor or person of unsound mind

– Preservation or interim custody or sale of goods, if goods are of

perishable nature
– Securing the amount of claims
– Allowing inspection or interim injunction or appointment of receiver
– Any other relief’s as the court may in its discretion may deem proper
considering the circumstances of the case.

 Interim relief under section 17

Let us now examine the powers of Arbitral Tribunal u/s 17. If the
arbitration agreement does not prohibit, Arbitral Tribunal at the request
of a party, may order the other party to take such interim measures of
16
protection as it may deem necessary in respect of subject matter of
dispute. In the process, it can order for providing appropriate security in
exercise of its power. This power also has to be exercised within the
terms of reference or arbitration agreement. It is very strange that
Section 17 although permits Arbitral tribunal to pass interim order, it
does not give any power to Tribunal to enforce its order. Also there is no
section in the new Arbitration Act which ensures enforcement of interim
orders passed by the Tribunal or to treat interim order as an enforceable
decree like that of final award. In other words, the power of the tribunal
is limited and any interim award necessarily has to merge with the final
award for attaining enforceability.
In UNCITRAL model law similar power is given to arbitral tribunal under
Article 16 and 21 of Arbitration Rules.

 Section 9 and Section 17:

Supreme court of India observed that even under S. 17 of the 1996
Act the power of the Arbitrator is a limited one. It cannot issue any
direction which would go beyond the reference or the arbitration
agreement. Even under S. 17 of 1996 Act, an interim order must relate
to the prot, ection of subject-matter of dispute and the order may be
addressed only to a party to the arbitration. It cannot be addressed to
other parties. Even under S. 17 of the 1996 Act, no power is conferred
upon the Arbitral Tribunal to enforce its order nor does it provide for
judicial enforcement thereof.6

 Difference between Arbitration and

Conciliation
On the basis of Definition:
ARBITRATION
A method of dispute resolution where a neutral third party makes a
legally binding decision after considering the arguments of both
parties.

CONCILIATION

6
M D Army WHO Vs Sumangal services (p) Ltd reported in AIR 2004 SC 1344
17
A method of dispute resolution where a neutral third party facilitates
negotiations between the parties to help them reach a mutually
acceptable solution

Role of the Third Party

ARBITRATION
The arbitrator acts as a decision-maker and renders a final and
binding decision.

CONCILIATION
The conciliator acts as a mediator and facilitates talks between the
parties but does not make a final decision

Legal Binding
ARBITRATION
The decision reached by the arbitrator is legally binding and
enforceable by law.

CONCILIATION
The agreement reached through conciliation is not legally binding
unless the parties voluntarily decide to formalize it into a contract.

Process Control
ARBITRATION
The parties have limited control over the arbitration process as the
arbitrator determines the rules and procedures.

CONCILIATION
The parties have more control over the conciliation process as they
actively participate in negotiations and decide the outcome.

Adversarial Nature
ARBITRATION
Arbitration is typically an adversarial process where the parties
present their case to the arbitrator.

CONCILIATION
Conciliation is more collaborative, focusing on finding common
ground and resolving disputes amicably.
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 Speed
ARBITRATION
Arbitration can be relatively quicker than litigation but may take
several months or years

CONCILIATION
Conciliation can be quicker as it fosters direct communication
between the parties to resolve efficiently.

Applicability
ARBITRATION
Applicable in commercial disputes, construction contracts, labor
disputes, and international matters.

CONCILIATION
Applicable in family disputes, community conflicts, and interpersonal
conflicts.

Role of Legal Representation

ARBITRATION
Parties in arbitration can have legal representation to present their
case.

CONCILIATION
Parties in conciliation may or may not have legal representation

19
Important Judgments on Arbitration by Indian Courts
[January – June 2023]

Section 8
 Whether the non-signatory defendants be referred to arbitration under Section 8 of the A&C
Act?
Town Essentials Pvt Ltd v. Daily Ninja Delivery Services Pvt Ltd7
The Karnataka High Court held that non-signatory defendants cannot be compelled to participate in
arbitration under Section 8 of the A&C Act. The Court stated that if there is an arbitration agreement
between the plaintiff and one defendant, but the remaining defendants are not party to that agreement, the
Court will not entertain an application under Section 8. In cases where the cause of action cannot be
bifurcated, dividing the proceedings to allow arbitration for some defendants and a suit for others would lead
to multiple proceedings, delays, increased costs, and conflicting judgments. Therefore, the only viable
option in such situations is to proceed with the lawsuit against all defendants.

Section 9
 Whether a Third-Party Funder can be made liable for payment of Adverse Award?
Tomorrow Sales Agency v. SBS Holdings8
The Delhi High Court held that a funder cannot be held responsible for an arbitral award and thus is not
obligated to provide security for its enforcement. It further emphasized that the funder should not be
7
Town Essentials Pvt Ltd v. Daily Ninja Delivery Services Pvt Ltd 2023
8
Tomorrow Sales Agency v. SBS Holdings 2023
20
subjected to liability for something it neither assumed nor had knowledge of. The Court held that a third-
party funder, that is, a non-signatory to arbitration agreement, who is not a party to the arbitral proceedings
or the award, cannot be held liable for the awarded amount merely because it has funded a party in arbitral
proceedings.

Section 11
 Whether an arbitration agreement contained in an unstamped agreement can be acted upon?
N.N. Global Mercantile Pvt. Ltd v. Indo Unique Flame Ltd9
The Supreme Court ruled that an unstamped instrument without the required stamp duty is not legally
enforceable. If such an instrument with an arbitration clause is presented in a Section 11 petition under the
A&C Act, the Court must seize it. Only after impounding the instrument, ensuring payment of stamp duty,
and obtaining the endorsement under Section 42 of the Stamp Act can the Court proceed with the petition.
Without proper stamping, the arbitration agreement within the unstamped instrument has no legal validity.

Referring to Sections 2(h) and 2(g) of the Contract Act and Sections 33 and 35 of the Stamp Act, the Court
concluded that an unstamped agreement lacks legal enforceability and cannot be used as evidence in court or
before a public authority. Until properly stamped in accordance with the Stamp Act, an agreement without
the necessary stamp or insufficient stamping is considered void and non-existent in legal terms.

 Whether the illegality of the appointment procedure would make the entire arbitration clause
invalid?
Sunil Kumar Jindal v. Union of India10
The Bombay High Court held that the illegality of the appointment procedure does not invalidate the entire
arbitration agreement. If an arbitration clause is partially invalid, the Court can remove the illegal portion
while preserving the valid portion if the intention to arbitrate is clear.

 Whether negotiations between the parties would postpone for cause of action for the purpose
of limitation?
B&T AG v. Ministry of Defence11
The Supreme Court held that the three-year limitation period for filing a Section 11 application starts from
the date the cause of action initially arose. Subsequent negotiations between the parties will not delay the
cause of action for the purpose of calculating the limitation period.

In situations where parties engage in serious negotiations to amicably settle the dispute, the Court must
determine the “breaking point” when such efforts would have been abandoned. However, to calculate the
limitation period, the entire history of negotiation must be presented and recorded for the Court to determine
the “breaking point.”

 Whether the period of limitation for invoking arbitration can be restricted to a period lesser
than that provided under the Limitation Act?
Municipal Corporation of Delhi v. Natraj Construction Company12
The Delhi High Court held that the period of limitation for invoking arbitration cannot be restricted to a
lesser period than the one provided under the Limitation Act. It further held that any agreement/clause
between the parties providing for a lesser limitation period would be hit by Section 28(2) of the Indian
Contract Act, and would therefore be invalid.

 Whether a High Court is competent to review an order passed under section 11 of the Act?

9
N.N. Global Mercantile Pvt. Ltd v. Indo Unique Flame Ltd 2023
10
Sunil Kumar Jindal v. Union of India 2023
11
B&T AG v. Ministry of Defence 2023
12
Municipal Corporation of Delhi v. Natraj Construction Company 2023
21
 Sarada Construction v. Bhupendra Pramanik13
The Calcutta High Court held that the power to review is a not an inherent power but rather has to be
established by a statute. The Court held that the Arbitration & Conciliation Act, 1996 is a complete code
which means that power to entertain a review petition has not been conferred upon the High Court under
Section 11 or under any other provision of the Act. Furthermore, the review petition before the High Court is
not maintainable under Section 11 of the Arbitration & Conciliation Act, given that the grounds for review
under Order XLVII Rule 1 of the Civil Procedure Code, 1908 do not stand fulfilled in the instant case.

