Validity Of An Arbitration Agreement In An Unstamped Agreement: A Step Forward

OVERVIEW:

The Apex Court on 11 January, 2021 took a giant progressive leap towards developing a more liberal arbitration regime in the country by holding that non-payment of stamp duty would not invalidate the arbitration agreement. A bench comprising of Hon'ble Dr. Justice D.Y. Chandrachud, Justice Indu Malhotra and Justice Indira Banerjee in the matter of N.N. Global Mercantile Pvt. Ltd v. Indo Unique Flame Ltd. & Others¹ has interestingly referred the issue  ‘whether non-payment of Stamp duty on Commercial Contract will invalidate an Arbitration Agreement' to be authoritatively settled by a Constitution Bench.

The Court also held that the allegations of fraud with respect to the invocation of the Bank Guarantee are arbitrable, since it arises out of disputes between parties inter se, and is not in the realm of public law.