In short. Arbitration is a private way of settling a dispute in India. You don't file a suit. Instead the parties send the dispute to one or three arbitrators under the Arbitration and Conciliation Act, 1996, and the award they give binds both sides and is enforced like a court decree. It's for anyone whose contract has an arbitration clause, or who agrees to arbitrate once a dispute has started. A fought domestic arbitration usually takes about 18 months to 3 years from notice to award. Start by reading the clause. Then send the notice, or answer it.
Is this your situation?
- You were going through an old work order and spotted a line at the bottom saying disputes will be settled by arbitration.
- A customer, supplier or contractor has sent a letter saying they're invoking arbitration against you.
- The money's been stuck for a year and you can't decide between a commercial court and arbitration.
- Someone told you the case will go to the Delhi International Arbitration Centre. You've no idea what happens there.
- You're drafting a new contract and the other side wants an arbitration clause. What exactly are you signing up for?
- The award is out. Now you want to know if it can be challenged, or how you actually get the money.
What is arbitration? The meaning in plain words
Think of it as a private trial. Two or more parties agree that a person or panel they pick, called the arbitral tribunal, will decide the dispute between them instead of a civil court. The tribunal hears both sides, takes evidence and gives a written decision. That decision is the award. It's final, it binds the parties, and it can be enforced just like a court decree.
For a business, the meaning that counts is this. You give up your right to take the merits of the dispute to a civil court. In exchange you get a quicker, more flexible process before someone you helped choose. Courts don't vanish from the picture. Their role just shrinks. They help at the start, by appointing arbitrators and giving urgent protection, and they supervise at the end, by hearing narrow challenges and enforcing the award.
Don't confuse arbitration with mediation or conciliation. A mediator or conciliator helps you reach your own settlement and can't force a decision on anyone. An arbitrator decides, whether you like the outcome or not. A Lok Adalat is different again, because it only records settlements. Plenty of disputes go through mediation first and arbitration later. And if you settle midway through an arbitration, that settlement can be recorded as a consent award under Section 30.
The Arbitration and Conciliation Act 1996: the parts that shape the process
Structure of the Act
The Arbitration and Conciliation Act, 1996 is built on the UNCITRAL Model Law. Part I covers arbitrations seated in India, domestic and international commercial both. Part II is about enforcing foreign awards under the New York and Geneva Conventions. Part III deals with conciliation. Parliament amended the Act heavily in 2015, 2019 and 2021. The aim, mostly, was less delay and less interference from the courts.
Section 7: the arbitration agreement
The arbitration agreement has to be in writing. It can be a clause inside a contract or a separate agreement. It can also come out of an exchange of letters, emails or other electronic messages, or from a statement of claim and defence where one side says there's an agreement and the other doesn't deny it. And if your contract refers to another document that has an arbitration clause, that clause can come in too. People miss this one.
Sections 8 and 11: getting into arbitration
Say one party files a suit even though there's an arbitration agreement. Section 8 lets the other side ask the court to send the dispute to arbitration, as long as it applies no later than its first statement on the substance of the dispute. Wait too long and that right goes. Section 11 lets the High Court appoint arbitrators where the parties can't agree.
Sections 9 and 17: interim protection
Under Section 9 you can ask the court for interim measures before the arbitration, during it, or in limited cases after it. Section 17 gives the tribunal much the same powers once it's in place. Its orders can be enforced like a court's.
Sections 23, 29A and 29B: time limits
Pleadings should be done within six months of the arbitrator's appointment (Section 23(4)). The award is due within twelve months after pleadings are complete. The parties can agree to stretch that by six months, and after that only the court can extend it (Section 29A). If both sides want, they can opt for a fast track with a six-month deadline (Section 29B).
Sections 31, 34, 36 and 37: the award and after
Section 31 says what an award must contain, reasons and interest included. Section 34 allows a challenge on limited grounds within three months, with up to 30 more days if there's sufficient cause. Section 36 makes the award enforceable as a decree. And Section 37 lists which orders you can appeal.
Which disputes can go to arbitration, and which can't?
Most commercial fights can be arbitrated. Unpaid invoices. Construction and infrastructure contracts, supply and distribution deals, franchise and licence disputes, partners falling out, shareholder disputes, insurance claims under policies that carry an arbitration clause, and leases governed by the Transfer of Property Act. A rough rule we give clients: if two businesses could settle it between themselves by contract, they can usually arbitrate it.
