Arbitration Rewind 2025

Introduction

2025 witnessed significant judicial developments that further refined India's arbitration landscape. Courts across levels ruled upon important aspects such as the validity and formation of arbitration agreements, arbitrability of disputes, interim reliefs, governing law, and the permissible scope of judicial intervention.

2025 also saw meaningful progress in institutional arbitration, most notably through the revised MCIA Rules, reflecting India's continued alignment with global best practices.

This rewind tracesthese developments offering readers aconsolidatedview of evolving principles and practical takeaways.

Validity of Arbitration Agreement

1. Uncertain arbitration clauses do not create a binding arbitration agreement

In BGM and M-RPL-JMCT (JV) v. Eastern Coalfields Limited¹, the Supreme Court clarified that language in a dispute resolution clause such as "may be sought through arbitration" merely provides an option to arbitrate the dispute and does not amount to a binding arbitration agreement between the parties. In such cases, the parties are not in complete agreement that all disputes arising from the contract will be referred to arbitration.

The Supreme Court also observed that mere use of the expression "arbitration" or "arbitrator", or such clauses which state that disputes "shall be referred to arbitration if the parties so decide", do not constitute a valid arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996 ("Act"). These clauses would require a further or fresh consent of the parties to refer the dispute to arbitration. Thus, the Supreme Court held that an enabling clause, allowing parties to decide whether to arbitrate, is not sufficient and does not constitute an enforceable arbitration agreement.

Relying on this ruling, the High Court of Calcutta in Roshan Agarwal v. National Projects Construction Corporation Limited² also held that the mere use of a heading "Arbitration" in a clause does not, by itself, create a binding arbitration agreement. An arbitration agreement must be couched in obligatory and not precatory words. While no specific form is prescribed, the words used must be certain, definite, and indicative of the parties' determination to refer disputes to arbitration, and it must not merely contemplate a choice or mere possibility to arbitrate.

2. WhatsApp and email exchanges can constitute an arbitration agreement

While dealing with an application under Section 9 of the Act, the Delhi High Court in Belvedere Resources DMCC v. OCL Iron and Steel & Ors.³held that WhatsApp communication and email exchanges containing an arbitration clause, shall constitute a valid and binding arbitration agreement. The Court placed reliance on Cox & Kings Ltd. v. SAP India Pvt. Ltd.⁴ where it was observed that Section 7(4)(b) dispenses with conventional agreements with signatures and emphasises consent through exchanging of documents between persons.

3. Failure to counter sign the agreement does not bar reference to arbitration

In Glencore International AG v. M/s. Shree Ganesh Metals and Anr.⁵, the parties had reached a contractual understanding for sale of zinc through an email. Consequently, Glencore International shared the signed copy of the contract to Shree Ganesh Metals, but Shree Ganesh Metals never signed the said contract. Despite this, both sides performed their respective obligations. When a dispute later emerged, one party invoked the arbitration clause contained in that contract and initiated arbitral proceedings. While the invocation was challenged by the other party, the Supreme Court, relying upon Jugal Kishore Rameshwardas v. Goolbai Hormusji⁶, held that an arbitration agreement needs to be in writing and Section 7(4) of the Act does not mandate that it must, in all cases, be signed by the parties.

Arbitrability of disputes

4. Not all trademark-related disputes are non-arbitrable

In K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr.⁷, the Supreme Court upheld the decision of the Madras High Court which held that an in-personam trademark dispute arising out of a contract can be decided in arbitration, but not rights in remarising under the Trade Marks Act, 1999. The court clarified the assumption that all trademark-related disputes are outside the scope of arbitration is erroneous. In the present case, as the dispute was in relation to rights and obligations arising out a trademark license agreement, the Court held that such dispute was arbitrable.

5. Mandatory reference to arbitration in specified cases under the SARFAESI Act

Under Section 11 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI Act"), any dispute relating to securitisation or reconstruction or non-payment of any amount due including interest, between a bank or financial institution or asset reconstruction company or qualified buyer shall be settled by arbitration as provided in the Act.

While examining the scope and ambit of the Section 11 of the SARFAESI Act, the Supreme Court in Bank of India v. Nangli Rice Mills Pvt. Ltd.⁸, held that this provision creates a statutory mandate for arbitration, and therefore, a separate or explicit written arbitration agreement between the parties is not necessary, as the statute itself incorporates a legal fiction of consent. In this case, the dispute hinged on whether a conflict between two banks over the priority of their security interest in the same assets should be resolved by the Debts Recovery Tribunal. The Supreme Court clarified that such inter-se disputes between secured creditors must be settled through mandatory arbitration under Section 11 of the SARFAESI Act rather than through the Debts Recovery Tribunal.

