Arbitration and Conciliation Law: From the Clause to the Award

Does my dispute have to go to arbitration?

Only if there is a written arbitration agreement and the dispute is one the law allows to be arbitrated. Section 7 of the Act requires the agreement to be in writing. It can be a clause in the main contract, a separate agreement, an exchange of letters or emails, or a reference in one contract to another document that contains an arbitration clause. A purely oral agreement to arbitrate does not count.

Most commercial and civil money disputes are arbitrable. Some kinds of dispute are not, because they affect rights against the world or are reserved for public forums by statute: criminal offences, divorce and custody, guardianship, insolvency and winding up, probate and succession certificates, and eviction or tenancy matters governed by rent control laws. Allegations of fraud can generally be arbitrated today unless they touch the public domain or make the arbitration agreement itself void.

Consumers are treated differently. A homebuyer or a consumer with a complaint against a service provider can usually still go to the consumer commission despite an arbitration clause in a builder-buyer agreement or standard form. If you are on that side of the table, look at our page on consumer and competition laws before you agree to arbitrate.

What should a good arbitration clause say?

A clause that just says 'disputes shall be referred to arbitration' is enforceable but invites a fight about everything else. A workable clause names the seat of arbitration (the legal home of the proceedings, which fixes the supervising court), the number of arbitrators, how they will be appointed, whether the arbitration is ad hoc or run by an institution under its rules, the language, and the law governing the contract.

The seat is the part people most often get wrong. Writing 'venue: Delhi' in one place and 'courts at Ghaziabad shall have jurisdiction' in another creates an argument that can take a year to settle before any claim is heard. The Supreme Court has held that designating a seat usually gives the courts of that place exclusive supervisory jurisdiction, so choose one place and say so clearly.

Appointment clauses also need care. Clauses that let one party alone name the sole arbitrator, often found in loan agreements and government contracts, have been struck down repeatedly (see the section on independence below). A neutral method, such as appointment by an institution or each side naming one arbitrator who together choose the presiding arbitrator, saves a court round later. We draft and vet these clauses as part of our work on commercial contracts and agreements.

Ad hoc or institutional arbitration: which suits your dispute?

In ad hoc arbitration the parties and the arbitrator run the process themselves. In institutional arbitration a centre administers it under published rules. Neither is always better.

How does an arbitration start? The notice under section 21

Arbitration begins on the date the other side receives a request to refer the dispute to arbitration, under section 21. In practice this is a notice invoking the arbitration clause, setting out the dispute and the claims in brief, and either proposing an arbitrator or calling on the other side to agree to one in line with the clause. Send it by a method that proves delivery: registered post, courier and email together.

The date matters because the Limitation Act applies to arbitrations (section 43). A money claim must be raised within three years of the cause of action, and for limitation purposes the claim is treated as made when the section 21 notice is received, not when the statement of claim is filed months later. People who negotiate for two years before thinking about arbitration sometimes find part of their claim time-barred.

The notice also fixes the scope of what follows. Claims left out of it are not always lost, but it is cleaner to list every head of claim, including interest and costs, and to reserve the right to add more. A careful notice often brings the other side to the table, because it shows the claimant has read the contract.

What if the other side refuses to appoint an arbitrator? Section 11

If the other party fails to appoint its arbitrator, or the parties cannot agree on a sole arbitrator, within 30 days of the request (or as the clause provides), you can apply under section 11. For domestic arbitrations the application goes to the High Court of the state concerned; for international commercial arbitrations it goes to the Supreme Court. The court is expected to decide it quickly, and the Act asks for disposal within 60 days of notice to the other side, though crowded lists can stretch that.

The court's examination at this stage is limited. Since the 2015 and 2019 amendments, it looks mainly at whether an arbitration agreement exists, and leaves most other objections, such as limitation, whether the claim is covered or whether it has been settled, to the arbitrator. A Constitution Bench held in December 2023 that an arbitration agreement in an unstamped or insufficiently stamped contract is not void, and stamp objections are dealt with later rather than blocking appointment.

A section 11 petition must itself be filed within three years of the date the right to apply arose, which is generally when the other side failed to act on your notice. Courts in Delhi often appoint an arbitrator from a panel and direct the arbitration to be conducted under an institution such as the Delhi International Arbitration Centre.

Can one party appoint the sole arbitrator? Independence under section 12

Not any longer, in most cases. Section 12 requires a prospective arbitrator to disclose in writing any circumstances that give rise to justifiable doubts about independence or impartiality, using the Sixth Schedule format. The Seventh Schedule lists relationships that make a person ineligible outright, such as being an employee, consultant or adviser of a party, or having a business relationship with it. That ineligibility can be waived only by an express written agreement made after the dispute arises.

The Supreme Court has held that a person who is ineligible to act as arbitrator also cannot nominate one, so a clause allowing the managing director of one party to appoint the sole arbitrator does not survive. In 2024 a Constitution Bench went further and held that clauses giving one side unilateral control over appointment in public-private contracts offend equal treatment. Banks, NBFCs and builders that still appoint arbitrators unilaterally are exposed to having the whole award set aside.

If you doubt an arbitrator's independence, you can challenge before the tribunal under section 13 within 15 days of learning the facts. For a Seventh Schedule ineligibility, the mandate ends by operation of law and the court can be approached under section 14 to declare it and appoint a substitute. Raise the objection early; taking part for months without protest weakens the argument.

I have been sued in court despite an arbitration clause. What now?

Apply under section 8 for the court to refer the parties to arbitration, and do it before or along with your first statement on the substance of the dispute, which usually means before filing a written statement on merits. Attach the original arbitration agreement or a certified copy. If the court finds, on a first look, that a valid arbitration agreement exists, it must refer the matter.

The commonest mistake is to file a full written statement, argue an interim application on merits, and only then mention the clause. By then the right to insist on arbitration may be treated as given up. If you need time, file the section 8 application first and ask for time on the rest.

A section 8 application does not stop the arbitration from starting or continuing while the court decides it, and an award can even be made in the meantime. On the other hand, if you want the court case to go on, perhaps because it is cheaper and you are confident on the merits, you can choose not to invoke the clause. Both sides can agree to litigate instead.

Urgent relief: section 9 from the court or section 17 from the tribunal?

Before the arbitral tribunal is constituted, go to the court under section 9. It can order preservation of goods, attachment or deposit of the amount in dispute, an injunction, appointment of a receiver or any other interim protection that is just and convenient. If the court grants relief before arbitration has started, the arbitration must begin within 90 days or such time as the court fixes, or the order can lapse.

Once the tribunal is in place, section 9(3) makes the court reluctant to entertain an application unless the remedy before the tribunal is not efficacious. Section 17 gives the tribunal the same range of interim powers as the court, and its orders are enforceable as if they were orders of the court. Institutional rules, including those of the Delhi International Arbitration Centre, provide for an emergency arbitrator, and the Supreme Court has held that an emergency arbitrator's order made under agreed rules can be enforced.

Courts are cautious about restraining a bank from paying out on an unconditional bank guarantee, such as a performance guarantee, and usually do so only for egregious fraud or irretrievable injustice. Interim relief is granted on the familiar tests of a prima facie case, balance of convenience and irreparable harm, and a party seeking deposit of money must show a real risk that the award will otherwise be frustrated.

The stages of an arbitration, from notice to award

A typical domestic commercial arbitration moves through these stages. Institutional rules add their own steps, such as fee deposits and case management conferences.

1. Notice and constitution

   The claimant sends the section 21 notice. Arbitrators are appointed under the clause, by agreement, by an institution or by the court under section 11, and each gives the written disclosure required by section 12.

2. Preliminary hearing

   The tribunal holds a first meeting, settles fees, the seat and venue, the language, how documents will be exchanged and a timetable. It records these in a procedural order that both sides sign off on.

3. Pleadings

   The claimant files a statement of claim with documents, the respondent files a defence and any counterclaim, and the claimant replies. Section 23(4) expects pleadings to be complete within six months of the arbitrators receiving notice of appointment.

4. Documents and evidence

   Parties admit or deny each other's documents, the tribunal frames issues, and witnesses give evidence by affidavit followed by cross-examination. Applications for disclosure or inspection are decided along the way.