 Whether the period of 12 months under Section 29A of the A&C Act is also applicable to
International Commercial Arbitration?
TATA Sons Pvt Ltd v. Siva Industries & Holdings Ltd14
The Supreme Court held that the time limit of 12 months provided under Section 29A for making an award
is only applicable to domestic arbitrations and does not apply to International Commercial Arbitrations. The
Court further held that in terms of the proviso to Section 29A(1), the 12 months for making an award from
the date of completion of pleadings is not a mandatory requirement.
Section 31

 Whether the order of the tribunal rejecting an application for impleadment constitutes an
‘interim award’?
Goyal MG Gases Pvt Ltd v. Panama Infrastructure Developers15
According to the Delhi High Court, the decision of the Arbitral Tribunal to reject an application for the
impleadment of parties in the arbitral proceedings does not qualify as an “interim award” under the A&C
Act. This is because such a decision does not address any substantive legal issue or delve into the merits of
the case, more so when the party sought to be impleaded was neither a proper nor the necessary party.

Section 34
 Whether the delay in delivering the award after it has been reserved makes it susceptible to
challenge under Section 34 of the Act?
Department of Transport, GNCTD v. Star Bus Services Pvt Ltd16
The Delhi High Court recently ruled that a significant and unexplained delay of 18 months in delivering an
arbitral award after the conclusion of the hearing can lead to a challenge under Section 34(2)(b)(ii) of the
Act based on conflict with India’s public policy. The Court stated that such delays undermine the
effectiveness of arbitration as a speedy dispute resolution mechanism. The longer the delay, the more it
impacts the quality of the award due to fading memories of the arbitrator.

 Whether power under Section 34(4) of the A&C Act can be exercised to consider new material
evidence?
Inox Air Products v. Air Liquide North India17
The Delhi High Court held that Section 34(4) of the A&C Act cannot be used to allow an arbitral tribunal to
reconsider previously overlooked material evidence. The Court clarified that this provision only permits
addressing gaps in reasoning or other curable defects. The Court determined that the failure to consider
material evidence is not considered a curable defect and therefore does not fall within the scope of Section
34(4). Allowing the tribunal to consider new evidence could potentially alter the outcome, which exceeds
the tribunal’s powers as it cannot reverse its decision. The Court emphasized that reconsidering overlooked
evidence would be akin to a remand, which is prohibited by law.

13
Sarada Construction v. Bhupendra Pramanik 2023
14
TATA Sons Pvt Ltd v. Siva Industries & Holdings Ltd 2023
15
Goyal MG Gases Pvt Ltd v. Panama Infrastructure Developers AIR 2023
16
Department of Transport, GNCTD v. Star Bus Services Pvt Ltd AIR 2023
17
Inox Air Products v. Air Liquide North India AIR 2023
22
 OVERALL LANDMARK JUDGMENTS ON
ARBITRATION

1. Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field

Ltd18

The Supreme Court held that the issue of limitation would be decided by an
arbitrator based on the doctrine of kompetenz-kompetenz established in
Section 16 of the Arbitration & Conciliation Act, 1996 (Arbitration Act) and the
legislative intent to restrict judicial intervention at pre- reference stage.
Additionally, it underlined that the Arbitration Act’s legislative objective is for
parties to be autonomous and for court intrusion in the arbitration process to
be kept to a minimum. It was noted that after an arbitrator has been chosen,
all disputes and objections must be resolved by the arbitrator in accordance
with the Arbitration Act’s rules. According to the Supreme Court, the question
of limitation is a jurisdictional one that should be resolved by the arbitrator in
accordance with Section 16 of the Arbitration Act, not the High Court at the
pre- reference stage as provided for in Section 11 of the Arbitration Act.
The Supreme Court pointed out that the arbitrator should resolve all disputes,
including those involving jurisdiction, once the arbitration agreement is not in
question.

2. National Highways Authority of India v. Sayedabad Tea Estate19

18
AIR 2018
19
AIR 2019 SCC ONLINE SC 1102
23
 The Supreme Court ruled that an application made under Section 11 of the
Arbitration & Conciliation Act, 1996 (Arbitration Act) cannot be accepted due to
the provision outlined in Section 3G(5) of the National Highways Act, 1956
(NH Act), which empowers the central government to appoint an arbitrator.The
Supreme Court noted that the use of the term “subject to” in Section 3G(5) of
the NH Act clearly indicates that the NH Act takes precedence over the
Arbitration Act specifically concerning matters related to land compensation
under the NH Act. It determined that since the authority to appoint an arbitrator
lies exclusively with the Central Government under Section 3G(5) of the NH
Act, which is a specialized legislation, an application filed under Section 11(6)
of the Arbitration Act for the appointment of an arbitrator is not permissible.
The provisions of the Arbitration Act cannot be invoked for this purpose.

