Arbitration allows parties to resolve disputes outside court through a neutral decision maker. To use this mechanism effectively, businesses and individuals must follow statutory procedures that ensure fairness and enforceability. This guide explains how to commence arbitration in India, from serving notice to obtaining the award.
Pre‑Conditions: Valid Arbitration Agreement
The foundation of any arbitration is a valid agreement. Section 7 of the Arbitration and Conciliation Act 1996 requires the agreement to be in writing and signed by the parties. An arbitration clause can be part of a larger contract or a standalone agreement. The agreement should specify the number of arbitrators, seat or place of arbitration,
governing law and language. A clear arbitration clause prevents preliminary litigation over interpretation and strengthens the enforceability of the award.
Ensure that the clause is precise, names the institution (if any), and avoids vague terms. Common pitfalls include clauses that merely state “all disputes shall be resolved by arbitration” without indicating who will appoint the arbitrator or which rules will apply.
Step 1: Issue Notice Invoking Arbitration
Arbitration proceedings begin with a notice of invocation. One party sends a written notice to the other, invoking the arbitration clause and identifying the dispute. The notice may suggest the name of a proposed arbitrator and request the other party to appoint its arbitrator (in case of a three‑member tribunal) or concur on a sole arbitrator. The
date of receipt of this notice often triggers statutory timelines for appointing the tribunal and rendering the award.
Step 2: Appointment of Arbitrator(s)
If the arbitration agreement specifies a procedure for appointing arbitrators, the parties must follow it. Otherwise, Section 11 of the Act applies. According to Section 11(3), in a three‑member tribunal each party appoints one arbitrator, and the two appointed arbitrators choose the third as presiding arbitrator. If a party fails to appoint its
arbitrator within thirty days of receiving the notice, or the two arbitrators cannot agree on the presiding arbitrator, the parties may apply to a designated arbitral institution or the High Court to make the appointment. For a sole arbitrator, failure to agree within thirty days allows either party to approach the court under Section 11(5).
The 2019 amendment empowers the Supreme Court and High Courts to designate arbitral institutions for appointing arbitrators. Courts do not delve into the merits at this stage; they only examine whether a valid arbitration agreement exists.
Step 3: Statement of Claim and Defence
Once the tribunal is constituted, the claimant must submit a statement of claim describing the facts, issues in dispute and relief sought. The respondent files a statement of defence and may include counterclaims. Section 23 of the Act specifies that parties must submit claims and defences within the time agreed by them or set by the tribunal.
Clear pleadings help focus the arbitration on the real issues and avoid later surprises.
Step 4: Hearings and Evidence
Arbitral tribunals have flexibility to decide whether to hold oral hearings or decide the case based on documents. Section 19 allows parties to agree on procedural rules; failing such agreement, the tribunal conducts proceedings in a manner it considers appropriate, including determining the admissibility, relevance and weight of evidence.
Witnesses may be examined, and expert evidence may be presented. Parties should cooperate and avoid unnecessary adjournments to meet statutory timelines.
Step 5: Award and Time Limits
Section 29A imposes a time limit for delivering the arbitral award. For domestic arbitrations, the tribunal must make the award within twelve months from the date of completion of pleadings. Parties can mutually extend this period by up to six months; any further extension requires court approval. If the award is not made within the prescribed time
and no extension is granted, the arbitrator’s mandate terminates automatically. Courts may reduce arbitrator fees by five percent per month of delay. These strict timelines were introduced to ensure that arbitration does not devolve into prolonged litigation.
International commercial arbitrations are exempted from the twelve‑month deadline, but tribunals must aim to deliver the award expeditiously.
Interim Measures and Court Assistance
Parties may seek interim protection from courts or the tribunal. Section 9 allows parties to approach the court before or during arbitration to secure assets, prevent third‑party rights or obtain other interim relief. After the tribunal is constituted, parties can seek interim measures from the tribunal under Section 17. Courts generally refrain
from interfering with arbitration except when necessary to support or facilitate the process.
Enforcement of Awards
Once the award is delivered, the unsuccessful party has limited grounds to challenge it under Section 34, such as lack of jurisdiction, fraud or public policy violations. After the time for challenge expires, domestic awards are enforced like court decrees under Section 36. Foreign awards are enforced under Part II of the Act and the New York
Convention, subject to narrow grounds for refusal.
Conclusion
Commencing arbitration in India requires adherence to statutory procedures and careful drafting of the arbitration clause. By issuing a notice of invocation, appointing the tribunal within prescribed timelines, filing clear pleadings and cooperating during hearings, parties can obtain a binding and enforceable award within a reasonable timeframe.
Understanding key provisions such as Sections 7, 11, 23 and 29A helps businesses and individuals navigate the process efficiently.
FAQs
Do I need a written arbitration agreement to start arbitration?
Yes. Section 7 of the Act requires the arbitration agreement to be in writing and signed by the parties. Without a written clause or agreement, a court cannot refer the dispute to arbitration.
What if the other party refuses to appoint an arbitrator?
If the other party fails to appoint its arbitrator within thirty days of receiving the notice, you can apply to the High Court or designated arbitral institution under Section 11. The court will appoint the arbitrator after verifying the existence of a valid arbitration agreement.
How long does an arbitration take?
Domestic arbitrations must be completed within twelve months from the completion of pleadings, with a possible six‑month extension by consent. International commercial arbitrations do not have a strict statutory deadline but must aim for expeditious resolution.
Can I seek interim relief during arbitration?
Yes. You can approach the court for interim measures under Section 9 or ask the tribunal to grant interim measures under Section 17.
What happens if the arbitrator fails to deliver the award on time?
If the award is not delivered within twelve months (plus up to six months by consent) and no extension is granted by the court, the arbitrator’s mandate terminates automatically. The court may reduce the arbitrator’s fee for delays.