In short. Yes, you can pull out of a DIAC arbitration. You file a written application asking the tribunal to terminate the proceedings under Section 32(2)(a) of the Arbitration and Conciliation Act, 1996. The respondent may object if it has a legitimate interest in a final decision. And its counter claim doesn't die with yours. A DIAC case can also end by agreement, by settlement, over unpaid deposits, or because it can't go on. Application to order usually takes a few weeks. Before you file, decide two things: do you want liberty to bring the claim back, and who pays what.
Is this your situation?
- The debtor paid up last month, or went silent, or turned out to own nothing worth chasing. You'd rather stop now.
- Their counter claim landed on your desk, and suddenly the fees look bigger than the money you're fighting over.
- You're the respondent. After months of pleadings, the claimant's lawyer emails to say they want to withdraw.
- DIAC wants a further deposit. Neither of you is keen to pay it.
- The tribunal's last order warns that the matter may be closed, because nobody has moved it in a long while.
- Over a phone call, both sides agreed to drop it. Nobody has worked out how to put that on paper.
- There's a Section 9 order in court, or an emergency arbitrator order, and you've no idea what becomes of it once the case ends.
Can you withdraw a DIAC arbitration? The short answer
Yes. Until the award is signed, a claimant can write to the tribunal and ask it to terminate the proceedings. The power sits in Section 32(2)(a) of the Arbitration and Conciliation Act, 1996. When a claimant withdraws its claim, the tribunal passes an order of termination. There's one exception. If the respondent objects, and the tribunal accepts that it has a legitimate interest in a final decision on the dispute, the case can carry on.
Withdrawal isn't the only exit. You and the other side can simply agree to stop. You can settle and have the terms recorded as a consent award. Unpaid deposits can end it, through the Centre or the tribunal. And the tribunal can close the file if the claimant never files its statement of claim, or if going on has become pointless or impossible. Each exit treats costs differently. Each one affects the counter claim differently, and your right to sue again. So the route depends on why you want out.
The Delhi International Arbitration Centre (DIAC) was set up by the Delhi High Court and has run from the High Court campus at Sher Shah Road since 2009. The Centre manages the file. The order that ends the case, though, usually comes from the tribunal. If you haven't yet made up your mind whether to stay or go, our page on DIAC arbitration work explains how we run claims and defences there.
The provisions that let a DIAC case be ended
Section 32, Arbitration and Conciliation Act, 1996
Under Section 32(1), arbitral proceedings end in one of two ways: a final award, or an order of termination. Section 32(2) gives three grounds for that order. (a) The claimant withdraws its claim, unless the respondent objects and the tribunal sees a legitimate interest on its side in getting the dispute finally settled. (b) The parties agree to end it. (c) The tribunal finds that carrying on has, for some other reason, become unnecessary or impossible. Section 32(3) says the tribunal's mandate ends with the termination. Only its narrow post-award powers survive.
Section 25(a)
If the claimant doesn't file its statement of claim within the agreed or fixed time, and has no sufficient cause, the tribunal must terminate. That's mandatory. Rule 16.2 of the DIAC (Arbitration Proceedings) Rules, 2023 gives a DIAC tribunal the same power over the claims concerned, and lets it make costs and other directions too.
Section 38(2) and Rule 33.5 of the 2023 Rules
Each side pays half the deposit. If one side won't pay, the other can pay its share. If neither pays, the tribunal may suspend or terminate the proceedings on that claim or counter claim. DIAC's own Rule 33.5 goes a step further. Where a deposit isn't paid within thirty days of falling due, the Centre can terminate the arbitration itself if the tribunal hasn't been constituted. If it has, the Centre can direct the tribunal to do it.
Section 30 and Rule 30.2
When the parties settle, the tribunal terminates the proceedings. If both sides ask, and the tribunal has no objection, it records the settlement as an award on agreed terms. Rule 30.3 says that award must state it was made at the joint request, and with the consent, of the parties.
