By Legum Pacific Editorial ·
Suppose two businesses put an arbitration clause in a supply contract and a payment dispute follows. One party asks for an arbitrator. The other party wants the court to order urgent steps to protect assets while the arbitration proceeds.
What does the law say about the arbitration clause itself?
- An arbitration agreement (an agreement to submit some or all disputes to arbitration) is defined in the Act as an agreement to submit to arbitration all or certain disputes that have arisen or may arise between the parties in a defined legal relationship (Section 7).
- The arbitration agreement must be in writing (Section 7(3)).
How and when will a court send a case to arbitration?
- If a suit is filed on a matter covered by an arbitration agreement, a judicial authority must refer the parties to arbitration if a party so applies not later than the date of submitting its first statement on the substance of the dispute. The court will do this unless it finds prima facie that no valid arbitration agreement exists (Section 8(1)).
- An application under Section 8 must be accompanied by the original arbitration agreement or a certified copy. If the applicant does not have the original because the other party holds it, the applicant may file a copy and ask the court to call on the other party to produce the original or a certified copy (Section 8(2), proviso).
Who appoints the arbitrator or arbitrators?
- The parties are free to agree the number of arbitrators, but the number must not be even. If the parties do not choose, the tribunal will be a sole arbitrator (Section 10).
- The parties are free to agree a procedure for appointing arbitrators (Section 11(2)).
- If there is no agreed procedure and there are three arbitrators, each party appoints one arbitrator and the two appointed arbitrators appoint the third, who will preside. If a party fails to appoint within thirty days of a request, or the two appointed arbitrators fail to agree on the third within thirty days, a party may ask the Supreme Court, the High Court or a person or institution designated by that Court to make the appointment (Section 11(3)–(5)).
- Similar fallback rules apply where the arbitration is to have a sole arbitrator and the parties do not agree on the person within thirty days (Section 11(5)).
- The Court or its designate, before appointing an arbitrator, will seek a written disclosure from the prospective arbitrator under Section 12 and will have regard to required qualifications and the disclosure to secure appointment of an independent and impartial arbitrator (Section 11(8)).
- The Act asks that applications for appointment under these provisions be disposed of as expeditiously as possible, with an endeavour to decide within sixty days (Section 11(13)).
What must a prospective arbitrator disclose? Grounds for challenge
- When a person is approached about possible appointment, they must disclose in writing any circumstances likely to give rise to justifiable doubts about independence or impartiality. That includes any past or present relationship or interest with a party or the subject-matter, whether financial, business, professional or other (Section 12(1)(a)).
- The person must also disclose circumstances likely to affect his ability to devote sufficient time to the arbitration, including ability to complete the arbitration within twelve months (Section 12(1)(b)).
- The Fifth Schedule gives guidance on what circumstances create justifiable doubts (Section 12, Explanation).
Interim relief: what courts can do before and during arbitration
- A party may apply to a court, before or during arbitral proceedings, or at any time after an award but before enforcement under Section 36, for interim measures. These include appointment of a guardian for a minor, preservation, interim custody or sale of goods that are the subject-matter, securing the amount in dispute, detention, preservation or inspection of property, authorising entry on land for inspection, interim injunctions or appointment of a receiver, and “such other interim measure of protection” the court finds just and convenient. The court has the same powers as it has for proceedings before it (Section 9(1)(i) & (ii)(a)–(e)).
- If the court grants an interim measure before arbitration starts, the arbitral proceedings must be commenced within ninety days of the court order unless the court allows more time (Section 9(2)).
- Once the arbitral tribunal is constituted, the court will not ordinarily entertain a fresh application under Section 9(1) unless it finds circumstances that may make a remedy under Section 17 (interim measures by the tribunal) insufficient (Section 9(3)).
Corrections, additional awards and time to challenge an award
- A party may request the tribunal to correct errors or give an interpretation of a specific point. If the tribunal agrees, it must act within thirty days of the request; an additional award on omitted claims must be made within sixty days of request (Section 33(1)–(6)).
- An application to set aside an arbitral award (challenge) can be made only on the grounds listed in Section 34(2), such as incapacity, invalid arbitration agreement, lack of proper notice, award on matters beyond submission, or composition/procedure not in accordance with the agreement or the Act. The court will also set aside an award if the subject-matter is not capable of settlement by arbitration or the award conflicts with public policy of India, as explained in Section 34 (including fraud, corruption or violation of specified sections; or contravention of fundamental policy of Indian law; or conflict with basic notions of morality or justice).
- Time limit: an application to set aside must be filed within three months from the date the applicant received the award, or within three months from the date a Section 33 request was disposed of. The court may allow a further thirty days if satisfied of sufficient cause (Section 34(3)).
- The Act requires prior notice to the other party before filing a Section 34 application and an affidavit endorsing compliance. The court is to dispose of such an application expeditiously, in any event within one year from the date the prior notice is served (Sections 34(5)–(6)).
Enforcement after challenge or expiry of time
- When the time for setting aside has expired, the award is enforced like a court decree under the Code of Civil Procedure (Section 36(1)).
- If a setting-aside application has been filed, the filing alone does not make the award unenforceable. The award becomes unenforceable only if the court grants a stay of the award after a separate application, and the court may impose conditions for reasons recorded in writing. In money awards, the court must have due regard to stay rules for money decrees under the Code of Civil Procedure (Section 36(2)–(3)).
Key points
- An arbitration agreement must be in writing and can be a clause in the contract (Section 7).
- Parties can choose number and appointment procedure for arbitrators; failing agreement, the Act provides clear fallback rules and court involvement (Sections 10–11).
- Prospective arbitrators must disclose relationships and time constraints in writing; the Fifth Schedule guides what creates justifiable doubts (Section 12).
- Courts can grant interim measures before, during or after arbitration but before enforcement; a pre-arbitration court order requires arbitration to begin within 90 days (Section 9).
- Corrections and interpretations of awards have short statutory timeframes; challenges to awards must be filed within three months, with a possible 30-day extension (Sections 33, 34).
- Once the time to challenge has passed, an award is enforced as a court decree; a pending challenge does not automatically stop enforcement unless the court orders a stay (Section 36).
Laws referred to
- The Arbitration and Conciliation Act, 1996 — Section 2
- The Arbitration and Conciliation Act, 1996 — Section 7
- The Arbitration and Conciliation Act, 1996 — Section 8
- The Arbitration and Conciliation Act, 1996 — Section 9
- The Arbitration and Conciliation Act, 1996 — Section 10
- The Arbitration and Conciliation Act, 1996 — Section 11
- The Arbitration and Conciliation Act, 1996 — Section 12
- The Arbitration and Conciliation Act, 1996 — Section 33
Official sources
This guide explains what the law itself says. Court rulings interpreting these provisions can also affect how they apply in a particular case. It states the position under the official texts listed above, as at 15 October 2026.