Advocate A M Iktear Uddin (Advocate Anik), a renowned lawyer and Special Public Prosecutor, partners at Prime Legal with Advocate Ayantika Mondal, brings 16+ years of arbitration expertise. He explains why arbitration is favored in global commerce for confidentiality, efficiency, and neutrality, yet Indian law challenges vague or conflicting clauses. Courts routinely intervene to ensure compliance and clarity. His deep arbitral experience offers essential insights into enforceability factors, guiding clients through the complexities of cross-border and domestic dispute resolution.
Q1: Advocate Anik, what is arbitration?
Arbitration is a private method of resolving disputes where the parties agree to submit their disagreement to one or more neutral arbitrators instead of going to court.
Q2- Advocate Anik, So what is needed to make it binding to go before arbitration?-
A binding arbitration clause in your contract is what is needed to refer the matter to arbitration, and it requires clear, written consent from all parties specifying scope, seat, rules, and number/appointment of arbitrators.
Q3 Advocate Anik:- What so alarming about the enforceability of arbitration clauses in commercial contracts in the present day?
Arbitration clauses are obligatory or not binding and this defines whether parties can in the real sense, use arbitration in place of litigation. As the number of commercial contracts particularly cross-border contracts are ever rising, an inadmissible arbitration clause can make a whole dispute resolution system useless. Section 7 of the Arbitration and Conciliation Act, 1996 obliges that the valid arbitration agreement must be in writing and must indicate the intention by the parties to put disputes before an arbitrator. In case that purpose is not clear or is subject to conditions, the courts might deny the authority to refer parties to arbitration under Section 8 of the same Act.
Q4: Advocate Anik:- What do you think are the crucial legal components that render an arbitration clause enforceable in India? And what are the most common drafting errors you see in cases?
The main key components are, written agreement, intention to arbitrate, definiteness, language, place.
- Applying ambiguous statements such as, “may refer to arbitration.”
- The absence of the governing law or seat specified.
- Arbitrating in a non-existent arbitral institution.
- Integrating arbitration and compulsory mediation with no defined trigger.
Q5: Advocate Anik: How do the Indian courts construe ambiguous arbitration clauses?
Since the 2015 and 2019 amendments, Indian courts have adopted a pro-arbitration approach. However, due to parties’ oversight and poorly drafted clauses, courts sometimes find it difficult to enforce arbitration provisions and must adhere to the contract terms. Therefore, it is recommended that parties carefully review and draft arbitration clauses, keeping all legal aspects in mind.
Q6: Advocate Anik:- What is the impact of seat and venue of arbitration on the enforceability?
It is a well-established principle, affirmed by the Hon’ble Supreme Court also, that once the seat of arbitration is specified in the agreement, it grants exclusive jurisdiction to the courts at that location. Therefore, it is advisable for parties to clearly define the seat in their agreement, as any ambiguity regarding the seat can lead to jurisdictional confusion and potentially delay the enforcement process.
Q7: Advocate Anik, Does Indian law have any particular forms of disputes that cannot be resolved by arbitration clauses?
Yes. Some disputes can be thought of as non-arbitrable, as they entail the rights of the people or the remedies that are provided by statute. These are criminal cases, matrimonial cases, bankruptcy, consumer complaints, etc.
Q8: Advocate Anik, What is the implication of the idea of pathological clauses on enforcement?
Answer: A pathological clause is a defective clause, i.e. by referring to something non-existent, contradictory rules or an impractical procedure. These clauses can lead to a lot of procedural challenges. Nevertheless, arbitration is tried to be effected by Indian courts as much as it can. Even though the clause provided two-tier arbitration in the case of Centrotrade Minerals and Metal Inc. v. Hindustan Copper Ltd. (2017), the Supreme Court determined that it was valid based on the party autonomy instead of technical contradictions. But, this independence is not complete, any clauses that are inconsistent with obligatory components of Indian law or which omit any judicial supervision whatsoever will not be enforceable at all. Enforceability depends on balancing between autonomy and legality.
Q10 – Advocate Anik: We hear that banks, financial institutions, and fintechs invoke arbitration through their own arbitrators and even issue orders. How are those legally enforceable?
Awards from self-appointed arbitrators are not generally enforceable. Courts require a legitimate, authorized arbitral forum, due process, and compliance with law. Unilateral appointments or orders by banks/fintechs are typically invalid. Enforcement depends on proper constitution of the arbitrator, fair proceedings, and adherence to the governing agreement and statutory safeguards.
Advocate Anik recommends that companies treat arbitration clauses not as mere formalities but as strategic, carefully drafted provisions. The clause should clearly specify the seat, rules, number of arbitrators, and applicable law while ensuring future enforceability under international conventions. Above all, the drafting must align with Indian legal principles to avoid unilateral arbitrator appointments. Clear and thoughtful arbitration clauses reduce costly jurisdictional disputes and safeguard party autonomy. Moving forward, the focus should be on proactive, precise contractual design to ensure effective dispute resolution and respect for arbitration in India’s evolving legal landscape.
The same was published in the DNA India on 30 October, 2025:
