Diwan Advocates

Arbitration and Dispute Resolution Practice

A joint venture between an Indian company and a foreign investor breaks down. The shareholders agreement contains an arbitration clause specifying SIAC arbitration in Singapore under Singapore law. The foreign investor files for arbitration in Singapore. The Indian company wants to challenge whether the dispute falls within the scope of the arbitration clause and whether the governing law clause is valid under Indian law. It needs Indian counsel who understands both the SIAC rules and the Indian law questions that will arise if and when the award comes to India for enforcement.

A construction company finishes a project eighteen months late. The employer withholds fifty crores as liquidated damages. The contract has an ad hoc arbitration clause appointing a sole arbitrator by agreement of the parties. The parties cannot agree on an arbitrator. The construction company applies to the High Court under Section 11 for appointment of an arbitrator. The court appoints one. The arbitration begins. Six months in, the construction company applies to the arbitral tribunal under Section 17 for a direction that the employer release twenty crores of the withheld amount pending the outcome.

Two situations, domestic and international, institutional and ad hoc, enforcement and interim relief. Arbitration practice spans all of them. At Diwan Advocates, we handle the full range: drafting arbitration clauses, constituting tribunals, managing proceedings from pleadings through hearing, applying for and defending against interim relief, enforcing awards, and challenging awards where the grounds exist.

The Arbitration and Conciliation Act, 1996: The Framework

The Arbitration and Conciliation Act, 1996 is structured in three parts. Part I governs domestic arbitration and international commercial arbitration seated in India. Part II governs enforcement of foreign awards under the New York Convention and the Geneva Convention. Part III governed conciliation but has been largely superseded by the Mediation Act, 2023. The Act was substantially amended in 2015, 2019, and 2021, with each amendment responding to specific problems identified in practice.

The 2015 amendment was the most significant. It clarified that courts cannot interfere in arbitral proceedings except as expressly provided in the Act, restricted Section 9 post-award court intervention, introduced mandatory disclosure of independence and impartiality by arbitrators, and added the Fifth and Seventh Schedules listing the circumstances that create justifiable doubts about an arbitrator's independence. The 2019 amendment added the Arbitration Council of India, introduced mandatory timelines, and created the fast-track mechanism. The 2021 amendment removed the Eighth Schedule qualifications requirement for arbitrators and clarified the automatic stay provision.

The Arbitration Agreement: Getting It Right

Every arbitration begins with the arbitration agreement. A poorly drafted arbitration clause can prevent the parties from getting to arbitration at all: if the clause is pathological, meaning it is so unclear or contradictory that no tribunal can be constituted under it, the entire dispute resolution mechanism fails. A clause that specifies an institution that no longer exists, that requires agreement of the parties at every step without a default mechanism, or that gives jurisdiction to an arbitral body that has no rules for the type of dispute at hand, creates problems that may only surface years later when a dispute arises.

What Every Arbitration Clause Must Cover

An effective arbitration clause must specify whether arbitration is ad hoc or institutional, the institution if institutional, the seat of arbitration, the number of arbitrators, the governing law for the substance of the dispute, and the language of the proceedings. For domestic contracts, these questions are simpler. For international contracts, each choice has legal consequences for how an award will be enforced, whether Indian courts have supervisory jurisdiction, and what challenges are available against the award.

Seat versus Venue

The distinction between the seat and the venue of arbitration is one of the most important and most misunderstood concepts in Indian arbitration law. The seat is the legal home of the arbitration and determines which country's courts have supervisory jurisdiction over the proceedings and over challenges to the award. The venue is simply where hearings physically take place. An arbitration can have its seat in Delhi but hold hearings in Mumbai. The Supreme Court settled the position in Brahmani River Pellets v. Kamachi Industries (2019) and BGS SGS SOMA JV v. NHPC (2019): the designation of a seat in an arbitration clause gives exclusive supervisory jurisdiction to the courts at that seat. Contracts that are unclear about seat versus venue create jurisdictional disputes that delay the arbitration itself.

Separability

An arbitration clause is treated as a separate and independent agreement from the contract in which it appears. The consequence is that even if the main contract is void, voidable, or unenforceable, the arbitration clause may still be valid and the dispute about the contract's validity can itself be referred to arbitration. This doctrine of separability, codified in Section 16 of the Act through the kompetenz-kompetenz principle, means that the arbitral tribunal has the power to rule on its own jurisdiction, including on challenges to the existence or validity of the arbitration agreement.

