The hon’ble Supreme Court of India (Supreme Court) in Re: Interplay Between Arbitration Agreements Under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act 1899 has conclusively resolved the longstanding dispute regarding the stamping of arbitration agreements.
The Supreme Court emphasized that the question of stamping is one of admissibility, falling within the purview of the arbitral tribunal for consideration and decision. It is not a matter that warrants a court’s intervention during the appointment of arbitrators or the referral of a dispute to arbitration. At these initial stages, the court’s role is limited to examining the prima facie existence of an arbitration agreement.
Furthermore, the court clarified that defective stamping is a curable defect. As soon as the defect is rectified, through the payment of the required stamp duty and applicable penalty, the arbitration agreement can be admitted and given full effect.
By adopting this stance, the Supreme Court has not only affirmed fundamental arbitral principles such as party autonomy, separability, and the dual positive and negative impacts of kompetenz-kompetenz, but has also effectively curtailed the court’s supervisory role, minimizing delays in initiating arbitration proceedings.
In the broader context, this judgment marks a positive leap forward and is a welcomed initiative in cultivating a favorable environment for arbitration in India, thereby contributing to its advancement and enhanced credibility.