Section 29A(4)
The award has to come within twelve months of the completion of pleadings, or within the further six-month extension the parties can agree. Miss that, and the arbitrator's mandate ends unless the court extends it. The dispute itself isn't terminated. But nothing moves until someone goes to court. Our guide on the DIAC time limit and extensions covers the petition.
Who is allowed to withdraw, and when?
You can only withdraw what you filed. The claimant withdraws its statement of claim. A respondent that has filed a counter claim can withdraw that counter claim. Neither can withdraw the other side's case. It sounds too obvious to say. Yet clients are regularly surprised that dropping their own claim doesn't make the arbitration vanish when there's a counter claim on the record.
Timing changes how it's done. Before the tribunal is constituted, the file is with the DIAC Secretariat. A claimant that wants to stop writes to the Centre, copying the respondent, saying it won't proceed with the Request for Arbitration. There's no tribunal yet to pass a Section 32 order, so the Centre closes the file administratively. Ask the Secretariat to confirm the closure in writing, and to tell you where the fees stand. Once the arbitrator has entered upon the reference, it's different. Your application goes to the tribunal, the other side is heard, and you get a reasoned order.
You can withdraw right up to the award. In practice, though, every month you wait helps the respondent. By the time it has filed a defence, led evidence and argued the case, it has a real stake in a finding that it owes nothing. Compare two claimants. One withdraws a week after filing the Request. The other waits until the tribunal has reserved its award. They're not in the same position at all.
Withdrawing a DIAC arbitration, step by step
This is how it usually runs once a tribunal is in place. If the tribunal hasn't been constituted yet, a letter to the DIAC Secretariat takes the place of steps 3 to 5.
Be clear about what you actually want
Withdrawal, an agreed termination and a consent award all end in different places. If you're being paid, a consent award protects you far better than a withdrawal does. If you just want the spending to stop, withdrawal can work. Think about the counter claim and costs first, though.
List deposits, orders and connected cases
Write down every deposit DIAC has demanded, every interim order of the tribunal, any emergency arbitrator order, and any court case tied to the arbitration (a Section 9 petition, say). Each one needs either a line in your application or its own step.
Draft the Section 32(2)(a) application
Say the claimant withdraws its claim. Give a neutral reason. Say whether you want liberty to bring the claim again, what you propose on costs, and what should happen to each interim order. If the claimant is a company or a firm, attach a board resolution or partners' authority. The respondent may well ask who signed off on this.
Serve it and file it with DIAC
Send it to the tribunal, the other side and the Centre the way documents have gone in the case so far. That's usually email, under Rule 3.1 of the 2023 Rules. Keep proof of delivery.
Deal with any objection at the hearing
The respondent normally gets a short time to reply. If it objects, both sides argue over whether it has a legitimate interest in a final decision, and the tribunal rules. Costs often get argued in the same sitting.
Get the termination order signed
The order should say which claims end, whether the counter claim carries on, who bears costs, and whether any liberty is kept open. Ask the Centre for a signed copy. Read it the day it arrives.
Tie up the loose ends
Write to DIAC about fees. Tell any court where a connected matter is pending. Withdraw or vacate interim orders as directed, and update your accounts and your auditors. Keep the whole file at least until limitation on any possible fresh claim has run out.
When Advocate B.K. Singh drafts a withdrawal application, he writes the costs paragraph and the liberty paragraph first. Those two lines are what the respondent will fight over, and what you'll be relying on years later. A one-line letter saying the claimant doesn't wish to proceed leaves both to the tribunal's discretion. We'd rather not.
Can the respondent block your withdrawal?
It can object. Sometimes it wins. Section 32(2)(a) doesn't give a claimant an absolute right to walk away. The tribunal has to ask whether the respondent has a legitimate interest in a final settlement of the dispute, and if it does, the tribunal can refuse to terminate and go on to an award.
There's no fixed list of what counts. It's decided case by case. The arguments we usually hear go like this. The claimant has threatened to sue again somewhere else, so the respondent wants a binding finding that it owes nothing. The respondent has spent heavily on its defence and wants costs decided on the merits. The allegations are hurting its standing with its bank or its customers and need a clear answer. Or the claimant can see an adverse ruling coming and is withdrawing to dodge it. Simply wanting to watch the claimant lose isn't enough.