Constituting the Tribunal: Section 11 and Arbitrator Independence

Appointment Under Section 11

If the parties cannot agree on the constitution of the tribunal in accordance with their agreed procedure, either party can apply to the Supreme Court (for international commercial arbitration) or the relevant High Court (for domestic arbitration) under Section 11 of the Arbitration Act for appointment of an arbitrator. The 2015 amendment requires the court to endeavour to dispose of a Section 11 application within 60 days of service of notice on the other party. The court's role at this stage is limited: it examines whether a valid arbitration agreement exists and whether there is a live dispute, but does not go into the merits.

Independence and Impartiality

Section 12 of the Act, as amended in 2015, requires every prospective arbitrator to disclose any circumstances that are likely to give rise to justifiable doubts as to their independence or impartiality. The Fifth Schedule lists relationships and interests that must be disclosed. The Seventh Schedule lists circumstances that make a person ineligible to be appointed as an arbitrator. The 2021 amendment removed the Eighth Schedule which had prescribed qualification requirements, freeing parties to appoint arbitrators on the basis of expertise rather than formal credentials.

An arbitrator with a relationship or interest covered by the Seventh Schedule can only be appointed if the parties, after disclosure of the circumstances, expressly agree in writing to waive the ineligibility. We advise parties on assessing the suitability of proposed arbitrators against the Schedules and on challenging appointments where undisclosed conflicts are discovered during proceedings.

Interim Relief: Sections 9 and 17

Section 9: Court-Ordered Interim Measures

A party can apply to the court under Section 9 of the Arbitration Act for interim measures before the arbitral proceedings begin, during the proceedings, or at any time after the making of the award but before it is enforced. Interim measures available under Section 9 include appointment of a guardian for a minor, preservation, inspection, or sale of the subject matter of the dispute, securing the amount in dispute, attachment of assets, and any other interim measure of protection the court considers just and convenient.

The 2015 amendment restricted Section 9 post-commencement of arbitration: once the tribunal is constituted, the court should not entertain a Section 9 application unless the remedy through the tribunal under Section 17 would be inefficacious. This change was intended to reduce court intervention in ongoing arbitral proceedings and to channel interim relief applications to the tribunal where possible.

Section 17: Tribunal-Ordered Interim Measures

After the 2015 amendment, a Section 17 order of the arbitral tribunal has the same force as an order of the court and is enforceable in the same manner. This change significantly enhanced the practical utility of Section 17 relief. A party that needs assets preserved, a bank guarantee kept intact, or construction work stopped pending the outcome of arbitration can now obtain enforceable relief from the tribunal without having to go to court. We apply for and defend against Section 17 applications with the same urgency and rigour as court injunction applications.

The Arbitral Proceedings

Pleadings and Evidence

Arbitral proceedings in India do not follow the Code of Civil Procedure. The tribunal has wide discretion in managing the proceedings. Domestic arbitrations typically follow a statement of claim, statement of defence, and reply structure, followed by document discovery and oral hearings. International arbitrations before institutional tribunals follow the applicable institutional rules, which typically involve a procedural hearing early in the proceedings to agree on the timetable, document production process, and hearing arrangements.

The 12-Month Timeline

The 2019 amendment introduced Section 29A, which requires domestic arbitral proceedings to be completed within 12 months of the date on which the arbitral tribunal is constituted. The parties can extend this to 18 months by agreement. Any further extension requires court sanction, and the court can condition the extension on a reduction in the arbitrators' fees. In practice, complex commercial arbitrations frequently seek and obtain extensions. However, the provision has meaningfully changed the pace at which tribunals manage domestic arbitrations.

Fast-Track Arbitration

Section 29B provides for a fast-track procedure for domestic arbitrations where the parties agree in writing after the dispute arises or at the time of appointing the arbitrator. In fast-track arbitration, the proceedings are conducted entirely on the basis of written pleadings, documents, and submissions. There is no oral hearing unless the tribunal decides one is necessary. The award must be made within six months. We advise on when fast-track is appropriate and manage fast-track proceedings on behalf of clients.

Challenging Awards: Section 34

A domestic arbitral award can be challenged before the court under Section 34 of the Arbitration Act within three months of receiving the award, with a court having discretion to condone delay of a further 30 days on sufficient cause. Beyond 30 days of that extended period, the right to challenge is gone. The grounds on which an award can be set aside are deliberately narrow: incapacity of a party, invalidity of the arbitration agreement, lack of notice of the proceedings, the award dealing with matters beyond the scope of the arbitration, improper composition of the tribunal, non-arbitrability of the dispute, and patent illegality.

