Drafting an Arbitration Clause That Works

Seat, not venue

The seat of arbitration determines which court supervises the proceedings and hears challenges to the award. The venue is merely the physical location of hearings and carries no legal consequence.

Clauses that specify a venue without a seat have generated a great deal of litigation. Name the seat explicitly — arbitration seated at Bengaluru — and name the venue separately if you care about it.

Number of arbitrators

A sole arbitrator is cheaper, faster and easier to appoint. A three-member tribunal is appropriate for high-value or technically complex disputes, where each side appointing one arbitrator contributes to confidence in the process.

Note that Section 10 requires the number not to be an even number, and a clause specifying two arbitrators is invalid on that ground alone.

Appointment mechanism

Without a mechanism, an uncooperative respondent forces you into a Section 11 application to the High Court, which adds months before the arbitration begins.

Name an institution — one of the established Indian arbitral institutions — or name a neutral appointing authority. Institutional rules also supply a procedural framework, which avoids arguing about process once the dispute has started.

Timelines and costs

Section 29A requires the award within twelve months of completion of pleadings, extendable by six months by consent and thereafter only by the court. That statutory clock is one of the real advantages of arbitration in India.

Address costs in the clause. Section 31A gives the tribunal discretion, and a clause stating that costs follow the event gives a well-founded claimant a stronger position.

Frequently asked questions

### What is the difference between seat and venue?

The seat fixes the legal home of the arbitration and determines which courts supervise it and hear challenges to the award. The venue is simply where hearings are physically held. A clause naming only a venue invites a preliminary dispute about the seat.

### Can an arbitration clause specify two arbitrators?

No. Section 10 of the Arbitration and Conciliation Act requires the number of arbitrators not to be an even number. A clause providing for two is invalid in that respect, and the default of a sole arbitrator applies.

### How long does arbitration take in India?

Section 29A requires the award within twelve months of completion of pleadings, extendable by six months with consent of the parties and beyond that only with the court's permission. Institutional arbitration tends to stay closer to that timeline than ad hoc arbitration.