Here is what you should know about arbitration: appointment, interim relief and challenges to awards before you act or reply to anyone. Legals365 is the legal platform of Advocate B.K. Singh and associates, based in Delhi NCR.
In short. Arbitration is a private trial before an arbitrator chosen under a written arbitration agreement, governed by the Arbitration and Conciliation Act 1996. The court can appoint the arbitrator (s.11) and grant interim relief (s.9). The award must usually come within 12 months of pleadings closing (s.29A). It can be challenged only on limited grounds within 3 months plus up to 30 days (s.34), and is enforced like a decree (s.36).
Arbitration clauses sit quietly in loan agreements, supply contracts, logistics agreements, partnership deeds, construction contracts, franchise agreements and leases until the day a payment stops. Then the clause decides where the dispute will be heard, who will hear it, how fast, and what the courts can and cannot do about it. Many parties discover too late that they have agreed to a seat in another city, a sole arbitrator named by the other side, or a timetable they cannot meet.
This page explains arbitration under Indian law as it works in Delhi, Uttar Pradesh and elsewhere: the arbitration agreement, starting the case, getting the arbitrator appointed, interim relief from the court and the tribunal, how proceedings run, the time limits, challenging an award under section 34, and enforcing it. It also covers loan agreement and NBFC arbitrations, MSME claims and the questions that change with the industry and the city.
- Law
- Arbitration and Conciliation Act 1996 as amended in 2015, 2019 and 2021 (ss.7, 8, 9, 11, 12, 17, 21, 23, 29A, 31, 34, 36, 37, 43, Part II for foreign awards), Commercial Courts Act 2015 s.10, MSMED Act 2006 s.18, Limitation Act 1963
- Forum
- The arbitral tribunal; the High Court for appointment under s.11 (Supreme Court for international commercial arbitration); the principal civil court or commercial court of the seat, or a High Court with original jurisdiction, for ss.9, 34 and 36
- Time limit
- Statement of claim and defence within 6 months of the arbitrator's appointment (s.23(4)); award within 12 months of completion of pleadings, extendable by 6 months by consent and further by court (s.29A); s.34 challenge within 3 months plus up to 30 days
- Documents
- The contract with the arbitration clause, notice invoking arbitration and replies, invoices, ledgers, correspondence, and for a challenge, the signed award and the full arbitral record
What arbitration is and when it applies
Arbitration is a way of resolving a dispute outside the courts, before one or more arbitrators the parties have agreed on, whose award is binding and enforceable like a court decree. It applies only if there is an arbitration agreement: a clause in the contract or a separate written agreement to refer disputes to arbitration. Without that agreement, nobody can be forced into arbitration, except where a statute such as the MSMED Act provides for it.
The attraction is a single round of decision by a chosen decision-maker, private hearings, flexible procedure and limited court interference. The cost is that the parties pay the arbitrators and venue, appeals on the merits are almost unavailable, and a badly run arbitration can take as long as a suit. Arbitration suits commercial disputes over money, performance and contract terms. It is not available for disputes the law reserves for courts or special forums.
Disputes generally treated as not arbitrable include criminal offences, matrimonial and guardianship matters, insolvency and winding up, testamentary matters, rights in rem, tenancies protected by rent control laws, and claims that the law sends to special tribunals, such as bank and financial institution recoveries before the Debts Recovery Tribunal. A consumer may also choose the consumer commission despite an arbitration clause. Fraud allegations are arbitrable unless they are serious enough to affect the public domain or the arbitration agreement itself.
The key sections of the Arbitration and Conciliation Act 1996
Sections 7 and 8: the agreement and reference by a court
Section 7 requires the arbitration agreement to be in writing, which includes an exchange of letters, emails or other communications, or a reference in a contract to a document containing an arbitration clause. Under section 8, if a party to an arbitration agreement is sued in court, it can apply to have the dispute referred to arbitration, but it must do so no later than its first statement on the substance of the dispute, with the original or a certified copy of the agreement.
Sections 9 and 17: interim measures
Section 9 lets a party ask the court for interim measures before, during or after the arbitration but before enforcement of the award: preserving goods, securing the amount in dispute, injunctions, appointment of a receiver and similar orders. If the court grants relief before arbitration starts, arbitration must begin within 90 days (s.9(2)), and once the tribunal is constituted the court will not ordinarily entertain a section 9 application unless the tribunal's remedy would be ineffective (s.9(3)). Section 17 gives the tribunal the same powers, and its orders are enforceable as orders of the court.
