COMPARATIVE PERSPECTIVES
In other jurisdictions such as Singapore and the UK, stamping is considered to be a rectifiable matter which does not impact the jurisdiction of the tribunal. Such questions are left to the arbitrators by the competence-competence doctrine in courts.
Indian jurisprudence, by contrast, inclines towards pre-referral scrutiny, a stance that adds to court intrusion and kills the object of simplified arbitration.
CRITICAL VIEW OF THE MAJORITY IN N.N. GLOBAL (2023)
The majority verdict gives more priority to fiscal policy and statutory compliance but sacrifices the efficiency of arbitration.
The dissent, however, presents a balanced opinion, asserting that stamping is curable and does not impair the jurisdiction of the arbitrator. Such an objection is more in line with international arbitration principles and business common sense.
IMPLICATIONS FOR COMMERCIAL DISPUTE RESOLUTION AND CONTRACTUAL ENFORCEABILITY
The stamping deficiencies have been treated as an obstacle to arbitration, and this has had grave effects on commercial dispute resolution in India. The procedural delay caused by pre-referral judicial scrutiny is one of the most urgent issues.
Rather than letting the arbitral tribunal resolve such objections under kompetenz-kompetenz, the courts are now expected to check the stamping compliance at the first instance, thus derailing arbitration’s intended efficiency.
This has resulted in numerous proceedings. Parties might be required to impound and pay stamp duty before initiating arbitration, which is time-consuming. This compromises arbitration’s key benefits—speed, cost-effectiveness, and party autonomy.
Furthermore, the ambiguity on whether a defect can be cured at the referral stage has created a chilling effect on commercial certainty. Parties hesitate to rely on arbitration clauses unless they are sure of rigid stamp compliance—an impracticable expectation in complex transactions involving multiple instruments.
Such legal ambiguities affect contract structuring and risk allocation. Legal counselors are adding clauses requiring stamping compliance and indemnity provisions to transfer the cost of non-compliance. Pre-stamping protocols and conditional validity clauses are increasingly used to reduce enforceability risks.
From a dispute strategy standpoint, litigants are now encouraged to use stamping objections as tactical defenses to delay or derail arbitration—especially in high-stakes commercial disputes. This represents a strategic abuse of the spirit of party autonomy and an overemphasis on procedural technicalities over substantive justice.
The current judicial interpretation of the curability doctrine does not align with the objective of the Arbitration Act, which promotes minimal judicial intervention. Unless stamping is treated as a procedural defect curable post-referral, India risks losing its reputation as an arbitration-friendly jurisdiction.
POLICY CONSIDERATIONS AND REFORM SUGGESTIONS
The existing legal ambiguity underscores the need for legislative clarity. Parliament should consider adding an explanatory note to the Arbitration and Conciliation Act, 1996, clarifying that an arbitration agreement remains valid and enforceable regardless of stamping, provided compliance follows under the Stamp Act.
Alternatively, the Stamp Act itself may be revised to expressly acknowledge arbitration clauses as severable, consistent with the doctrine of severability. This would ensure that deficiencies in stamping the main contract do not prejudice dispute resolution mechanisms.
The law could also introduce time-limited curing, requiring the defect to be remedied within a specified duration following the invocation of arbitration, without halting the arbitral process.
Another reform could involve automatic impounding and adjudication systems through arbitral institutions or digital portals, eliminating the need for preliminary court intervention.
Such reforms would balance fiscal compliance with arbitration efficiency, reinforcing India’s credibility as a pro-business and arbitration-supportive jurisdiction.
CONCLUSION
The concept of curable defect in stamping deficiencies lies at the intersection of statutory formalism and arbitral freedom. While the Stamp Act mandates fiscal compliance, treating non-compliance as a substantive impediment undermines the very essence of alternative dispute resolution.
The landmark case, N.N. Global (2023), reignited the debate, resulting in a formalist approach that delays arbitration and increases procedural complexity. The dissenting opinion, however, aligns more closely with international standards, viewing stamping as a repairable, not fatal, defect.
Moving forward, courts and legislators must strike a balance—preserving legal compliance without sacrificing the efficiency, predictability, and autonomy that arbitration promises. Legislative reform, procedural streamlining, and digital innovation are crucial to safeguard commercial certainty and maintain India’s global arbitration standing.
ORIGINALITY REPORT
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Primary Sources:
- www.mondaq.com – Internet Source
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- Submitted to National Law School of India University, Bangalore – Student Paper
- Submitted to Queen Mary and Westfield College – Student Paper
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- ftp.legalserviceindia.com – Internet Source