Some matters belong only to courts or special forums. Criminal offences, divorce and custody, guardianship, insolvency proceedings, probate and testamentary matters, and eviction under rent control laws generally can't be arbitrated. In Vidya Drolia v. Durga Trading Corporation (2020) the Supreme Court laid down tests for this. Broadly, does the dispute affect third parties or the public at large? Has the law handed it to a particular public forum? An allegation of fraud doesn't by itself pull a dispute out of arbitration, though serious fraud with a public law side to it may. The grey areas are covered in our guide on disputes that can't go to arbitration in India.
Then there's the question of who's bound. Usually only the people who signed the arbitration agreement. In some cases, though, a non-signatory can be dragged in, for example a group company that took part in negotiating or carrying out the contract. See when someone who didn't sign can still be bound by an arbitration clause.
The arbitration process in India, stage by stage
No two arbitrations keep the same timetable. Still, a fought domestic arbitration usually passes through these stages, in roughly this order.
The dispute starts and you check the clause
Somebody stops paying, ends the contract or refuses to do their part. First job: read the arbitration clause. Who appoints the arbitrator? Where's the seat? Is an institution named? Do you have to try negotiation or mediation first?
Notice invoking arbitration
The claimant writes to the other side asking for the dispute to go to arbitration. Under Section 21, the arbitration begins on the date the respondent receives that notice, and that date matters a great deal for limitation. Drafting it properly is covered in our guide on invoking an arbitration clause through a Section 21 notice.
The tribunal is appointed
Either the parties agree on a sole arbitrator, or each names one of three. If the other side won't cooperate within 30 days, the High Court can step in under Section 11. Every arbitrator has to disclose in writing anything that could affect their independence.
First hearing and timetable
At the first procedural hearing the tribunal fixes its fees and the deposits, sets dates for pleadings and evidence, picks the venue and decides whether hearings will be in person or on video. Usually a short sitting.
Pleadings
The claimant files a statement of claim with its documents. The respondent files a statement of defence, and quite often a counterclaim. A rejoinder and a reply to the counterclaim may follow. This is also when the tribunal usually asks each side to admit or deny the other's documents.
Evidence
Witnesses give their evidence by affidavit and are then cross-examined. In construction and technical disputes you'll often see experts too. The Code of Civil Procedure and the strict rules of evidence don't bind the tribunal (Section 19). But it has to treat both sides equally and give each a full chance to present its case (Section 18).
Arguments
Each side argues orally and usually hands in written submissions as well. In a case with heavy paperwork, those written submissions often count for more than the hearing itself.
The award
The tribunal gives a signed award with reasons, deciding the claims and counterclaims along with interest and costs. Spot a clerical error, or need something interpreted? Under Section 33 you can ask within 30 days.
Challenge or enforcement
The losing side may challenge the award under Section 34. If it doesn't, or the challenge fails, or no stay is granted, the winner enforces the award under Section 36 as though it were a decree.
How long each stage takes and what it'll cost
| Stage | Typical time | Costs to expect (leaving aside lawyer fees) |
|---|---|---|
| Notice invoking arbitration | The respondent usually gets 30 days to reply | Just postage and courier |
| Arbitrator appointed by agreement | 2 to 8 weeks | Nothing at this point, other than letters back and forth |
| Court appointment under Section 11 | Often 2 to 6 months | Court fee on the petition (check the current figure), affidavits and copies |
| First hearing and deposits | 2 to 6 weeks after appointment | Arbitrators' fees, usually split equally; administrative charges if an institution such as DIAC runs the case |
| Pleadings | Up to 6 months from appointment (Section 23(4)) | More fee deposits, as the tribunal directs |
| Evidence and arguments | 6 to 12 months | Stenographer, venue (ad hoc), experts' fees, witnesses' travel |
| Award | Within 12 months of pleadings closing, plus up to 6 months if both agree (Section 29A) | Whatever is left of the tribunal's fees |
| Section 34 challenge | File within 3 months of receiving the award, plus up to 30 days; how long the hearing takes depends on the court | Court fee on the petition; possibly a deposit if you want the award stayed |
| Enforcement under Section 36 | Depends on what the debtor owns and what objections it raises | Court fee on execution, plus the cost of attachment and sale |
Who are the arbitrators, and how do they get chosen?
The parties can pick any number of arbitrators, so long as it isn't an even number. If the contract says nothing, you get a sole arbitrator (Section 10). Sole arbitrators are common for claims of middling value. In big construction and infrastructure disputes you usually see three: each side names one, and those two choose a presiding arbitrator. Depending on what the dispute needs, arbitrators tend to be retired judges, senior advocates, chartered accountants or engineers.