Sections 11 and 12: appointment and independence
If the parties fail to appoint an arbitrator under their agreed procedure, section 11 lets a party apply to the High Court, or to the Supreme Court for an international commercial arbitration. At that stage the court examines mainly whether an arbitration agreement exists. Section 12 requires a prospective arbitrator to disclose circumstances that may raise doubts about independence, and section 12(5) with the Seventh Schedule makes certain people, such as employees or advisers of a party, ineligible unless both sides waive it in writing after the dispute has arisen.
Sections 21, 23, 29A and 31: the proceedings and the award
Arbitration begins on the date the respondent receives a request to refer the dispute to arbitration (s.21), which matters for limitation under section 43. Pleadings must be completed within six months of appointment (s.23(4)). The award must be made within twelve months of completion of pleadings, extendable by six months by consent; after that the mandate ends unless the court extends it (s.29A). The award must be reasoned unless the parties agree otherwise, and the tribunal can award interest and costs (ss.31, 31A).
Sections 34, 36 and 37: challenge, enforcement and appeal
An award can be set aside only on the grounds in section 34, on an application made within three months of receiving it, extendable by up to 30 days for sufficient cause but not beyond. Once that time has passed, or a challenge fails, the award is enforced under section 36 as if it were a decree. Filing a challenge does not automatically stay the award; the court may grant a stay on conditions, usually a deposit or security for a money award. Section 37 lists the orders that can be appealed, including orders setting aside or refusing to set aside an award.
The arbitration agreement: read it before anything else
Every arbitration starts with the clause. Read it for five things: what disputes it covers, how the arbitrator is to be appointed, the seat, whether institutional rules apply, and any steps that must happen first, such as negotiation or a notice period. The seat decides which courts supervise the arbitration and hear challenges; a clause that says the venue shall be Delhi is usually read as fixing Delhi as the seat unless something points the other way.
Stamp duty and signatures used to cause long delays. In December 2023 a seven-judge bench of the Supreme Court held that an unstamped or insufficiently stamped agreement containing an arbitration clause is not void or unenforceable on that account, and that stamping objections are for the arbitral tribunal, not the court at the appointment stage. A Constitution Bench has also accepted that companies in the same group that did not sign the agreement can, on the facts, be bound by it.
If the contract is still being negotiated, this is the time to fix the clause. Choose a neutral appointment mechanism, a seat convenient to you, an institution if the value justifies it, and a sole arbitrator for smaller disputes. Our page on commercial contracts explains how dispute clauses fit into the rest of the agreement.
Starting an arbitration: the notice under section 21
Arbitration starts with a written notice invoking the arbitration clause, served on the other party under section 21. The notice should identify the contract and clause, set out the dispute and claims briefly, and either propose an arbitrator or ask the other side to agree on one within the period the clause allows. It is often combined with, or follows, a demand notice; our page on legal notices covers the demand stage.
Limitation is the first thing to check. Under section 43, the Limitation Act applies to arbitration as it does to court proceedings, and the claim is treated as made on the date the section 21 notice is received. A money claim is usually barred three years after the cause of action. An application to the court for appointment of an arbitrator has its own limitation period, generally three years from the date the other party fails or refuses to appoint, so a notice sent and then forgotten can lose the right to an appointment.
If the clause provides for institutional arbitration, such as the Delhi International Arbitration Centre at the Delhi High Court or another institution, the case starts by filing a request with that institution under its rules. Institutions handle appointment, fees and timelines, which reduces the scope for one side to stall.
Appointment of the arbitrator under section 11
If the other side does not agree to an arbitrator within 30 days of a request, or fails to act under the agreed procedure, a party can apply under section 11. For a domestic arbitration the application goes to the High Court with jurisdiction: the Delhi High Court for a Delhi-seated arbitration, the Allahabad High Court for one seated in Ghaziabad, Noida, Lucknow or Prayagraj, the Punjab and Haryana High Court for Gurugram, and the Kerala High Court for Kochi. For an international commercial arbitration it goes to the Supreme Court. The court is expected to decide within 60 days of notice to the other side, and it looks mainly at whether a valid arbitration agreement exists, leaving other objections to the tribunal.