Jurisdiction and Governing Law

6. Interim relief by Indian Court in a foreign seated arbitration

In Rhutikumari v. Zanmai Labs Pvt. Ltd.⁹, the Madras High Court held that it had jurisdiction to grant interim relief even when the arbitration was seated abroad (Singapore) and the assets (cryptocurrency) were held by a foreign entity in Singapore. The Court rejected the argument that it lacked jurisdiction, holding that since the investor accessed her cryptocurrency wallet from India, the assets were prima facie situated there and therefore the Court possessed jurisdiction. It further categorized cryptocurrency as "property" held in a fiduciary capacity, establishing that platform operators owe a duty of trust to their users.

This judgment has been challenged and is pending before a Division Bench of the Madras High Court.

7. Governing law of the arbitration agreement when such law is not expressly stipulated

In Disortho S.A.S v. Meril Life Sciences Pvt. Ltd.¹⁰, the Supreme Court, in an application for appointment of arbitrator under Section 11 of the Act, dealt with the interplay between the law governing the arbitration agreement and the law governing the contract. In this case, a Distributor Agreement was governed by Indian law and courts in Gujarat, India had exclusive jurisdiction as per Clause 16.5 of the said Agreement. However, Clause 18 stipulated that arbitration would be conducted as per the rules of the Arbitration and Conciliation Centre of the Chambers of Commerce in Bogota, Colombia. The venue of the arbitration was Bogota.

By applying settled conflict-of-laws principles, the Supreme Court held that in the absence of an express choice of law governing the arbitration agreement or the seat, the presumption would be in favour of the law governing the main contract. The Court emphasized that when parties choose a specific law, viz. Indian law to govern their entire contract, they generally intend for that same legal system to handle any disputes arising from it, unless stipulated otherwise. As the Court found the arbitration agreement to be governed by Indian law, it was held that Indian Courts retained the authority to appoint an arbitrator, even though the proceedings were set to take place in Colombia.

8. Power of the Court under Section 11(6) of the Act comes to an end after appointment of the arbitrator

In Kamal Gupta & Anr. v. M/s. L.R. Builders Pvt. Ltd. & Anr.¹¹, the Supreme Court held that once a court appoints an arbitrator under Section 11(6), it becomes functus officio and it lacks the jurisdiction to entertain subsequent applications or issue ancillary directions regarding the conduct of the arbitration, as such powers vest solely with the Arbitral Tribunal. Further, the Court reinforced the sanctity of confidentiality and the limits of judicial intervention in arbitration. The Court held that non-signatories to an arbitration agreement even those with a commercial or familial interest in the dispute have no legal right to attend or observe arbitral proceedings. The Court emphasized that permitting "strangers" to the agreement to be present would directly breach the confidentiality mandate of Section 42A of the Act.

Judicial intervention under Section 34 of the Act

9. Courts have powers to modify arbitral awards under Section 34 of the Act

A 5-Judge Bench of the Supreme Court in Gayatri Balasamy v. ISG Novasoft Technologies Ltd.¹² held by a 4:1 majority, that the power to "set aside" an award includes a limited power to modify it. This power, however, is strictly confined to: (i) severing and setting aside only the invalid part of a severable award while preserving the valid portion, and (ii) correcting clerical or computational errors. The majority reasoned that this curative modification prevents the unnecessary total annulment of awards for minor defects. However, the Court cautioned that this does not permit a modification on merits or a substitution of the tribunal's findings with the Court's own view. Further, it was held that a Court exercising jurisdiction under Section 34 is empowered, in an appropriate case, to interfere with and alter the rate of post-award interest where the factual matrix and equities so warrant.

10. Delay in passing an arbitral award affecting the final decision can be set aside

The issue before the Supreme Court in M/s. Lancor Holdings Limited v. Prem Kumar Menon & Ors.¹³ was that what would be the effect on the validity of an arbitral award passed after undue delay in pronouncement. The Supreme Court clarified that delay in passing an arbitral award by itself is not a sufficient ground to set aside an award. What must be demonstrated is that the delay had a direct and adverse impact on the final decision. It must further be shown that such delay affected the final award in a manner that renders it contrary to the public policy of India or was vitiated by patent illegality under Section 34 of the Act.The Court also held that it was not mandatory for the party to first exhaust the remedy under Section 14(2) of the Act before raising this ground under Section 34.