Independence isn't negotiable. Section 12 makes every arbitrator disclose in writing anything that could raise justifiable doubts about their independence or impartiality. Section 12(5), read with the Seventh Schedule, rules some people out altogether, like an employee, consultant or advisor of one of the parties. And a clause letting one party alone appoint the sole arbitrator doesn't work anymore. In 2024 the Supreme Court's Constitution Bench in Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML held that such one-sided appointments offend equality between the parties. Many old government contracts still have them.
Arbitrators charge fees. In an ad hoc arbitration you agree the fee with the tribunal, or it's fixed with reference to the Fourth Schedule of the Act and the High Court's rules. In an institutional one, the institution's published schedule applies. That usually turns on the amount in dispute.
Ad hoc or institutional: who actually runs the arbitration?
In an ad hoc arbitration, the parties and the tribunal manage everything themselves. They book the venue, settle the fees and keep the record. In an institutional arbitration, a body like the Delhi International Arbitration Centre (DIAC), the Mumbai Centre for International Arbitration or the Indian Council of Arbitration administers the case under its own rules. It takes the filings, collects the fees, appoints from its panel and provides hearing rooms. Where your contract leaves a gap, its rules fill it.
The Delhi High Court set up DIAC, and it works out of the High Court premises. The DIAC (Arbitration Proceedings) Rules, 2023 govern its procedure, and the High Court often sends Section 11 matters there. Our sister site walks through the DIAC arbitration process stage by stage, and our guide on arbitration centres used in India compares the main choices.
Neither one wins every time. Institutional arbitration costs more in administrative charges. But it tends to keep the case moving, and there are fewer fights over fees and procedure. Ad hoc can be cheaper for a simple dispute between parties who cooperate. Once a dispute has started, frankly, that kind of cooperation is rarer than people hope.
What actually happens at an arbitration hearing?
It looks more like a board meeting than a courtroom. The tribunal sits at the head of a table, lawyers and parties on either side, and a stenographer takes down the evidence. At DIAC the hearings are in the Centre's own rooms. Ad hoc tribunals often meet in hotel conference rooms or in an arbitrator's chambers, and lots of hearings now happen on video. Dates are fixed by agreement. For evidence, two or three days in a row are often blocked.
Parties don't have a dress code. There's no cause list either. That flexibility cuts both ways. A tribunal can move fast when both sides are ready, but it won't look kindly on repeated adjournment requests, because the Section 29A clock is ticking and arbitrators who overrun can have their fees cut.
One thing we see again and again in Advocate B.K. Singh's files. First-time claimants pour their energy into the oral hearing, when the arbitration is usually won or lost on the documents filed with the statement of claim. Tribunals don't like admitting documents produced late without good reason. A ledger, a measurement sheet or an email chain left out at the start can be very hard to get in later. So he asks clients to spend the first two weeks building the document set, in date order, before anyone writes a single paragraph of the claim.
Can you get urgent relief before or during the arbitration?
Yes. Before the tribunal is formed, the court can grant interim measures under Section 9. That could be an injunction stopping encashment of a bank guarantee, an order to preserve goods or secure the amount in dispute, or appointing a receiver. If the court gives you protection before the arbitration starts, you must begin the arbitration within 90 days, or whatever further time the court allows. Don't let that lapse. Once the tribunal is in place, the court ordinarily won't hear a Section 9 application unless going to the tribunal wouldn't give you an effective remedy. Read where to file a Section 9 petition for urgent interim relief.
After the tribunal is constituted, Section 17 lets it grant similar interim measures, and its orders are enforced as if a court had made them. Some institutional rules, DIAC's among them, also allow an emergency arbitrator who can give urgent relief before the main tribunal is formed. In Amazon.com NV Investment Holdings v. Future Retail (2021), the Supreme Court treated an emergency arbitrator's order in an India-seated arbitration as enforceable under Section 17(2).
How long does arbitration in India take?
On paper, a domestic arbitration should wrap up within about 18 months of the tribunal being appointed. Six months for pleadings, then twelve months for the award. The parties can agree to push the award deadline by six months. After that only the court can extend time under Section 29A, and if the arbitrators caused the delay, it can cut their fees. For international commercial arbitrations, the twelve-month period is only a target.
Real life adds more. There's the time before the tribunal exists, anywhere from a few weeks to six months depending on whether a court has to appoint it. There's the time after the award for any Section 34 challenge. A contested arbitration with a court appointment and a challenge can take three to five years from start to finish. That surprises people. At the other end, a cooperative fast track arbitration under Section 29B can be done in about six months from the tribunal's appointment. The extension rules are explained in our guide on how long arbitration takes under Section 29A.
What does the award decide, and can you challenge it?