Unilateral appointment is the most litigated point. The Supreme Court has held that a person who is ineligible to act as arbitrator, such as a party's managing director, cannot appoint someone else either, and in November 2024 a Constitution Bench held that clauses allowing one party, particularly a public body, to unilaterally appoint a sole arbitrator or control the panel offend the principle of equal treatment, with that ruling applying to appointments made after the judgment. Where the clause lets one side choose alone, the other side can ask the court to appoint an independent arbitrator.
Before accepting, every arbitrator must give the written disclosure in the Sixth Schedule. Read it. A challenge to an arbitrator on grounds of bias is made first before the tribunal within 15 days of learning the facts (s.13), and if it fails, the point can be raised in a section 34 challenge to the award. Ineligibility under the Seventh Schedule goes to the root and can be raised before the court under section 14.
Interim relief under section 9 and section 17
Interim relief is often the most valuable part of an arbitration. A supplier that fears the buyer is moving assets, a lender afraid that a hypothecated vehicle will disappear, a franchisor whose former franchisee is still using its brand, or a contractor facing invocation of a performance guarantee will all want an order quickly. Before the tribunal is constituted, the application goes to the court under section 9; after that, ordinarily to the tribunal under section 17.
Courts apply the familiar tests: a prima facie case, balance of convenience and irreparable harm. For securing a money claim, they also look for a real risk that the respondent will defeat the award, in the spirit of Order 38 of the CPC, though the strict standards of attachment before judgment are applied more flexibly in arbitration. Injunctions against invocation of an unconditional bank guarantee are granted only in narrow cases such as egregious fraud or irretrievable injustice.
Where institutional rules provide for an emergency arbitrator, a party can get urgent relief before the full tribunal is formed. The Supreme Court has held that an emergency arbitrator's order in an India-seated arbitration is enforceable under section 17(2). Whatever the route, file promptly, disclose everything relevant, and be ready to start arbitration within 90 days if the court grants relief first.
How an arbitration runs from notice to award
The sequence is broadly the same in ad hoc and institutional arbitration.
Notice invoking arbitration
Serve a section 21 notice identifying the clause, the dispute and a proposed arbitrator. This date stops limitation for the claims stated.
Constitution of the tribunal
The parties agree on the arbitrator, the institution appoints, or the High Court appoints under section 11. The arbitrator gives the section 12 disclosure and accepts.
Preliminary meeting
The tribunal fixes the procedure, timetable, fees, venue, language and whether hearings will be physical, online or mixed. Interim relief applications are often taken up here.
Pleadings
The claimant files its statement of claim with documents, the respondent files its defence and any counterclaim, and replies follow, all within six months of appointment under section 23(4).
Evidence and hearing
Witnesses give evidence by affidavit and are cross-examined. Documents are admitted or proved, and the tribunal can seek court assistance for evidence under section 27. Final arguments follow, often with written submissions.
Award
The tribunal makes a signed, reasoned award within the section 29A period, with interest and costs. Each party gets a signed copy, and the time to challenge runs from receipt.
Challenge or enforcement
The losing party may file a section 34 challenge within the time limit and seek a stay; otherwise the winning party files for execution under section 36 where the assets are.
Arbitration time limits at a glance
| Stage | Time limit | Provision |
|---|---|---|
| Section 8 application in a court suit | Not later than the first statement on the substance of the dispute | Section 8 |
| Starting arbitration after court interim relief | Within 90 days of the section 9 order, or as the court fixes | Section 9(2) |
| Appointment by the parties before going to court | 30 days from a request, under the default procedure | Section 11(4), 11(5) |
| Court's decision on appointment | To be disposed of within 60 days of notice to the other party | Section 11(13) |
| Challenge to an arbitrator before the tribunal | 15 days from learning of the constitution or the grounds | Section 13(2) |
| Statement of claim and defence | Within 6 months of the arbitrator's appointment | Section 23(4) |
| Award | 12 months from completion of pleadings, plus 6 by consent, then by court | Section 29A |
| Fast track award | 6 months from the tribunal entering on reference, if parties opt | Section 29B |
| Challenge to the award | 3 months from receipt, plus up to 30 days for sufficient cause | Section 34(3) |
| Court's decision on a challenge | To be disposed of within one year of notice | Section 34(6) |
Challenging an arbitral award under section 34
Section 34 is not an appeal. The court does not re-examine the evidence or substitute its view of the facts or the contract. An award can be set aside only if a party was under incapacity, the agreement was invalid, a party was not given proper notice or was unable to present its case, the award deals with matters beyond the reference, the tribunal or procedure was not as agreed, the dispute is not arbitrable, or the award conflicts with the public policy of India. Public policy is now limited to fraud or corruption in the making of the award, contravention of the fundamental policy of Indian law, and conflict with the most basic notions of morality or justice.
