Putting DIAC Arbitration in Your Contract: How to Draft the Clause and the Mistakes to Avoid

What a DIAC clause should say, in short

A good DIAC clause gets five things down clearly. Disputes 'shall' go to arbitration, not 'may'. The institution is named in full, the Delhi International Arbitration Centre, along with its rules. The seat is fixed, usually New Delhi. The number of arbitrators is set, with appointment left to the Centre's rules. And the language and governing law are named.

Anything beyond that is optional. Add it only for a reason: a short negotiation or mediation step, fast track procedure, special qualifications for the arbitrator, confidentiality terms or cost rules. Every extra line is one more thing for the other side to argue about later. Keep it lean.

The clause problems we see in Delhi courts aren't exotic. A loose name for the institution. A 'venue' with no seat. A clause that lets one party pick the arbitrator, or wording that turns arbitration into an option. Each of these takes a minute to avoid while you're drafting, and fixing one after a dispute starts is slow and costly.

Why bother naming DIAC?

There are two kinds of arbitration clause. Ad hoc, where the parties run the arbitration themselves, and institutional, where a body like DIAC administers it. DIAC was set up by the Delhi High Court and has worked out of the High Court premises in New Delhi since 2009. Name DIAC in your clause and its rules fill whatever gaps your contract leaves: how the request is filed, how arbitrators are picked from its panel, how fees are assessed and collected, how deadlines are managed and how the award is delivered.

That structure earns its keep when the other side won't cooperate. Under an ad hoc clause, a party that refuses to name its arbitrator can push you into a Section 11 petition before the High Court. Under a DIAC clause, the Centre's rules handle appointment. You usually don't need a court just to get a tribunal in place.

It isn't free. DIAC publishes a schedule of administrative costs and arbitrators' fees, worked out on the sum in dispute, under the DIAC (Administrative Costs and Arbitrators' Fees) Rules, 2018. Check the current figures. If you're weighing the two models side by side, our guide on DIAC or ad hoc arbitration goes through it.

Sample wording you can start from

What follows is the wording we start from for domestic contracts between Indian parties. It's our own draft, not the Centre's official model clause. DIAC puts its recommended wording on its website. Compare the two before you finalise.

Any dispute, controversy or claim arising out of or in connection with this Agreement, including any question about its existence, validity, interpretation, performance, breach or termination, shall be referred to and finally resolved by arbitration administered by the Delhi International Arbitration Centre, New Delhi, in accordance with the DIAC (Arbitration Proceedings) Rules in force on the date the arbitration commences. The arbitral tribunal shall consist of a sole arbitrator appointed in accordance with those Rules. The seat of arbitration shall be New Delhi. The language of the arbitration shall be English. This Agreement, including this clause, shall be governed by the laws of India. Subject to this clause, the courts at New Delhi shall have exclusive jurisdiction.

For bigger contracts, swap 'a sole arbitrator' for 'three arbitrators', and add that each party nominates one, with the two nominees (or the Centre, if they fail) choosing the presiding arbitrator under the Rules. If you'd like a short cooling-off period first, add something like this: Before commencing arbitration, a party shall give written notice of the dispute, and the parties' senior representatives shall meet within 15 days; if the dispute is not resolved within 30 days of the notice, either party may commence arbitration.

