India – Arbitration and Stamp Duty Update

A seven-judge bench of the Supreme Court has overruled the judgement of a five-judge bench rendered in April this year in N.N.Global Mercantile Pvt. Ltd. v M/s. Indo Unique Flame Ltd. And Ors., in which a 3:2 majority held that arbitration agreements on which stamp duty has not been paid are unenforceable.  

In so doing, the seven-judge bench has correctly held that insufficiency of stamping does not make an agreement void or unenforceable but only makes it inadmissible in evidence.  This is a curable defect under the Indian Stamp Act.

This is an accurate interpretation of the law and a very timely ruling.  Nevertheless, contracting parties should diligently pay stamp duty on agreements, however small the amounts.

By Ravi S. Raghavan, Majmudar & Partners, India, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact india@transatlanticlaw.com

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