For domestic arbitrations, an award can also be set aside for patent illegality appearing on its face, but not merely for an erroneous application of law or by reappreciating evidence. Awards that ignore the contract, rely on evidence never put to a party, or give no reasons on a central issue are the typical candidates. In 2025 a Constitution Bench held that courts have a limited power to modify an award under section 34: they can sever an invalid part, correct clerical or computational errors, and in some cases modify post-award interest, but cannot rewrite the award on merits.
The time limit is strict. The application must be filed within three months of receiving the signed award, and the court can extend this by only 30 days for sufficient cause; after that, no extension is possible. Before filing, a prior notice must be issued to the other party under section 34(5). A challenge does not stay the award by itself, so file a stay application at the same time, ready to offer security.
Enforcing an award and appeals
Once the challenge period ends without a challenge, or a challenge is dismissed and no stay is in place, the award holder files an execution petition under section 36 in the court where the judgment debtor's assets are, without needing to go back to the court of the seat. Execution proceeds under the CPC: attachment of bank accounts, receivables and property, arrest in limited cases, and sale. Where the debtor is a company that cannot pay, the award debt can also support insolvency proceedings; our page on insolvency under the IBC explains when that route makes sense.
When the award is under challenge, the court considers stay under section 36(3), usually on deposit of all or part of the awarded amount or security. Where the award was induced by fraud or corruption, the court can grant an unconditional stay. Appeals under section 37 lie against orders refusing reference under section 8, granting or refusing section 9 relief, and setting aside or refusing to set aside an award; the appeal goes to the court authorised to hear appeals from original decrees, which in Delhi is often a Division Bench of the Delhi High Court. A further challenge lies by special leave petition to the Supreme Court.
Foreign awards are enforced under Part II of the Act if made in a New York Convention country notified by India. The court can refuse enforcement only on the grounds in section 48, which are narrower than section 34.
Loan agreement and NBFC arbitrations
Many NBFC and vehicle finance agreements contain arbitration clauses, and lenders use them to obtain awards and repossess security. Borrowers often learn of the arbitration only when an award or an execution notice arrives. The questions to ask are whether notice was properly served at the borrower's correct address, whether the arbitrator was appointed unilaterally by the lender, whether the borrower had a fair chance to present its case, and whether the amount awarded follows the contract.
A unilaterally appointed arbitrator, or one connected to the lender, gives the borrower a strong ground under sections 12(5) and 34, and courts have set aside many such awards. A borrower who receives a notice early should reply, object to any one-sided appointment, and ask for an independent arbitrator, rather than staying silent. Banks and financial institutions recovering debts of 20 lakh rupees and above from borrowers usually go to the Debts Recovery Tribunal, and those claims are treated as non-arbitrable, so the forum depends on who the lender is.
In arbitration files that reach Advocate B.K. Singh's office from borrowers, the most common gap is not the merits but the record: the borrower has no copy of the agreement, did not keep the notices, and cannot say when the award was received. Since the section 34 clock runs from receipt, the first step is always to fix that date and collect the arbitral record from the tribunal.
MSME claims and statutory arbitration
A micro or small enterprise owed money for supplies or services can bypass the contract's arbitration clause and refer the dispute to the Micro and Small Enterprises Facilitation Council under section 18 of the MSMED Act. The Council first conciliates and then arbitrates or refers the matter to an institution. The Supreme Court has held that section 18 overrides a private arbitration agreement. A buyer challenging a Council award under section 34 must deposit 75% of the awarded amount (s.19).
