Arbitration under Investors' Grievances Redressal Mechanism of Stock Exchanges: formula sheet

Key formulas

Escalation ladder

Complaint to entity → exchange investor service cell / SCORES → conciliation or mediation → arbitration → IPF compensation where eligible

Use this order as the skeleton of any descriptive answer. Do not present it as a fixed legal sequence unless the question gives that rule.

Arbitration agreement in writing

Section 7(3): an arbitration agreement shall be in writing

Under section 7(4) it can be in a signed document, an exchange of electronic communications giving a record, or an exchange of statements of claim and defence where one alleges it and the other does not deny it.

Interim relief from court

Section 9: a party may apply to a court before, during or after the award but before enforcement under section 36

If the tribunal is already constituted, section 9(3) says the court does not entertain the application unless section 17 remedy is not efficacious.

Interim relief from tribunal

Section 17(1): a party may apply to the tribunal during the arbitral proceedings

Under section 17(2) the tribunal's order is deemed an order of the Court and enforceable under the Code of Civil Procedure, 1908.

Conciliator's limits

Section 80: unless parties agree otherwise, the conciliator cannot act as arbitrator or counsel, or be a witness, in proceedings on the same dispute

Relevant when the exchange process begins with conciliation and moves to arbitration.

Definition of arbitration agreement

Agreement to submit present or future disputes + defined legal relationship (contractual or not) + in writing

Section 7(1) and (3). Name all three elements in answers.

Forms of agreement

Arbitration clause in a contract OR separate agreement

Section 7(2).

Writing test

Signed document OR exchange of letters/telecommunication/electronic means providing a record OR claim-defence exchange with no denial

Section 7(4)(a), (b), (c).

Incorporation by reference

Contract in writing + reference making the arbitration clause part of the contract

Section 7(5). A casual mention is not enough.

Section 8 reference

Application not later than first statement on substance of dispute + original agreement or certified copy; refer unless prima facie no valid agreement exists

Section 8(1) and (2). Proviso allows a copy plus a petition to call for the original from the other party.

Arbitration during pendency

Arbitration may commence or continue and award may be made despite pending Section 8 application

Section 8(3).

Section 45 reference

Agreement referred to in Section 44 + request of a party; refer unless prima facie null and void, inoperative or incapable of being performed

Applies notwithstanding Part I and the Code of Civil Procedure, 1908.

Death of a party

Agreement survives; enforceable by or against legal representative; arbitrator's mandate not ended by death of appointing party

Section 40(1) and (2). Section 40(3) saves laws extinguishing rights of action on death.

Written agreement requirement

Arbitration agreement must be in writing (section 7(3))

It can be a signed document, an exchange of communications including electronic means, or claim and defence where one party alleges it and the other does not deny it.

Limitation

Limitation Act, 1963 applies to arbitration as to court proceedings (section 43(1))

Arbitration is deemed to commence on the date referred to in section 21 (section 43(2)). The exact filing period for exchange arbitration comes from the exchange rules and circulars.

Extension for undue hardship

Court may extend a contractual time bar if undue hardship would otherwise be caused (section 43(3))

Applies where an agreement for future disputes bars claims unless a step is taken within a fixed time.

Time excluded after award set aside

Period from commencement of arbitration to the court's order is excluded (section 43(4))

Applies where the court sets aside the award.

Default appointment

Three arbitrators: each party appoints one, and the two appoint the presiding arbitrator (section 11(3)); 30 days apply under section 11(4)

This works only where the parties have not agreed a procedure. In exchange arbitration, the exchange's rules normally govern appointment.

Panel decision

Decision by majority of all members (section 29(1))

Unless parties agree otherwise. Procedural questions may be decided by the presiding arbitrator if authorised (section 29(2)).

Place of arbitration

Parties are free to agree the place (section 20(1)); failing that, the tribunal decides (section 20(2))

The tribunal may meet elsewhere for consultation, witnesses or inspection (section 20(3)).

Section 20(1)

Place of arbitration = place agreed by the parties

Parties are free to agree. This is the first test.

Section 20(2)

No agreement → tribunal decides, having regard to circumstances, including convenience of parties

Applies only when parties have not agreed.

Section 20(3)

Unless otherwise agreed, tribunal may meet at any place it considers appropriate for consultation, hearing or inspection

Does not shift the place of arbitration.

Section 2(2)

Part I applies where the place of arbitration is in India

Proviso extends Sections 9, 27 and 37(1)(a) and 37(3) to international commercial arbitration seated outside India, subject to contrary agreement.