The award has to be in writing and signed. Unless the parties agree otherwise, it has to give reasons. It deals with each claim and counterclaim, awards interest and decides who pays the costs. Under Section 31(7) the tribunal can award interest for the period before the award and after it, and unless the award says otherwise, post-award interest runs at two percent above the current rate of interest prevailing on the date of the award. Under Section 31A, costs generally follow the event.
A Section 34 challenge must be filed within three months of receiving the award. There's a further 30 days only if you show sufficient cause. Not a day beyond. The grounds are narrow: a party under incapacity, an invalid agreement, no proper notice, the award going beyond what was referred, an irregular tribunal, a dispute that couldn't be arbitrated, conflict with public policy, and for domestic awards, patent illegality on the face of the award. Courts won't decide the facts afresh. In Gayatri Balasamy v. ISG Novasoft (2025), a Constitution Bench held that courts have a limited power to modify an award, for instance by cutting out an invalid part or fixing clerical errors, but can't review it on merits. Each ground is taken up in our guide on challenging an arbitral award under Section 34.
Filing a challenge doesn't stay the award by itself. Since 2015 you've had to ask the court for a stay, and it usually grants one only on conditions, often a deposit of the awarded amount. Once the time to challenge runs out, or a challenge fails, the award is enforced as a decree. See how an arbitral award is enforced in India.
Where does the court come in? The seat and the supervising court
The seat is the arbitration's legal home. It decides which courts supervise it. If the clause names New Delhi as the seat, Delhi courts hear the Section 9, 34 and 36 matters, even if the hearings happen somewhere else. For commercial disputes, Section 10 of the Commercial Courts Act, 2015 sends these petitions to the Commercial Division of the Delhi High Court where the value is above Rs 2 crore, and to the District Judge (Commercial Court) below that, at Saket, Tis Hazari, Karkardooma and the other district courts. Check the current pecuniary limit before filing.
Section 11 petitions work differently. They go to the High Court for domestic arbitrations and to the Supreme Court for international commercial ones. With the seat in Noida or Ghaziabad, you're before the Allahabad High Court. Gurugram or Faridabad means the Punjab and Haryana High Court. A clause that names only a venue, without saying clearly that it's the seat, invites a fight about which court has jurisdiction. Read what the seat of arbitration is and why it decides the court before you sign a clause or invoke one.
Papers to keep ready for an arbitration
- The signed contract, plus every amendment, annexure and purchase or work order issued under it
- The arbitration clause itself, and any general conditions or terms it points to
- Invoices, running bills, delivery challans, measurement records and acceptance certificates
- Their ledger from your books, reconciliation statements, and bank statements showing what was paid
- Emails, letters and WhatsApp messages about the dispute, printed in date order with the sender and date showing
- Any legal notice, reply and notice invoking arbitration, with proof they were delivered
- A board resolution or authority letter for whoever will represent the company
- A certificate under Section 63 of the Bharatiya Sakshya Adhiniyam for electronic records, in case the tribunal or the other side wants formal proof
- A short chronology of what happened, and your working of the amount claimed with interest
Arbitration or a court case: when does arbitration make sense?
Arbitration makes sense when your contract requires it, when the dispute is technical and a specialist decision-maker would help, when confidentiality matters, and when the amount is big enough to justify paying the tribunal. On confidentiality, Section 42A requires the parties and arbitrators to keep proceedings confidential, except the award where it's needed for enforcement. Arbitration looks less attractive for small claims, where arbitrators' fees can eat into what you recover. It also loses its shine when a quick summary judgment from a commercial court is realistic.
One point people get wrong. Pre-institution mediation under Section 12A of the Commercial Courts Act applies to commercial suits, not to arbitration. And if you're a registered micro or small supplier chasing delayed payment, the MSME Facilitation Council under Section 18 of the MSMED Act is often the better road. The Supreme Court held in Gujarat State Civil Supplies v. Mahakali Foods (2022) that it overrides a private arbitration clause. The MSMED (Amendment) Act, 2026 changes parts of that procedure, and it wasn't fully notified as of late October 2026. Check the current position.
Clients often ask Advocate B.K. Singh whether a small claim is worth arbitrating. The first thing he writes down is a rough comparison of the tribunal's likely fees against the claim value. If fees and costs could swallow a big chunk of a modest claim, he looks at whether the other side would agree to a fast track process, a documents-only hearing or a settlement, before anyone spends on a full arbitration. For a wider comparison of the routes, read arbitration or litigation for business disputes in India.
