Unstamped arbitration agreements - Not Void Abinitio

Today, a seven-judge Constitution Bench of the Supreme Court held that while unstamped arbitration agreements are inadmissible, they are not rendered void ab initio (void from the beginning) because they are unstamped. Effect of not paying duty renders an instrument inadmissible and not void and non-payment of stamp duty is curable, the Court held overruling its 5-judge bench decision in NN Global Mercantile Pvt Ltd v. Indo Unique Flame Ltd & Ors case. The Court ruled that the aspect of whether the arbitration agreement has been stamped or not, is for the arbitral tribunal to decide and not courts.

The court is of the view that when the parties to the arbitration agreement confer jurisdiction on the arbitral tribunal, by way of pen their signatures to the arbitration agreement, ?they are regarded to independently sign the arbitration agreement. In the process, the separability provision gives rise to the doctrine of competence. The negative aspect of the doctrine of competence is that it limits courts' interference at the referral stage and arbitral tribunals are given a chance to rule on their own jurisdiction.