5. Arguments and award

   Oral arguments are followed by written submissions. The tribunal then makes a reasoned, signed and dated award, deals with interest and costs, and sends a signed copy to each party, which starts the clock for any challenge.

Many arbitrations are shorter than this outline suggests. Where the facts are not seriously disputed, the parties can agree to a decision on documents and written submissions alone, or to the fast track procedure under section 29B, which aims for an award within six months.

How long does arbitration take? The section 29A time limit

For domestic arbitrations, section 29A requires the award within 12 months of completion of pleadings. The parties can extend this by consent by up to six months. After that, only the court can extend time, on sufficient cause, and it can impose conditions or reduce the arbitrator's fees if the delay is the tribunal's fault. If time runs out without an extension, the arbitrator's mandate ends, though the court can restore it or substitute an arbitrator.

In practice, a well-run domestic arbitration with cooperative parties often finishes within 18 months to two and a half years of the notice, counting the appointment stage. Arbitrations where one side files every possible application, changes counsel or seeks adjournments routinely take longer. The time limit is an important pressure point, and a party that wants the matter decided should keep an eye on it and apply for extension in good time.

International commercial arbitrations are outside the strict 12-month rule; the Act only asks that they be decided as quickly as possible, ideally within 12 months of the end of pleadings.

What does arbitration cost compared with going to court?

Arbitration is not cheap in the way people sometimes assume. In court the judge is paid by the state. In arbitration the parties pay the arbitrators, usually in equal shares, along with the venue, stenographer and any institutional fee. For ad hoc domestic arbitrations, the Fourth Schedule of the Act gives a model fee scale linked to the amount in dispute, and courts often direct its use when they appoint arbitrators. Institutions publish their own schedules.

What arbitration can save is time and the cost of years of adjournments. Hearings are fixed to suit the parties, sometimes in the evenings or on Saturdays, and an award is usually reached far sooner than a decree in a contested civil suit. Under section 31A, the tribunal can order the losing party to bear the costs, including legal fees, and it can award interest up to the date of the award and after it under section 31(7).

Our own fees are discussed at the first meeting and agreed in writing, stage by stage: the notice, any section 11 or section 9 application, pleadings, evidence and arguments. Arbitrator and institutional fees are separate and are paid directly.

Can an arbitral award be challenged? Section 34 grounds and time

Yes, but only on narrow grounds and only within time. An application to set aside an award under section 34 must be filed within three months of receiving the signed award, and the court can allow up to 30 more days for sufficient cause, but not a day beyond that. If a party asks the tribunal to correct or interpret the award under section 33, time runs from the tribunal's decision on that request.

The grounds are limited to incapacity of a party, an invalid arbitration agreement, lack of proper notice or inability to present one's case, an award beyond the scope of the reference, an improperly constituted tribunal or procedure contrary to the agreement, a subject matter that cannot be arbitrated, and conflict with the public policy of India. Public policy is confined to fraud or corruption, contravention of the fundamental policy of Indian law, and conflict with the most basic notions of morality or justice. For domestic awards there is one more ground, patent illegality appearing on the face of the award.

A section 34 court does not rehear the case or reappreciate evidence. An award is not set aside because the court would have read the contract differently. In 2025 a Constitution Bench of the Supreme Court recognised a limited power to modify an award, for example by severing an invalid part, correcting clerical or arithmetical errors or adjusting post-award interest, but courts still cannot rewrite the arbitrator's decision on merits.

Other sections of the 1996 Act you will hear about

Beyond the main stages above, these provisions come up regularly in hearings and in advice.

Enforcing an award: section 36 and execution

Once the time for a section 34 challenge has passed, or the challenge has been dismissed, the award is enforced under section 36 as if it were a decree of a civil court, through execution under the Code of Civil Procedure. The execution petition can be filed directly in any court where the award debtor has assets or bank accounts. You do not need to go back to the court that supervised the arbitration.

Filing a section 34 challenge does not automatically stop enforcement. Since the 2015 amendment, the award debtor must apply separately for a stay, and for money awards the court usually grants it only on deposit of the whole or a substantial part of the amount, or on furnishing adequate security. Where the award or the contract was induced by fraud or corruption, the court can stay the award unconditionally pending the challenge.

