Arbitration In IndiaArbitration Agreement versus Stamp Duty

January 18, 20230

The endless saga of Stamp Duty on an Arbitration Agreement is finally before the Constitutional Bench of SC.

It will be very interesting to note the final outcome of this issue which had been hovering for a quite long period.

Meanwhile, it is pertinent to note that Section 11(6) of the Arbitration and Conciliation Act,1996 provides the procedure for the appointment of an arbitrator with the reference to an arbitration agreement.

Whereas, a valid arbitration agreement is a sine qua non where an appointment of an arbitrator has to be dealt at the first place.

This gives rise to suo motu question as to whether such an agreement satisfies the trite requirement of Section 35 of the Indian Stamp Act,1899 before being considered as a valid agreement and at par an instrument to be called as evidence for being acted upon.

In the above factum and legality; it has to be decided as to;

a. whether an appointment of an arbitrator will be only subject to a valid agreement?

b. whether the defect of stamp duty is curable and appointment of an arbitrator shall not be hampered where there is no dispute about existence of an agreement by both the parties?

c. whether the appointment of an arbitrator shall be carried out subject to the compliance of the provision of Section 35?

d. whether guidelines should be framed to file a properly stamped arbitration agreement and then an application under Section 11 shall be entertained by Chief Justice or any person or institution designated for the said purpose.

Perhaps a harmonious approach towards both enactments can be a better way out.


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