The most commonly argued and most contested ground is patent illegality. After the 2015 amendment, this ground applies only to domestic awards and not to international commercial arbitration awards. Patent illegality means the award is based on no evidence, ignores vital evidence, or reaches a conclusion that no reasonable tribunal could have reached on the evidence. Courts have consistently held that errors of law or fact that do not amount to patent illegality are not grounds to set aside an award: an arbitral award is not an appeal from the arbitration.

The 2015 amendment also changed the effect of a Section 34 application on enforcement. Before 2015, filing a challenge automatically stayed enforcement. After 2015, filing a challenge does not automatically stay enforcement. A separate application for a stay must be made, and the court must consider whether there are prima facie grounds for setting aside the award and whether enforcement pending the challenge would cause irreparable harm.

Enforcement of Foreign Awards: Part II

India is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958. Foreign awards from Convention countries are enforceable in India under Part II of the Arbitration Act. The enforcement procedure requires filing the award and the arbitration agreement with the relevant High Court. The court will enforce the award unless the person opposing enforcement proves one of the limited grounds of refusal: incapacity, invalid agreement, lack of notice, excess of jurisdiction, improper tribunal composition, non-finality of the award, or non-arbitrability under Indian law.

The public policy ground for refusing enforcement of foreign awards has been interpreted narrowly by Indian courts following the 2015 amendment, which limited it to awards that are against the fundamental policy of Indian law, the interests of India, or justice or morality. The Supreme Court in Vijay Karia v. Prysmian Cavi E Sistemi SRL (2020) and subsequent decisions have reinforced the pro-enforcement approach. We enforce foreign awards in India and oppose enforcement applications where the grounds for refusal are available.

International Commercial Arbitration

Institutional Arbitration: ICC, SIAC, LCIA, DIAC, and MCIA

International commercial contracts involving Indian parties commonly specify ICC (International Chamber of Commerce), SIAC (Singapore International Arbitration Centre), LCIA (London Court of International Arbitration), or DIAC (Dubai International Arbitration Centre) arbitration. The Mumbai Centre for International Arbitration has been established as an Indian institutional alternative. Each institution has its own rules, its own approach to arbitrator appointment, and its own administrative structure. We advise on which institution is most appropriate for a particular contract and manage proceedings under all the major institutional rules.

Institutional arbitration offers administrative support, scrutiny of draft awards by the institution, and a structured procedure for appointment of arbitrators where the parties cannot agree. For high-value international disputes, institutional arbitration typically produces more predictable and defensible proceedings than ad hoc arbitration, and the award is easier to enforce internationally because of the institution's reputation.

Governing Law and Indian Law Issues

International contracts frequently choose foreign governing law, typically English law or Singapore law. Where an Indian party is a respondent in a foreign-seated arbitration, questions of Indian mandatory law, including FEMA compliance, Companies Act requirements for corporate authority, and Indian public policy, may arise as defences. We advise on the Indian law dimension of international arbitrations and appear alongside foreign counsel in proceedings seated abroad.

Mediation Under the Mediation Act, 2023

The Mediation Act, 2023 replaced Part III of the Arbitration Act and established a standalone framework for mediation in India. The Act provides for pre-litigation mediation in commercial disputes before filing a suit, court-referred mediation, and online mediation. A mediated settlement agreement is final and binding on the parties and is enforceable as a court decree. Mediators must be registered with the Mediation Council of India, which is established under the Act.

The Mediation Act creates a pathway to resolution that is faster than arbitration for disputes where both parties want to resolve the matter but cannot agree directly. The mediator does not impose a solution: the parties control the outcome. A mediated settlement can include commercial arrangements, ongoing relationship terms, and other matters that an arbitral award cannot order. We advise on mediation strategy, prepare clients for mediation sessions, and act as party representatives in formal mediation proceedings.

Pre-litigation mediation is mandatory for commercial disputes under the Commercial Courts Act before filing a suit where urgent relief is not required. This requirement has been incorporated into the mediation framework. Failure to attempt pre-institution mediation does not make the suit non-maintainable but is a procedural step that must be accounted for in the litigation timeline.

Why Diwan Advocates for Arbitration?

Legislative Reference Index

Arbitration done well is faster, more confidential, and more enforceable internationally than litigation.

Arbitration done poorly is expensive, slow, and produces awards that cannot be enforced.

The difference is the quality of the legal team. Diwan Advocates delivers that quality.

Diwan Advocates  |  Delhi, India