Most of the time it ends in a withdrawal on terms. The tribunal may let you withdraw but refuse liberty to refile. Or it may let you go with costs payable to the respondent. Claimants who offer those terms at the outset often get a quick order. Ask to withdraw while keeping every door open, and you've invited a fight.
Your claim goes. What about their counter claim?
It stays. A counter claim is a claim in its own right. When the claimant withdraws, the tribunal terminates the proceedings only on the claim. The counter claim carries on unless the respondent withdraws it too, or both sides agree to stop altogether. You then become, in effect, the respondent in whatever's left.
That changes the fee picture. DIAC can assess fees on the claim and the counter claim separately. In Samsung India Electronics v. Delhi International Arbitration Centre (Delhi High Court, 18 March 2026), the court upheld a separate assessment where the respondent had refused to pay its share on the main claim. So if your claim goes and the counter claim stays, expect the deposits to be recalculated around the counter claim. How the Centre handles that split is in our guide on what happens when the other side won't pay its DIAC fees.
Are you the respondent, and happy to drop your counter claim if the claimant walks away? Put it in writing. Ask for an agreed termination under Section 32(2)(b), each side bearing its own costs. That's tidier than two separate withdrawals. For how a counter claim is pleaded in the first place, see our guide to the statement of defence and counter claim at DIAC.
How a DIAC case can end, and what each route leaves you with
| Route | Legal basis | Who starts it | Can the claim come back? | Practical note |
|---|---|---|---|---|
| Claimant withdraws | Section 32(2)(a) | The claimant, by application | Depends on the order, so ask for liberty in so many words | The respondent can object, and the counter claim survives |
| Agreed termination | Section 32(2)(b) | Both sides together | Depends on what you both record | Put costs, fees and any release of claims in writing |
| Settlement and consent award | Section 30, Rule 30.2 | Both sides together | No. The award decides the dispute | Enforceable like a decree under Section 36 |
| Statement of claim never filed | Section 25(a), Rule 16.2 | The tribunal | Doubtful, because limitation and the claimant's own default count against it | A recall application may work if there was sufficient cause |
| Deposits unpaid | Section 38(2), Rule 33.5 | The Centre or the tribunal | The Supreme Court frowned on a fresh reference in 2025 | Ask for recall first, then go to court under Section 14(2) |
| Carrying on is unnecessary or impossible | Section 32(2)(c) | The tribunal | Depends why | Tribunals don't lightly infer abandonment |
| Mandate runs out | Section 29A(4) | Happens by law | The case revives if the court extends time | Petition the court. You can file even after expiry |
When the deposit isn't paid
This is how most DIAC cases end without anyone deciding to end them. The Centre fixes deposits for the arbitrators' fees and its own administrative costs under the DIAC (Administrative Costs and Arbitrators' Fees) Rules, 2018. Rule 33.1 of the 2023 Rules splits them equally between claimant and respondent, unless the Centre says otherwise. If a deposit isn't paid within thirty days of falling due, Rule 33.5 lets the Centre terminate the arbitration before the tribunal is formed. After that, it can direct the tribunal to terminate.
The Supreme Court dealt with exactly this in Harshbir Singh Pannu v. Jaswinder Singh (2025 INSC 1400). It held that the power to pass a termination order comes only from Section 32. Provisions like Sections 25 and 38 merely supply the triggers. If your case is terminated for non-payment, first ask the same tribunal to recall the order. Maybe you paid and it wasn't recorded. Maybe a material fact was missed. If recall is refused, your remedy is before the court under Section 14(2). The Court also said a fresh Section 11 petition to start over isn't the right route, and cautioned against letting a party at fault restart the arbitration.
So don't let a deposit lapse quietly and assume you'll come back later. You won't, easily. Pay it, or write to the Centre asking for time and giving reasons, or make a deliberate decision to withdraw on recorded terms. The payment side is in our guide on DIAC fees and what happens if you miss a deposit.