Other statutes also provide for arbitration, for example under the National Highways Act for land acquisition compensation and under some co-operative society laws. These follow the 1996 Act subject to the special statute. For the conciliation stage before the Council and other settlement routes, see our page on mediation, conciliation and Lok Adalat.
How arbitration changes by industry and city
In construction and infrastructure disputes, claims usually cover delay, extra work, price escalation and withheld payments, and the contract often has a multi-tier clause with an engineer's decision or a dispute board before arbitration. Logistics and transport disputes often turn on freight, demurrage, lost or damaged cargo and limitation of liability clauses. Partnership and shareholder disputes may be arbitrable as to money and contract, while oppression and mismanagement claims go to the NCLT. Real estate developer agreements, joint development agreements and commercial leases also frequently go to arbitration, though homebuyers can choose RERA or the consumer commission.
The city matters because of the seat and the court. A Delhi-seated arbitration is supervised by the Delhi High Court or the Delhi commercial courts, depending on value; an arbitration seated in Ghaziabad, Noida or Prayagraj goes to the district commercial court or the Allahabad High Court for appointment; one seated in Kochi goes to the Kerala courts. Under section 2(1)(e), the court for sections 9 and 34 is the principal civil court of original jurisdiction in the district, or the High Court where it has ordinary original civil jurisdiction, and for commercial disputes the Commercial Courts Act sends the matter to the commercial court or Commercial Division. For the commercial court system generally, see our page on commercial litigation.
Example: a logistics claim and a one-sided clause
Here's a made-up example. A Ghaziabad logistics company carries goods for a Delhi manufacturer under a contract with an arbitration clause saying disputes will be decided by a sole arbitrator appointed by the manufacturer's managing director, seat at New Delhi. The manufacturer stops paying invoices of about 60 lakh rupees, alleging damaged consignments.
The logistics company sends a section 21 notice proposing three names of retired judges. The manufacturer replies by appointing its own regular legal adviser as sole arbitrator. The logistics company objects in writing and applies to the Delhi High Court under section 11, arguing that the appointment is invalid because the appointing authority is ineligible and the clause is one-sided. The court appoints an independent arbitrator.
Meanwhile the logistics company learns that the manufacturer is selling its warehouse. It files a section 9 application, and the court directs the manufacturer to furnish security for part of the claim. The arbitration then proceeds on the merits of the damage allegations, with an award due within twelve months of pleadings. Had the logistics company participated before the manufacturer's chosen arbitrator without objection, its later challenge would have been much weaker.
Documents for an arbitration
To start or respond
- The signed contract with the arbitration clause, and any amendments
- Purchase orders, work orders, invoices and delivery records
- Ledger or account statement and bank records of payments
- Correspondence, emails and messages about the dispute
- Notice invoking arbitration and the reply
For interim relief
- Evidence of urgency, such as sale notices, asset transfers or guarantee invocation
- Bank guarantees, hypothecation or security documents
- Company master data and recent financials of the other side, if available
For a challenge or enforcement
- Signed copy of the award and proof of the date of receipt
- Full arbitral record: pleadings, evidence, orders and transcripts
- Arbitrator's disclosure and any objections raised
- Details of the judgment debtor's assets for execution
Common mistakes and when not to arbitrate
The costly mistakes are procedural. Parties take part before a one-sided arbitrator without objecting and later try to challenge the award. They miss the section 34 deadline because nobody noted when the signed award arrived. They file a suit and then fail to move a section 8 application in time, losing the right to arbitrate, or they reply to the merits in court before raising the clause. They let the section 29A period expire without seeking extension. They obtain a section 9 order and forget to start arbitration within 90 days.
Arbitration is not always worth it. For a small claim with an arbitration clause, the cost of a three-member tribunal can exceed what is at stake; agree to a sole arbitrator or a fast track procedure under section 29B. Where the debtor is clearly insolvent, an award may be a piece of paper. Where the claim is really a cheque bounce, a criminal complaint under section 138 of the NI Act may run alongside. And where the dispute can be settled, mediation before or during the arbitration often saves months.
