Unstamped Arbitration Agreements Not Unenforceable: Supreme Court

Agreements that are not stamped or inadequately stamped are not rendered void ab initio or unenforceable, the Supreme Court said on Wednesday.

Non-stamping or inadequate stamping is a curable defect, the top court held.

It said courts must limit the examination to the existence of an arbitration agreement at the pre-reference stage and any objection in relation to the stamping of the agreement would fall within the ambit of the arbitral tribunal.

The court also clarified that when the matter reaches the arbitral tribunal, the tribunal is bound to apply the relevant law to determine the adequacy of the agreement.

In April this year, a five-judge bench of the top court held that an arbitration agreement in an unstamped contract would be considered non-existent in law. The judgement was fractured, with three judges ruling in its favour and two against it.

In September, it was pointed out to the court that arbitrators across the county were facing uncertainties in the backdrop of the five-judge bench judgement.

Considering that this issue is of significant importance in the arbitration landscape, the chief justice of India referred the matter to a seven-judge bench for a final ruling.