Execution /Enforcementof Arbitral Award

11. Execution under Section 47 CPC cannot be a backdoor appeal against Arbitral Award:

In MMTC Limited v. Anglo American Metallurgical Coal Pvt. Limited¹⁴, the Supreme Court was called upon to decide whether MMTC could, in execution proceedings, resist enforcement of an arbitral award in favour of Anglo by invoking Section 47 of the Code of Civil Procedure, 1908 ("CPC") on the basis of alleged fraud and collusion by its own officials. The Court held that, though in principle, a plea of nullity can be raised under Section 47 CPC in a very narrow class of cases, MMTC's objections did not disclose even a prima facie case of fraud or collusion. The Court reiterated that Section 47 cannot be used to commence a "retrial" of already concluded arbitral proceedings and that entertaining such objections without strong prima facie grounds would undermine finality and delay the decree‑holder's realization of the fruits of the award.

12. Arbitral award is executable in any court where a decree can be enforced

The issue before the Jharkhand High Court in Golden Ceramic Works Pvt. Ltd. v. Simplex Casting Ltd. & Ors.¹⁵ was whether the civil court in Dhanbad, Jharkhand had jurisdiction to entertain an execution petition under Section 36 of the Act for enforcement of an arbitral award passed by the Micro and Small Enterprises Facilitation Council at Ranchi. The judgment-debtors objected that only the court at Bhilai, Chhattisgarh, where their properties are located, had jurisdiction to execute the award. Relying on Sundaram Finance Ltd. v. Abdul Samad¹⁶ and Cheran Properties Ltd. v. Kasturi and Sons Ltd.¹⁷, the Court reaffirmed that an arbitral award under Section 36 of the Act can be enforced through execution in any court in the country where the decree can be executed, without the need for transfer from the court having jurisdiction over the arbitral proceedings.

13. Award directing share buy-outs in deadlocked joint ventures is not contrary to the public policy of India

In Roger Shashoua & Ors. v. Mukesh Sharma & Ors.¹⁸, the Delhi High Court delivered a landmark ruling upholding the enforceability of two foreign ICC awards and clarifying the boundary between contractual arbitration and statutory company law. The Court held that while pure statutory claims for oppression and mismanagement are reserved for the National Company Law Tribunal ("NCLT"), disputes arising from a shareholders' agreement remain fully arbitrable. Crucially, the judgment validated a "buy-out" remedy, ordering one party to transfer its shares to the other to resolve a commercial deadlock, ruling that such relief is rooted in the parties' contractual consent and does not violate Indian public policy or encroach upon the NCLT's exclusive jurisdiction. By allowing the enforcement petitions, the Court reinforced a pro-investment stance, ensuring that foreign awards providing tangible commercial exits are not reduced to mere "paper awards".

An appeal¹⁹ against this decision is pending before the Supreme Court. However, no stay has been granted against this decision by the Supreme Court.

Improvements in Institutional Arbitration in India

Indian arbitration institutions are increasingly positioning themselves to compete with, and in certain respects match, established global arbitral centres such as the Singapore International Arbitration Centre ("SIAC") by adopting internationally benchmarked rules, expedited procedures, frameworks, and technology-driven case administration.

TheMumbaiCentre for International Arbitration ("MCIA") has updated its rules to align with these contemporary global best practices. The key changes are as follows:

1. Recognition of cross-claims filed by parties.
2. If the same tribunal is appointed and there are common questions of law or fact, proceedings can run concurrently.
3. Non-parties may be joined to an existing arbitration if prima facie bound by the arbitration agreement or if all parties consent.
4. MCIA may appoint an arbitrator of the same nationality as that of a party when suitable and unobjected to.
5. The 21-day negotiation period for appointing a sole arbitrator starts from the date of commencement, whereas earlier it began from the Registrar's receipt of the Request for Arbitration.
6. A mandatory filing fee for challenging the appointment of arbitrators.
7. A mechanism for early dismissal of claims or defences, or for summary determination of specific issues based on specific grounds is introduced.
8. Monetary threshold has been raised for expedited procedure from Rs. 10 crores to Rs. 13 crores.
9. Mandatory disclosure of any third-party funding, including the funder's identity and whether they bear adverse costs liability.
10. MCIA may publish awards with names of the parties and other identifying information redacted.