When the tribunal closes the case itself
Two provisions let a tribunal end a case with nobody asking. Section 25(a) says it must terminate if the claimant doesn't file its statement of claim in time and has no sufficient cause. Section 32(2)(c) says it may terminate where carrying on has become unnecessary or impossible. Think of a dispute whose subject matter no longer exists, or a claimant who has obviously given up.
The Supreme Court has put limits on that second power. In Dani Wooltex Corporation v. Sheil Properties (2024), it held that a Section 32(2)(c) termination needs a recorded finding, based on the material, that carrying on really has become unnecessary or impossible. Abandonment can be express or implied. Implied abandonment, though, isn't lightly assumed. A claimant's failure to ask for hearing dates won't do, because fixing hearings is the tribunal's job, not the party's. And where a party just doesn't show up, the tribunal should proceed under Section 25, not shut the case.
Older DIAC practice directions also let a reference be treated as closed if the statement of claim or the fees weren't filed within set windows. How those directions sit with the 2023 Rules is something to check with the Secretariat in your own matter. Has your case been closed this way, and you think wrongly? Don't sit on it. File a recall application before the tribunal with an explanation and proof. That's the first step.
If you withdraw, can you ever bring the claim back?
Possibly not. This is the question most claimants forget to ask. The Arbitration Act has nothing that directly matches Order XXIII Rule 1 of the Code of Civil Procedure. Under that rule, a plaintiff who withdraws a suit without the court's leave to file afresh can't sue again on the same claim. Tribunals and courts have still borrowed the fairness idea behind it. A claimant shouldn't be able to drag a respondent through pleadings, pull out, and then start again whenever it likes. The Supreme Court's 2025 remarks against restarting arbitrations after termination point the same way.
If there's any chance you'll want to revive the claim, maybe because the debtor's finances could recover or a missing document might turn up, ask the tribunal to record that the withdrawal is with liberty to begin fresh proceedings on the same cause of action, subject to limitation. It may say no. It may attach costs. At least the order will answer the question.
Limitation doesn't pause because you started an arbitration and dropped it. For limitation, an arbitration begins on the date the respondent receives the notice invoking it under Section 21. Whether time spent in a withdrawn arbitration can be excluded later is far from settled. Don't bank on it. And withdrawing usually won't let you file a civil suit instead. The arbitration clause still binds you, and if the defendant asks, the court has to send the parties back under Section 8. Our guide on choosing between DIAC and a commercial court suit explains when each one is open to you.
Withdrawal or a settlement award?
If the other side has paid every rupee, a withdrawal with each side bearing its own costs is usually enough. If they've only promised to pay, or paid part, don't withdraw. A withdrawal gives you nothing to enforce. Say the debtor misses the second instalment. You're left suing on a settlement letter, possibly out of time on the original claim.
The safer course is a consent award. Ask the tribunal to record the settlement as an award on agreed terms under Section 30 and Rule 30.2. It has the same standing as an award on the merits, and if payments stop, you can execute it as a decree under Section 36. Our guide on settling a DIAC case through a consent award covers drafting the terms and the default clause.
Where the deal is done but the money comes in instalments, there's a middle path. Ask the tribunal to adjourn for a fixed period with liberty to revive if there's a default, and to record the consent award once the last payment clears (or straight away on default). Keep an eye on the Section 29A clock. A long adjournment can run out the mandate.
How long it takes and what it costs to end a DIAC case
| Stage | Typical time | Costs to expect | Comment |
|---|---|---|---|
| Drafting and filing the withdrawal application | A few days | Your lawyer's drafting fee. DIAC doesn't usually charge a separate filing fee for the application itself, but do check | Have your authority papers ready first |
| Respondent's reply | Usually one to three weeks, whatever the tribunal directs | Nothing for you, unless you file a rejoinder | Takes longer if they object on legitimate interest |
| Hearing on the application | One sitting, occasionally two | Sitting fees under the DIAC schedule, shared as directed | Often done online |
| Termination order | A few days to a few weeks after the hearing | There may be a costs order under Section 31A and Rule 32 | Check it for liberty, costs and the counter claim |
| Settling accounts with DIAC | A few weeks after the order | Arbitrators usually keep fees for work already done. Any refund depends on the Fee Rules and the Centre's assessment | Ask in writing for a statement of account |
| Closing connected court matters | The next date in each matter | Court fee on any application, plus your lawyer's appearance fee | Don't leave a Section 9 undertaking hanging |
Fees, deposits and costs once you've withdrawn
You won't get the whole deposit back. The arbitrators have worked on your file. What part of the fees they've earned by the stage the case ends is decided by the DIAC (Administrative Costs and Arbitrators' Fees) Rules, 2018 and the Centre's own assessment. DIAC publishes a fee schedule pegged to the sum in dispute. Look at the current one, then ask the Secretariat for a written statement: what you've paid, what's been disbursed, and what (if anything) comes back.
