INDIA Law and Practice Contributed by: Neeraj Tuli, Celia Jenkins and Rajat Taimni, Tuli & Co
tract itself, it is not mandatory. An arbitration agree- ment may also arise if it is contained in a subsequent exchange of letters, telex, telegrams, or other means of telecommunications (including electronic means) that provide a record of the intent to arbitrate. The agreement should reflect the parties’ intention to submit their dispute(s) to arbitration. The Supreme Court of India has recently clarified that the mere use of the words “arbitration” or “arbitrator” in a clause in the contract cannot constitute a binding arbitration agreement between the parties, especially if it requires further or fresh consent from the parties. Generally, there is no prescribed form required for the purpose of an arbitration agreement. However, with regard to insurance policies, the IRDAI issued a cir- cular dated 27 October 2023 (the “Circular”) directing that all insurance policies issued under the commer- cial lines of business must have a mandatory arbitra- tion clause stipulating that “the parties to the contract may mutually agree and enter into a separate arbitra- tion agreement to settle any and all disputes in rela- tion to this policy”. If the parties mutually agree on an arbitration agreement, then the arbitration proceed- ings will be conducted as per the provisions of the Arbitration Act. The Circular has further deleted arbi- tration clauses from all polices under the retail lines of business prospectively. For existing retail policies, the arbitration clause shall remain valid until the policy expires, unless a policyholder specifically requests the insurer to replace it with the clause mandated by the IRDAI. This also applies to all existing policies issued under the commercial lines of business. A seven-judge bench of the Supreme Court of India – in a curative petition titled In Re: Interplay Between Arbitration Agreements Under the Arbitration Act and the Indian Stamp Act 1899 (2023 INSC 1066) – has held that unstamped or inadequately stamped arbi- tration agreements are inadmissible as evidence but not void. The Supreme Court of India held that non- payment of stamp duty is a curable defect, and any objection to the stamping of the agreement falls within the ambit of the arbitral tribunal. A five-judge bench of the Supreme Court in Cox & Kings Ltd vs SAP India (P) Ltd (2024 INSC 670) held
that even non-signatories can be bound by an arbi- tration agreement if they clearly intended to be part of the contractual arrangement. Such intent is to be inferred from their conduct and involvement in nego- tiating, performing, or terminating the contract. In order to bind a non-signatory, courts must holistically assess factors such as mutual intention of the par- ties, composite nature of the transaction, commonal- ity of subject matter, relationship with signatory par- ties and active involvement of the non-signatory in performance of the contract. Further, the Supreme Court in ASF Buildtech (P) Ltd v Shapoorji Pallonji & Co (P) Ltd (2025 INSC 616) upheld the impleadment of a non-signatory and, for the first time, expressly recognised that sectors such as rein- surance often involve complex contractual arrange- ments where this principle may be appropriately applied. Foreign Arbitration Even for foreign-seated arbitrations, the posi- tion remains broadly the same. Courts are typically inclined to refer disputes with an arbitration clause to arbitration. Section 45 of the Arbitration Act requires an Indian court seised of any dispute to refer the parties to arbi- tration at the request of any one of the parties, “unless it prima facie finds that said agreement is null and void, inoperative and incapable of being performed”. 9.6 Enforcement of Awards The enforcement of domestic awards rendered in India is governed by Part I of the Arbitration Act, whereas the enforcement of foreign arbitration awards ren- dered in a recognised jurisdiction is governed by Part II of the Arbitration Act. Domestic and foreign awards are both enforced as a decree of the civil court. A domestic award may be enforced only after the expiry of three months from the date on which the arbitral award was received. Three months is signifi- cant here, as it is also the time period within which a party has the right to challenge the award. After three months, the decree holder can initiate proceedings to enforce the award, and such proceedings are to continue unless the court deciding the challenge to
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