What each piece of the clause is doing

• 'Shall be referred'. This is what makes arbitration compulsory. In Jagdish Chander v. Ramesh Chander (2007), the Supreme Court held that a clause saying the parties 'may' go to arbitration if they agree later isn't an arbitration agreement at all.
• 'Arising out of or in connection with'. Wide words. They pick up contract claims and the claims closely tied to them. Narrow it to 'disputes about the price' and you'll get arguments that everything else falls outside.
• The institution's full name. 'DIAC' on its own can be mixed up with the Dubai International Arbitration Centre. Write 'Delhi International Arbitration Centre, New Delhi'.
• Rules 'in force on the date the arbitration commences'. Stops a fight over which version applies. Today that's the DIAC (Arbitration Proceedings) Rules, 2023.
• How many arbitrators. Section 10 of the Act lets you pick any number as long as it isn't even. Say nothing and you get a sole arbitrator.
• Seat. This decides which courts supervise the arbitration and hear any challenge to the award. Write 'seat'. 'Venue' on its own isn't enough.
• Language and governing law. Saves money and argument later, especially with a foreign party or a pile of documents in Hindi.
• The court jurisdiction line. Point it at the same city as the seat. New Delhi as the seat and Mumbai courts for 'all matters' is a fight you didn't need.

Drafting the clause, step by step

Run through these whenever you're reviewing the dispute clause in a commercial contract.

1. Ask whether arbitration fits this contract

   Arbitration is private, it can be quicker, and you get a decision maker who knows the subject. For small claims that rest on documents, a commercial suit can cost less, and some debts qualify for a summary suit. Our guide on DIAC arbitration versus a commercial suit compares them.

2. Get the institution and rules right

   Write 'Delhi International Arbitration Centre, New Delhi' and refer to its arbitration rules in force when the arbitration commences. Don't paraphrase the name. Don't just say 'the Delhi High Court' either.

3. Fix the seat

   If you want the Delhi courts supervising, choose New Delhi. Call it the 'seat'. Then make the exclusive jurisdiction clause point to the same place.

4. Settle tribunal size and appointment

   A sole arbitrator for most contracts. Three for complex or high-value ones. Leave appointment to the DIAC Rules or to balanced nomination by both sides, and never give one side the power to appoint the sole arbitrator.

5. Add extras only if you need them

   You might want a short negotiation step with a fixed end date, fast track procedure under Section 29B, or an arbitrator with particular technical experience. Each one needs a business reason. If you can't name it, leave it out.

6. Check who signs, and what's incorporated

   Everyone who should be bound has to sign, including guarantors and group companies that'll perform or pay. If the clause lives in separate general terms, the signed document has to refer to them expressly.

7. Stamp it and keep the signed copy

   Pay stamp duty under the state stamp law and keep the original, or at least a clear signed copy. An unstamped agreement isn't void. It can still hold up the arbitration.

When Advocate B.K. Singh looks over a contract, he reads the dispute clause alongside the notices clause and the definition of the parties. A perfect clause doesn't help much if the notice address is long out of date, or the group company that actually pays never signed.

Seat, venue, and which court keeps watch

Think of the seat as the arbitration's legal address. Parties choose the place of arbitration under Section 20 of the Act, and in Indus Mobile Distribution v. Datawind Innovations (2017) the Supreme Court held that only the seat's courts supervise it. Two years later, in BGS SGS Soma JV v. NHPC (2019), the Court said a clause mentioning just a 'venue' will ordinarily be read as fixing the seat, unless something in the contract suggests otherwise. Don't lean on that. Write 'seat'.

Pick New Delhi and every court application, mid-arbitration or after the award, is made in Delhi. For a commercial dispute of specified value (Rs 3 lakh and above), Section 10 of the Commercial Courts Act, 2015 routes those applications to the commercial courts. Claim plus counter claim above Rs 2 crore? The Commercial Division of the Delhi High Court takes applications under Sections 9 and 34. Smaller matters go to the District Judge (Commercial Court), whether at Saket, Tis Hazari, Karkardooma or wherever jurisdiction lies. Appointment petitions under Section 11 are different. They're filed in the High Court, however small the claim. Check the current district court limit. There's been a proposal to raise it.

DIAC doesn't force a Delhi seat on you. You can have DIAC administer an arbitration seated somewhere else, but then a Delhi institution is working alongside another city's courts. For most businesses in Delhi NCR, a New Delhi seat is just simpler. Enforcing the final award is a separate question, and that can happen wherever the debtor's assets are.

Who appoints the arbitrator (and why one side can't)

Older contracts often say the company's managing director, or an officer he nominates, will appoint the sole arbitrator. You see it a lot in paperwork drafted by big companies, lenders and public bodies. It doesn't work any more. Section 12(5) of the Act, read with the Seventh Schedule, makes certain people ineligible to be arbitrators, including employees and others closely tied to a party. In TRF Ltd v. Energo Engineering (2017) and Perkins Eastman Architects v. HSCC (2019), the Supreme Court held that someone who can't be an arbitrator can't nominate one either, and that a party with a stake in the outcome can't appoint a sole arbitrator on its own.

Then came Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (2024). A Constitution Bench took it a step further. One-sided appointment clauses, it said, break the rule that parties must be treated equally. So hand appointment to DIAC's rules, or split it evenly between the two sides. And the Section 12(5) bar can be given up only through an express written agreement signed once the dispute is already on. Nothing signed in advance counts.

If your current contracts have a unilateral clause, an arbitration under it could end in an award that gets set aside. Replace the clause at the next renewal, or agree DIAC administration in writing once a dispute comes up. How the Centre's panel and appointment process actually run is covered in our guide on arbitrator appointment at DIAC.

One arbitrator or three, qualifications, and fees

A sole arbitrator is quicker to appoint, easier to schedule and cheaper. Three bring more collective judgment and suit large, technical or long-running contracts. But the fees climb steeply, and finding a hearing date that suits three busy people is a small project of its own. For mixed contracts we like a value trigger: one arbitrator below a stated amount, three above it.

Go easy on qualifications. Insist on 'a retired judge of the Supreme Court', or 'a chartered engineer with 25 years of experience in hydropower', and you've shrunk the pool, raised the cost and handed a reluctant party a ground to object to any appointment. Ask for qualifications only where the subject really needs them. Keep the wording broad.

On fees, the DIAC schedule applies whatever your clause says. Under the 2018 fee rules, fees are generally worked out on the claim and counter claim added together, and DIAC can assess and demand them separately if one party won't pay its share. In Samsung India Electronics v. Delhi International Arbitration Centre, decided on 18 March 2026, the Delhi High Court upheld that approach. Your clause can't override the Centre's fee rules. Plan for them instead. Our guide on what DIAC arbitration costs has the details.

Talking or mediating before you arbitrate

Lots of contracts make the parties negotiate or mediate before they can arbitrate. That's fine, if the steps are clear and have a deadline. Write down who meets, within how many days, and when either party is free to start arbitration. A line saying 'the parties shall try amicably to resolve disputes', with no end date, hands a defaulting party the argument that you jumped the gun.

Courts have often treated these pre-arbitration steps as directory rather than a strict bar, especially when one side clearly had no interest in talking. Still, it turns on the wording. A fixed 30 days from a written notice heads off most of the argument. In clauses Advocate B.K. Singh settles for clients, the negotiation step nearly always ends on a fixed date. Neither side gets to stretch it.

Section 12A of the Commercial Courts Act makes pre-institution mediation compulsory before most commercial suits. It doesn't apply to arbitration. If your contract has an arbitration clause, you can invoke it without going through Section 12A mediation first. Where Section 12A does apply is explained on our pre-institution mediation page. DIAC runs mediation too, and parties can settle at any point in a DIAC arbitration and have the settlement recorded as a consent award.

Emergency arbitrator, interim relief and fast track

For urgent relief before your tribunal exists, Rule 14 of the DIAC Rules lets you go to an emergency arbitrator. That arbitrator must rule within 14 days of being appointed, and the order lasts 90 days unless the full tribunal alters it. The Supreme Court, in Amazon.com NV Investment Holdings v. Future Retail (2021), held such an order in an India-seated arbitration to be an order under Section 17(1), which you can enforce under Section 17(2). If you want that option, don't exclude it in your clause. There's more in our guide on the emergency arbitrator at DIAC.

