SUPREME COURT SETTLES THE LAW ON THE VALIDITY OF ARBITRATION AGREEMENTS CONTAINED IN UNSTAMPED / INSUFFICIENTLY STAMPED INSTRUMENTS: RE INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN STAMP ACT 1899[1]
Background
The question of the validity of an arbitration clause contained in an unstamped / insufficiently stamped agreement has seen several conflicting views in different judgments of the Supreme
Court[2] . On 25 April 2023, a 5 – judge bench of the Supreme Court in NN Global Mercantile (P) Ltd v Indo Unique Flame Ltd[3] held that an unstamped instrument containing an arbitration
agreement is void and cannot exist in law as per the Indian Contract Act 1872. It was also held that an arbitration agreement contained in such instrument can be acted upon only after it is
duly stamped as per the provisions of the Indian Stamp Act 1899. To consider the correctness of the view taken in NN Global, the issue was referred to a bench of 7 judges of the Supreme Court.