Costs between the parties are a separate fight. Section 31A of the Act and Rule 32 of the 2023 Rules let the tribunal decide who bears the costs of the arbitration, legal fees included. The general rule is that the losing side pays. A withdrawing claimant gets treated, in some ways, as the losing side. So a respondent that has spent money defending will often ask for it back. If you can, settle costs with the other side before the hearing. A short written note that each side bears its own costs usually ends the argument then and there.
Did the other side pay your share of a deposit to keep the case alive? Rule 33.2 allows that. Expect them to claim it back in any costs order. When Advocate B.K. Singh advises a respondent facing a sudden withdrawal, he files a short, itemised costs statement before the hearing. The tribunal then has figures in front of it, not a vague request.
Papers to pull together before you withdraw
- The arbitration clause or agreement, and the DIAC Request for Arbitration with its case number
- Statement of claim, statement of defence, any counter claim, and all replies
- Every procedural order of the tribunal, especially the latest timetable and the next date
- Each DIAC fee demand, your payment receipts, and any letters about the other side's unpaid share
- Any Section 17 order of the tribunal, any emergency arbitrator order, and any Section 9 order or undertaking given in court
- A board resolution, partners' authority or proprietor's letter that authorises the withdrawal
- The settlement agreement or proof of payment, if you're ending the case because you've settled
- A note of when limitation runs out on your claim, in case you need liberty to refile
- Every email you've exchanged with the Centre and the tribunal about the case
Don't forget the court cases and interim orders
Arbitrations rarely stand alone. There may be a Section 9 petition pending in the Delhi High Court or a district commercial court at Saket or Tis Hazari. The respondent may have undertaken not to sell stock. There could be an emergency arbitrator order under Rule 14 of the 2023 Rules, or a Section 17 order of the tribunal. Ending the arbitration doesn't automatically dispose of any court case. And a court order made in aid of an arbitration that no longer exists leaves everyone in an odd spot.
At the next hearing, tell the court the arbitration has been terminated and put the order on record. Ask for the Section 9 petition to be disposed of, with the interim order vacated or continued on agreed terms. If a bank guarantee was given under an interim order, ask for it back in the same order. Where the respondent deposited money with DIAC or in court, ask for directions on releasing it.
Is there also a cheque bounce complaint, an MSME Facilitation Council reference or an insolvency application between the same parties? Think about each one before you withdraw. A settlement that ends the arbitration but leaves a criminal complaint alive is rarely what either side meant. If the dispute should carry on outside DIAC on general arbitration grounds, the team at arbitrationlawyer.in handles non-DIAC arbitrations and court petitions.
An invented example: the claimant wants out, the respondent wants a ruling
This one's made up. A garment exporter in Okhla starts a DIAC arbitration against a dyeing unit in Faridabad. It claims Rs 68 lakh for fabric a foreign buyer rejected because the colour bled. The dyeing unit files a defence and a counter claim of Rs 21 lakh for unpaid job-work bills. Eight months in, the exporter's own quality manager admits in cross-examination that the fabric was washed hotter than the agreed specification. The exporter promptly applies to withdraw its claim under Section 32(2)(a).