3. Parsoli Motor Works v. BMW India Pvt Ltd20

The power to grant injunctive relief under Section 9 of the Arbitration and
Conciliation Act, 1996 (1996 Act) is subject to the provisions of the Specific
Relief Act. Injunctions that cannot be granted under Section 41 of the Specific
Relief Act, including those that would enforce a determinable contract or could
adequately be compensated with monetary damages at the final stage of
dispute resolution, cannot be granted under Section 9 of the 1996 Act either.
This ensures that injunctive relief in support of arbitration proceedings is
granted judiciously and aligns with the efficient and expeditious nature of
arbitration as a dispute resolution mechanism.

4. M/S NN Global Mercantile Pvt Ltd v. M/S Indo Unique Flame Ltd &
Others21

The power to grant injunctive relief under Section 9 of the Arbitration and
Conciliation Act, 1996 (1996 Act) is subject to the provisions of the Specific
Relief Act. Injunctions that cannot be granted under Section 41 of the Specific
Relief Act, including those that would enforce a determinable contract or could
adequately be compensated with monetary damages at the final stage of
dispute resolution, cannot be granted under Section 9 of the 1996 Act either.
This ensures that injunctive relief in support of arbitration proceedings is
granted judiciously and aligns with the efficient and expeditious nature of
arbitration as a dispute resolution mechanism.

20
AIR 2018
21
AIR 2021
24
 5. Government of Maharashtra v. Borse Brothers Engineers & Contractors
Pvt. Ltd22

The Supreme Court’s ruling clarified the application of the Commercial Courts
Act to appeals under Section 37 of the Arbitration Act, based on the specified
value. It also established the limitation periods under the Limitation Act for
appeals falling outside the Commercial Courts Act’s scope. The Court further
emphasized that delays in filing appeals should only be excused in exceptional
circumstances, requiring the party seeking an extension to demonstrate good
faith and the potential loss of equity and justice. These clarifications provide
guidance to parties involved in arbitration proceedings and promote the timely
and efficient resolution of disputes. The Court has offered essential
clarification on the limitation time for submitting appeals under Section 37 of
the Arbitration Act, as well as the condonation of delays in filing such appeals,
focusing on the underlying goal of quick resolution of disputes. The Court has
made comprehensive observations on the subject, taking into account the
relevant legal rules as well as the importance of adhering to deadlines,
particularly in business disputes. Furthermore, in keeping with the principle of
“equality before the law,” the Court has tried to put all parties participating in
commercial activity on an equal basis by adopting the same yardstick to
postpone condonation in instances involving public sector businesses. The
Supreme Court has made yet another commendable and forward-thinking
effort in the area of arbitration and commercial disputes.

22
AIR 2021
25
Conclusion
Arbitration Regime indeed is an efficacious mechanism saving time, costs
and speedy resolution can be made which unlike in Courts. Arbitration Act
did make a laudable attempt to develop itself as an attractive hub of
International Arbitrations, but still scope of improvement remains.
Reference was introduced for unambiguous intent of parties to opt
Arbitration. Yet it faces the daunting task of overcoming several other
hurdles.

UK Arbitration Law can be looked at for countering some drawbacks. First

and foremost, chain of precedents should be understood in a clear logical
context in order to avoid any insensible deviations which create further
complexities for the subsequent disputes, along with wastage of time and
resources. Confidentiality in certain matters to be provided as not
everything can be put on display for sake of transparency but prejudicial
to interest of either party. Administrative Assistance shall be within clear
contours so as to avoid possibility of unauthorized delegation despite with
the consent of parties; the Arbitral Secretary may lack the requisite skill
or expertise to preside over the matter. Certain Privileges can be granted
to Arbitrator while in his official capacity.

Judicial Intervention was carefully restricted so as to promote Arbitration

and Competence and Severability principle supplemented this objective
to provide Tribunal required Authority to serve underlying purpose. Such
small lacunas, if covered up shall strengthen the procedural and
substantive aspects, so as to make Arbitration successful in true sense,
to deal with novel complicated facts and ensure active participation of the
parties who themselves decide the outcome or settlement rather than
leaving it to any 3rd party as would have been in litigation.

26
BIBLIOGRAPHY / REFERENCE
The content of this project has been taken from the following sources:
Websites:
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%20agreement%20include%20a%20genuine%20dispute%2C%20a,help%20to%20define%20its%20validity.
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Journal=International+Journal+of+Reviews+and+Research+in+Social+Sciences%3BPID%3D2014-2-1-
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