Don't try to shut out the court's power under Section 9 to grant interim measures. It stays available before the arbitration, during it (where the tribunal's remedy isn't adequate) and after it. Trying to exclude it just gives the other side something to argue about.

If most of your contracts are for moderate sums and turn on documents rather than witnesses, think about agreeing to fast track procedure under Section 29B of the Act. You get a sole arbitrator, a decision on written pleadings and submissions unless the tribunal needs a hearing, and an award within six months. It suits more contracts than people expect. Our guide on fast track arbitration at DIAC explains when it fits.

What your clause choices do to time and cost

Clause mistakes we keep seeing

• Writing just 'DIAC'. Spell out Delhi International Arbitration Centre, New Delhi. Abbreviations have started arguments about which institution the parties meant.
• Letting one party appoint. After Perkins Eastman and the 2024 Constitution Bench decision, that's a weak spot in whatever award follows.
• 'Venue: Delhi' and no seat. It usually works out. But why leave it open to argument? Write 'seat'.
• Seat in one city, exclusive jurisdiction in another. The seat wins. A clashing court clause just adds a preliminary fight.
• Optional wording. 'May refer to arbitration' or 'may be settled by arbitration if both agree' binds nobody.
• Carving out too much. Exclude 'disputes about quality' or 'claims above Rs 50 lakh' and you've split one dispute across two forums.
• Running into the costs rule. Under Section 31A(5), an agreement that one party pays the costs of arbitration in any event is valid only if it's made after the dispute has arisen.
• Ignoring the notice clause. Arbitration commences when the other side receives the notice invoking it (Section 21). Old addresses and no email ID mean delay.

Signatures, group companies and clauses sitting in separate terms

Under Section 7 of the Act, the agreement to arbitrate has to be written down. A signed contract does it. So do letters or emails exchanged between you that record the deal, and so does a statement of claim alleging the agreement that the other side's defence never denies. Section 7(5) adds incorporation by reference: if your signed contract points to another document holding the clause, and points to it so that the clause becomes part of the deal, you're covered. Compare two purchase orders. One says 'supplied on our general terms, which include arbitration at DIAC'. The other only mentions 'standard terms'. The first is far safer, and the difference is one line.

Get the right people to sign. If a parent company is guaranteeing payment, have it sign the main contract, or put a matching DIAC clause in the guarantee. If a group company will perform or pay, make it a party. In Cox and Kings v. SAP India (2023), the Supreme Court accepted that non-signatories can sometimes be bound under the group of companies doctrine. You'd have to prove their conduct and involvement, though. A signature costs far less than that proof.

Stamp duty, governing law and foreign parties

Seven judges sat in In re Interplay between Arbitration Agreements under the Arbitration Act and the Stamp Act (2023). Their answer: a contract that's unstamped, or stamped short, isn't void, and its arbitration clause still bites. Stamping can be cured later, and the tribunal deals with it. That's a relief. It isn't a plan. Pay the right stamp duty when you sign, and you avoid both a preliminary objection and the penalty for late stamping.

When both sides are Indian, Indian law governs the contract and the arbitration clause, and Section 28(1)(a) makes a domestic tribunal decide by Indian substantive law. Bring in a foreign company, or a person who habitually lives abroad, and you have an international commercial arbitration under Section 2(1)(f). Then you're free to pick the law of the contract. With a New Delhi seat we'd still spell out that Indian law governs the arbitration clause itself. A foreign counterparty will also ask about language, translations and video hearings. Check what the Centre currently allows for virtual hearings.

What can't be arbitrated, and the MSME supplier question

However well you draft, some disputes just can't go to arbitration. In Vidya Drolia v. Durga Trading Corporation (2020), the Supreme Court explained that insolvency, criminal offences, matrimonial disputes and tenancies covered by rent control statutes aren't arbitrable. Ordinary landlord and tenant disputes under the Transfer of Property Act generally are. So a commercial lease for a shop or office outside rent control can carry a DIAC clause.