The dyeing unit objects. It says the exporter has been telling other buyers its work is defective, so it wants a finding on the merits. It has also paid a textile testing expert a good deal. The tribunal allows the withdrawal but refuses liberty to refile. It orders the exporter to pay the dyeing unit's costs of the claim as assessed, and lists the counter claim for final arguments. Two months later, with no way back and the counter claim still pending, the exporter settles it at Rs 16 lakh. The tribunal records a consent award.
Looking back, the exporter should have offered a package when it withdrew. No refiling. Each side bears its own costs. A negotiated figure on the counter claim. One order would have ended it, not three.
Mistakes we see when people end a DIAC case
- Letting the deposit lapse rather than deciding. It's the worst way out. The Supreme Court has said a fresh Section 11 petition isn't the answer, and the party at fault may not get to start again.
- Withdrawing after getting part of the money. Then there's nothing left to enforce if the rest doesn't come. Get a consent award with a default clause.
- Forgetting the counter claim. Your withdrawal ends your claim. Theirs stays. Negotiate the two together.
- An order that says nothing on costs or liberty. You could find you can't refile and still owe costs.
- Leaving court orders hanging. A Section 9 undertaking or a bank guarantee needs its own release order.
- Withdrawing without proper authority. One director acting with no board resolution, or one partner going against the rest, invites a challenge to the withdrawal itself.
- Thinking limitation stops while you were in arbitration. It doesn't. If refiling is even a possibility, check the date before you withdraw.
Ending a DIAC case: what to do this week
Write down why you want out, and what you need at the end. Money? A clean exit? Protection from a fresh claim? Or just no more fees. Gather the procedural orders, fee receipts and interim orders, and check when limitation runs out on your claim. If there's a settlement on the table, get the terms in writing before anyone files anything.
Then pick the route. Withdrawal with liberty or without it, agreed termination, or a consent award. Talk to the other side about costs and the counter claim before the hearing, not in the middle of it. If a deposit is due, deal with it now. Don't let the Centre end the case for you. For how we run a DIAC matter from start to finish, see our DIAC arbitration services.
Want your withdrawal application, settlement terms or termination order looked at before you file? Or an update on where the law stands on refiling after termination? Send your papers to Advocate B.K. Singh's team through the contact page.
Frequently asked questions
Can I withdraw my DIAC arbitration after the evidence is over?
Yes. You can withdraw any time before the award. But the later you leave it, the stronger the respondent's argument that it has a legitimate interest in a final decision. Late withdrawals are also likelier to come with costs against you, or with liberty to refile refused.
Does the other side have to agree before I withdraw?
No. You apply to the tribunal under Section 32(2)(a), and you don't need the respondent's consent. It can object, though. The tribunal then decides whether it has a legitimate interest in a final settlement of the dispute.
Will DIAC refund my fees if I withdraw early?
Only as far as the Fee Rules and the Centre's assessment allow. Arbitrators generally keep fees for work they've already done. Once the termination order is out, ask the Secretariat in writing for a statement of account.
What's the difference between withdrawal and termination?
Withdrawal is what the claimant does: it gives up its claim. Termination is the tribunal's order ending the proceedings. That order can follow a withdrawal, an agreement, a settlement, unpaid deposits, or a finding that the case can't go on.
Can I file a civil suit after withdrawing from arbitration?
Usually not. The arbitration agreement still binds you both. File a suit, and the defendant can ask the court to send the dispute back to arbitration under Section 8. Withdrawing ends the proceedings. It doesn't end the arbitration clause.
My case was terminated because the other side didn't pay its share. What now?
You could have paid their share and claimed it back as costs. If the case is already terminated, ask the tribunal to recall the order, giving reasons. If that fails, your remedy is before the court under Section 14(2), as the Supreme Court explained in 2025.
Do I need a lawyer to withdraw a DIAC claim?
The application is short. The terms aren't trivial, though: liberty to refile, costs, the counter claim, interim orders. A badly worded withdrawal can cost you more than the fee you saved, which is why most businesses get counsel to draft it.
Can a respondent withdraw from a DIAC arbitration?
Not from a case brought against it. It can only withdraw its own counter claim. If it just stops taking part, the tribunal can carry on and make an award on the evidence under Section 25.
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.