Arbitration Clause Drafting: Seat, Arbitrators and the Time Limits That Bite

By CA Arpan Bohra (FCA, CS), Arpan Bohra & Co., Chartered Accountants, Hyderabad. Position of law as at 20 October 2026.

One badly drafted clause can cost years: write your arbitration clause carefully.

A supplier and a buyer agree that disputes will go to arbitration “in Hyderabad or Mumbai”, with an arbitrator appointed by the buyer’s managing director. When a dispute comes, the first two years are spent arguing about the seat and the arbitrator. A short clause, drafted carefully, avoids this.

Quick answer

A good arbitration clause under the Arbitration and Conciliation Act, 1996 fixes the seat, the number of arbitrators (odd), the method of appointment, the rules and language, and the scope of disputes. The seat decides the supervisory court and the governing arbitration law; the Supreme Court in BALCO v. Kaiser Aluminium (2012) and Hardy Exploration v. Government of India (2018) treated the designated place as the seat unless there are contrary indications. A unilateral appointment of the sole arbitrator by one party has been held invalid in TRF Ltd. v. Energo Engineering (2017) and Perkins Eastman Architects v. HSCC (2019), read with section 12(5) and the Seventh Schedule. Time limits: an award is due within 12 months from the completion of pleadings, extendable by six months under section 29A, and a challenge lies under section 34 within three months, plus up to 30 days.

Contents

What the clause must contain
A model clause (adapt with advice)
Time limits at a glance
Worked example
Drafting checklist
FAQs

What the clause must contain

Element	Drafting point
Scope	All disputes arising out of or in connection with the contract, including its validity and termination
Seat	State the city as the seat, not only the venue; add that the courts of that city have exclusive supervisory jurisdiction
Number and appointment	Sole arbitrator or three; each party appoints one and the two choose the presiding arbitrator; avoid unilateral appointment
Rules and institution	Ad hoc, or an institution such as the Mumbai Centre for International Arbitration or the Indian Council of Arbitration, with its rules (verify the institution’s rules)
Language and governing law	Specify both
Interim relief	Preserve the right to approach the court under section 9
Fees	Fee schedule under the Fourth Schedule or the institution’s fee table
Stamp and execution	Stamp the agreement; an unstamped agreement is inadmissible until duty and penalty are paid (see our note on deeds as legal insurance)

Five-step arbitration timeline from pleadings to award and challenge — Arbitration time limits.

A model clause (adapt with advice)

“Any dispute arising out of or in connection with this agreement, including any question about its existence, validity or termination, shall be referred to and finally resolved by arbitration under the Arbitration and Conciliation Act, 1996. The seat of arbitration shall be Hyderabad and the courts at Hyderabad shall have exclusive jurisdiction over matters of supervision. The tribunal shall consist of three arbitrators, one nominated by each party and the third, who shall preside, by the two so nominated. The language shall be English.”

Time limits at a glance

Stage	Provision	Time
Reference of parties to arbitration	Section 8	On application before the first statement on the substance
Appointment by the court	Section 11	Application after the agreed procedure fails
Award	Section 29A	Within 12 months from the completion of pleadings, extendable by six months by consent and then by the court
Challenge to award	Section 34	Three months, plus up to 30 days for sufficient cause
Enforcement	Section 36	After the time for challenge, or as the court orders

Worked example

Illustration, assumed dates

Pleadings are completed on 1 March 2026 in a Hyderabad-seated arbitration.

The award is due by 1 March 2027 under section 29A, extendable by six months to 1 September 2027 with consent.
If the award is delivered on 15 December 2026, a section 34 challenge must be filed by 15 March 2027, with a further 30 days for sufficient cause, ending 14 April 2027.
If the tribunal misses the extended date, its mandate ends unless the court extends it.

Drafting checklist

Decide the seat, and keep the seat, venue and jurisdiction consistent.
Pick an odd number of arbitrators and a balanced appointment process.
Choose ad hoc or institutional arbitration and name the rules.
Check the scope: contract and related disputes.
Pair the clause with a mediation or escalation step where suitable, remembering section 12A of the Commercial Courts Act, 2015 for commercial suits.
Stamp and sign the agreement.

Verify before relying: the current text of section 29A, the institutional rules and fee schedules, the case citations and any proposed amendment of the Arbitration Act.

Frequently asked questions

What is the difference between seat and venue?

The seat is the legal home of the arbitration and decides the supervisory court; the venue is the physical location of hearings, which can differ.

Can one party appoint the sole arbitrator?

The Supreme Court has held a unilateral appointment of the sole arbitrator by one party to be invalid in the cases cited. A balanced procedure is safer.

How long does an arbitrator have to give an award?

Twelve months from the completion of pleadings, extendable by six months by consent and further by the court under section 29A.

Can a court stay arbitration?

The court can refer parties to arbitration under section 8 and grant interim relief under section 9, but has limited power to interfere with the tribunal.

Does an arbitration clause survive termination of the contract?

Yes, if drafted to cover disputes about termination and validity; the clause is treated as separable.

Do we need a mediation step first?

Not by the Act, but for commercial disputes pre-institution mediation applies before a suit under section 12A; an arbitration clause avoids a suit in the first place.

Contact particulars
Arpan Bohra & Co., Chartered Accountants, Himayat Nagar, Hyderabad.
This article is shared for general professional education. Readers may write to the firm for information about its practice areas.

office@arpanbohra.co.in Call 9010558981 WhatsApp 9010558981 www.arpanbohra.co.in

General educational information as at 20 October 2026. It is not legal or tax advice and does not create a professional relationship. Provisions, rates and thresholds change; verify the current law and notifications before acting. References to the 57th GST Council (8 October 2026) are to recommendations that need amendments or notifications before they have legal effect.

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