Buyers of goods from a registered micro or small enterprise should know one more thing. Under the MSMED Act, 2006, a late-payment claim may not end up at DIAC at all. The supplier can take it to the MSME Facilitation Council under Section 18, and the Supreme Court said in Gujarat State Civil Supplies v. Mahakali Foods (2022) that Section 18 wins over any private arbitration clause. Plenty of buyers find this out late. Our guide on DIAC versus the MSME Facilitation Council explains both routes.

Suppliers, service firms, lenders, startups and large groups: how the clause changes

Suppliers and distributors usually want a plain sole-arbitrator clause with fast track for the smaller claims. Keep a summary suit in mind for clean invoice debts, where the clause allows it. IT and service firms often need confidentiality and a technical arbitrator for fights over scope and acceptance. Section 42A of the Act already keeps arbitral proceedings confidential, except for the award, so don't overload the clause.

Lenders and NBFCs should strip out any clause letting the lender's officer appoint the arbitrator. They should also make sure the borrower, every guarantor and every security provider signs documents with matching DIAC clauses. For startups signing investor and shareholder agreements, check that the dispute clause in the shareholders' agreement matches the one in the share subscription agreement. Two different forums for the same deal is a common mistake. It's an expensive one too.

Large companies and groups often run master agreements with many affiliates. One consistent DIAC clause across the master agreement, the work orders and the guarantees saves a fight about which affiliate is bound. Contracts with government bodies are usually on the government's standard form, and you may not be able to change the clause. Note any unilateral appointment provision anyway. Raise it at the right time if a dispute comes.

Before you sign: a checklist for the DIAC clause

• The clause says disputes 'shall' be referred to arbitration
• The institution is named in full: Delhi International Arbitration Centre, New Delhi
• The rules are the ones in force when the arbitration commences
• The seat says New Delhi (or another city you picked on purpose)
• The number of arbitrators is fixed and odd, and appointment goes to the DIAC Rules or a balanced method
• Nothing gives one party alone the right to appoint
• Language and governing law are written down
• Any negotiation or mediation step ends on a fixed date
• The court jurisdiction clause matches the seat
• Everyone who should be bound has signed, guarantors and paying group companies included
• The notice clause has current addresses and email IDs
• It's stamped as the state stamp law requires

Stuck with a bad clause already?

Usually it can be fixed. If both sides can agree, sign a short written agreement after the dispute arises confirming DIAC administration, the seat and how the arbitrator is appointed. That same document doubles as the express written waiver Section 12(5) requires, if an ineligible appointee is in the picture.

If the other side digs in, it's a Section 11 petition in the Delhi High Court. Since In re Interplay (2023) and SBI General Insurance v. Krish Spinning (2024), the judge's look at that stage is limited to a prima facie check that some arbitration agreement exists, and very often the parties are sent to DIAC. Our guide on Section 11 references to DIAC walks through it. The other trap is being sued despite a valid clause. Move a Section 8 application for reference to arbitration, and do it before your first statement on the merits goes on file. Don't let that window close. For arbitration questions beyond DIAC, our network site arbitrationlawyer.in has more.

What to do this week

Take out the three or four contracts that matter most to your business, and your printed purchase order terms. Hold each dispute clause up against the checklist. Look hardest at three things: how the institution is named, what it says about the seat, and who picks the arbitrator. Any one-sided appointment clause gets flagged for replacement at the next renewal or amendment. Update the notice addresses and email IDs while you're at it.

If you're about to sign, send the other side a clean DIAC clause early in the negotiation. Deals are rarely lost over it. Our DIAC arbitration page explains how we run matters at the Centre once a dispute does come up.

If you'd like the dispute clauses in your contracts checked before you sign, or before a dispute starts, you can send them to Advocate B.K. Singh's team through the contact page.