An invented example: one dispute, from notice to award
This example is made up. A packaging unit in Noida supplies corrugated boxes to a Faridabad food company under a two-year supply agreement. Disputes are to go to a sole arbitrator appointed by the buyer's director, with the seat in New Delhi. After a quality complaint, the buyer holds back about Rs 85 lakh across fourteen invoices.
The packaging unit sends a notice invoking arbitration. It points out that a sole arbitrator picked by the buyer alone wouldn't be valid, and proposes three names. No reply. After 30 days the unit files a Section 11 petition in the Delhi High Court, which appoints a sole arbitrator and directs that the arbitration run under DIAC's rules. Pleadings close in about five months. The buyer files a counterclaim for rejected goods.
Evidence takes two hearing blocks. What carries most weight are the unit's quality records and the buyer's own goods received notes, all filed with the claim. The award comes about fourteen months after the appointment. It allows most of the claim with interest, and part of the counterclaim. The buyer files a Section 34 petition, and the court grants a stay only if part of the awarded amount is deposited. In a real case the figures, the time and the result would turn entirely on the facts.
Things people get wrong about arbitration in India
- "It's always faster than court." Often it is. Not always. A slow appointment and extensions under Section 29A can drag a case out, and a Section 34 challenge adds more time.
- "The arbitrator I nominate is on my side." Every arbitrator, your nominee included, has to be independent and impartial. Treat your nominee like your advocate and you may face a challenge.
- "If the arbitrator gets the facts wrong, I'll appeal." You can't. A Section 34 challenge is limited to specific grounds and isn't a rehearing.
- "If I ignore the notice, the arbitration can't happen." It can. The court will appoint an arbitrator and the case goes on, possibly with no say from you on who decides it.
- "There's no court fee, so it's cheap." True, no court fee on the claim itself. But arbitrators' fees and institutional charges can add up to a serious sum.
- "An award is just paper until a court approves it." No separate approval is needed. Once the challenge period passes or a challenge fails, the award is enforceable as a decree.
What to do this week
If you're in a dispute right now, find the arbitration clause. Note the seat, the number of arbitrators and how they're appointed. Work out when your oldest claim arose, so you know your limitation date. Sort the documents by date. Then write a one-page chronology, in plain words, of who did what and when. Got a notice? Diarise 30 days from the day you received it. For an overview of how we help businesses in arbitration, see our arbitration lawyer services.
For advice on your own contract and papers, or to hear about changes in arbitration law, reach Advocate B.K. Singh through the contact page.
Frequently asked questions
Is an arbitration award binding like a court judgment?
Yes. Section 35 makes an award final and binding on the parties. Under Section 36 it's enforced the same way as a civil court decree, once the time to challenge it has passed or a challenge has been dismissed without a stay.
Can I refuse to go to arbitration if I signed a contract with an arbitration clause?
Generally, no. File a suit instead and the other side can apply under Section 8, and the court must send the dispute to arbitration if there's a valid agreement. If you won't cooperate in appointing an arbitrator, the High Court can appoint one under Section 11.
Is arbitration in India confidential?
Largely, yes. Section 42A, added in 2019, requires the arbitrator, the institution and the parties to keep all arbitral proceedings confidential. The exception is the award, where disclosing it is needed to implement or enforce it.
Does the Limitation Act apply to arbitration?
It does. Section 43 applies the Limitation Act, 1963 to arbitrations just as it applies to court cases. For most money claims you have three years, and the arbitration counts as starting on the date the respondent receives the notice invoking it.
Can a government department or PSU be taken to arbitration?
Yes, if the contract has an arbitration clause, and most government and PSU contracts do. They often come with their own appointment procedures. Clauses letting the department alone pick the arbitrator can now be challenged after the 2024 Constitution Bench ruling.
Who pays the arbitrator's fees?
The parties do, usually half each while the case is running. At the end the tribunal can make the losing side bear the costs, fees included, under Section 31A. In institutional arbitrations, you pay through the institution under its schedule.
Can arbitration be held online in India?
Yes. Nothing in the Act insists on physical hearings, and many tribunals and institutions hear matters by video, especially procedural ones. Evidence hearings still often happen in person, so check what the tribunal has directed.
What's the difference between arbitration and mediation?
An arbitrator hears both sides and decides, and the award binds you. A mediator only helps you reach your own settlement and can't impose anything. You can try mediation before or during an arbitration, and a settlement can be recorded as a consent award.
Advocate B.K. Singh
Founder of B.K. Singh & Associates. MCA, LL.B., LL.M. More than twenty years in practice before the Supreme Court, the Delhi High Court, district and commercial courts in Delhi NCR, and tribunals.
This guide explains the law in general terms and is not legal advice. For advice on your own papers, contact the team.