Execution tools are the same as for any decree: attachment of bank accounts and property, sale of attached property, appointment of a receiver, and examination of the debtor about assets. An award holder whose debtor is a company that is plainly unable to pay may also consider a petition before the NCLT under the Insolvency and Bankruptcy Code if the amount crosses the threshold, which we discuss on our page on bankruptcy and insolvency advice.

Conciliation under Part III, and the Mediation Act 2023

Conciliation is assisted negotiation. A neutral conciliator helps the parties reach their own settlement and has no power to impose one. Under Part III of the 1996 Act (sections 61 to 81), either party can invite the other to conciliate, the conciliator may make proposals for settlement, and a settlement agreement signed by the parties under section 73 has the same status and effect as an arbitral award on agreed terms (section 74). It can be enforced in the same way.

Two features make conciliation safer than informal talks. Admissions and proposals made during conciliation cannot be relied on in later arbitration or court proceedings (section 81), and unless the parties agree otherwise, the conciliator cannot later act as arbitrator or counsel in the same dispute (section 80). That lets people speak frankly about what they can accept.

The Mediation Act 2023 treats conciliation as a form of mediation and is designed to replace Part III. Some provisions of the Act, including those setting up the Mediation Council of India, have been notified; others are being brought into force in stages, so check the current position before relying on either regime. Under the new Act, mediation is to be completed within 120 days, extendable by 60 days by consent, and a signed mediated settlement agreement is enforceable like a court judgment, challengeable only on narrow grounds within 90 days.

Before you invoke arbitration: a checklist

Run through this before sending the notice. Each point has, at some stage, decided a case.

• Find the signed contract and every amendment, and read the dispute resolution clause in full, including any notice or negotiation steps it requires first.
• Identify the seat, the appointment method and whether the clause names an institution and its rules.
• Work out limitation: when the cause of action arose and whether any acknowledgement of debt or part payment extended it.
• Check whether any party has already started court or arbitral proceedings on the same contract.
• Prepare a chronology with references to letters, emails, invoices and payments.
• List each head of claim, with interest and costs, and estimate the amount in dispute, which affects fees and the supervising court.
• Consider whether interim protection is needed now, for example because the other side is moving assets or about to encash a bank guarantee.
• Decide whether a mediation or conciliation attempt first makes commercial sense, and whether the clause requires it.

Mistakes that cost parties their arbitration

• Taking part in a tainted appointment. Objecting at the start to an arbitrator appointed unilaterally or with a conflict is far easier than attacking the award later.
• Filing a defence on merits before a section 8 application. The right to insist on arbitration can be lost by conduct in the court case.
• Letting section 29A time lapse. If the 12 months and the agreed six months pass without a court extension, the mandate ends and the proceedings stall.
• Missing the section 34 deadline. Three months plus 30 days is an absolute limit. A challenge filed even a day late cannot be entertained.
• Assuming a section 34 petition stops execution. It does not. Without a stay order, the award holder can proceed against your assets.
• Pleading thinly and hoping to add evidence later. Arbitrators decide on what is pleaded and proved. Claims that were never pleaded are difficult to award.

How we work on arbitration and conciliation matters

Advocate B.K. Singh starts with the clause and the chronology. Before advising on merits, he wants to know whether there is a valid arbitration agreement, where the seat is, whether the appointment mechanism will survive, and whether the claim is within time, because each of those can end a case before the merits are reached. Advocate Sadhna Singh assembles the documents, prepares the chronology and the claim calculation, and keeps the client informed of each date.

We act for claimants and respondents in ad hoc and institutional arbitrations, in section 9, 11, 34 and 37 proceedings, in execution, and in conciliation and mediation. Where a commercial dispute has no arbitration clause, it goes to the commercial court instead; see our page on the commercial court in Delhi. For a matter in another state, we work with associate counsel there.

To discuss a dispute, send the contract and the key letters through our online enquiry page. You can read more about Advocate B.K. Singh and the other areas of practice we cover.