Cost, time and what to do this week
Costs in arbitration, in general terms, are the arbitrators' fees, institutional fees if any, venue and stenography, and lawyers' fees. Court-appointed arbitrators often follow the Fourth Schedule fee model, and institutions publish their own scales. The tribunal can order the losing party to pay costs under section 31A. A straightforward arbitration with a cooperative tribunal finishes within the section 29A period; contested appointments and challenges add months or years.
This week, find the signed contract and read the clause, note any dates of notices and awards, and check limitation. If you have received a notice appointing an arbitrator chosen by the other side, object in writing promptly. If you have received an award, write down the date you got it and start on the section 34 review at once, because the 30-day grace period after three months is the last.
If you want the papers checked before you act, the team of Advocate B.K. Singh at Legals365 can review them and tell you the next step through our talk to a lawyer page.
Frequently asked questions
How do I start arbitration in India?
Send a written notice under section 21 of the Arbitration and Conciliation Act invoking the arbitration clause, setting out the dispute and proposing an arbitrator. If the other side does not agree within 30 days or the agreed procedure fails, apply to the High Court under section 11. For institutional arbitration, file a request with the named institution.
What is the time limit to challenge an arbitration award?
Three months from the date you receive the signed award, under section 34(3). The court can extend this by up to 30 days if you show sufficient cause, but not beyond. Missing it usually ends any chance of challenge.
Can an arbitration award be appealed on merits?
No. A section 34 challenge is not an appeal, and the court does not reassess evidence or the contract. An award can be set aside only on limited grounds such as lack of notice, matters beyond the reference, non-arbitrability, conflict with public policy or, for domestic awards, patent illegality.
Is a unilateral appointment of arbitrator valid?
Generally not. The Supreme Court has held that a party or its ineligible officer cannot unilaterally appoint a sole arbitrator, and a 2024 Constitution Bench ruling reinforced equal treatment in appointments. The other side can ask the High Court to appoint an independent arbitrator, or challenge an award made by an ineligible one.
What is section 9 interim relief in arbitration?
Section 9 lets a party ask the court for interim orders such as securing the amount in dispute, preserving goods, injunctions or a receiver, before, during or after arbitration but before enforcement. If granted before arbitration starts, arbitration must begin within 90 days. After the tribunal is formed, relief is usually sought from the tribunal under section 17.
How long does arbitration take in India?
The award must be made within 12 months of completion of pleadings, extendable by 6 months by consent and further by the court, and pleadings themselves must finish within 6 months of appointment. A fast track arbitration under section 29B must finish within 6 months. Appointment disputes and court challenges add time.
Does filing a section 34 petition stay the award?
No. Since the 2015 amendment, a challenge does not automatically stay the award. You must apply for a stay under section 36(3), and for money awards the court usually requires a deposit or security. An unconditional stay is granted where the award was induced by fraud or corruption.
Where do I file a section 11 application in Ghaziabad or Noida?
A section 11 application for a domestic arbitration seated in Uttar Pradesh goes to the Allahabad High Court. For a Delhi-seated arbitration it goes to the Delhi High Court. The seat named in the clause, not where the parties live, usually decides this.
Can a bank loan dispute go to arbitration?
Claims by banks and financial institutions that fall within the Debts Recovery Tribunal's jurisdiction are treated as non-arbitrable. Many NBFC and vehicle loan agreements do provide for arbitration, but borrowers can object to one-sided appointments and challenge awards made without proper notice.
Is an unstamped arbitration agreement valid?
Yes for arbitration purposes. In December 2023 a seven-judge bench of the Supreme Court held that an unstamped or insufficiently stamped agreement is not void or unenforceable for that reason, and stamping objections are for the arbitral tribunal. Stamp duty and penalty may still have to be paid.
Can an MSME refer a dispute to the Facilitation Council despite an arbitration clause?
Yes. Section 18 of the MSMED Act overrides a private arbitration agreement, so a micro or small supplier can approach the Facilitation Council, which conciliates first and then arbitrates. A buyer challenging the award must deposit 75% of the amount.
How is an arbitral award enforced?
Under section 36, once the challenge period ends or a challenge fails without a stay, the award is enforced like a decree of a civil court. The execution petition can be filed where the debtor's assets are. Attachment of bank accounts, receivables and property follows under the CPC.
Need help with Arbitration? Send your papers or a short note of what has happened. An advocate from the team of Advocate B.K. Singh will read it and tell you the next step.