Section 40(1)

Death of a party ≠ discharge of arbitration agreement

Enforceable by or against the legal representative.

Section 40(2)

Death of appointing party ≠ termination of arbitrator's mandate

Mandate continues.

Section 40(3)

Laws extinguishing a right of action on death are not affected

Personal rights that die with the person may still end.

Time limit for setting aside (section 34(3))

Application within 3 months from receipt of the award + up to 30 days more if sufficient cause is shown

If a request for correction or interpretation was made under section 33, the three months run from its disposal. After the extra 30 days, the court cannot entertain the application. Jammu and Kashmir and Ladakh have six months and sixty days by local amendment.

Grounds under section 34(2)(a)

Applicant must establish on the tribunal's record: incapacity; invalid agreement; no proper notice or unable to present case; award beyond submission; composition of the tribunal or procedure not in accordance with the parties' agreement (or, failing agreement, with Part I). A party-agreed composition or procedure is respected unless it conflicts with a provision of Part I from which the parties cannot derogate

The burden is on the applicant. Where matters can be separated, only the part dealing with matters not submitted may be set aside.

Grounds found by the court, section 34(2)(b)

Dispute not arbitrable, or award in conflict with the public policy of India

Public policy is limited to fraud or corruption (or breach of section 75 or 81), fundamental policy of Indian law, or the most basic notions of morality or justice. No merits review.

Patent illegality, section 34(2A)

Available for awards in arbitrations other than international commercial arbitrations; illegality must appear on the face of the award

An award is not set aside merely for erroneous application of law or reappreciation of evidence.

Prior notice and disposal, section 34(5) and (6)

Prior notice to the other party + affidavit of compliance; disposal expeditiously and in any event within one year from the date the notice is served on the other party

The application must be disposed of expeditiously, and in any event within one year from the date the section 34(5) notice is served on the other party.

Enforcement and stay, section 36

Enforce as a decree after section 34 time expires; filing under section 34 gives no automatic stay; stay needs a separate application

For money awards the court has due regard to the CPC rules on stay of a money decree. A prima facie case of fraud or corruption in the agreement or the award means an unconditional stay pending the section 34 challenge.

Quick revision

• An arbitration agreement must be in writing (section 7(3)).
• It may be a clause in a contract or a separate agreement (section 7(2)).
• It counts as written if it is in a document signed by the parties, in an exchange of letters or electronic communication that records it, or in an exchange of claim and defence where one side alleges it and the other does not deny it.
• Under section 8, the application for reference must be made not later than the date of submitting the first statement on the substance of the dispute.
• A judicial authority must refer parties unless it finds that prima facie no valid arbitration agreement exists.
• The section 8 application must come with the original agreement or a certified copy; if the other party holds it, file a copy and ask the court to call for the original.
• Arbitration may begin or continue even while a section 8 application is pending (section 8(3)).
• Grievance redressal at the exchange comes before formal arbitration, so know the order of steps.
• Exchange rules and SEBI circulars give the procedure; the Act fills the gaps and governs challenge and enforcement.
• Foreign-award conditions in sections 48 and 57 do not govern a domestic exchange award.
• Always answer in three parts: provision, analysis of the facts, conclusion.

Common mistakes

• Treating SCORES and the exchange investor service cell as the same thing. Fix: Say SCORES is SEBI's online complaint platform, while the investor service cell is the exchange's own unit for complaints against listed companies and members.
• Quoting exact timelines and rupee limits from memory. Fix: Give the process and say the timelines and limits are as set by the current SEBI circular and exchange rules. A wrong number costs marks.
• Saying an arbitration agreement must be a signed document. Fix: Section 7(4) lists three ways, including electronic exchanges that provide a record and an undenied claim-defence exchange.
• Mixing up Section 8 and Section 45 tests. Fix: Section 8: unless prima facie no valid agreement exists, with a timing condition. Section 45: unless prima facie null and void, inoperative or incapable of being performed.
• Quoting exact filing days, fees or panel sizes from memory Fix: State the principle and say the exact period or fee is as prescribed in the exchange rules and SEBI circulars in your study material.
• Saying section 43 fixes a special limitation period for exchange arbitration Fix: Section 43 applies the Limitation Act, 1963 and deems commencement as per section 21. It does not itself set a stock exchange filing period.
• Saying the tribunal always chooses the place. Fix: Write the order: parties' agreement first, tribunal only if there is no agreement.
• Treating a hearing at another city as a change of place of arbitration. Fix: State that Section 20(3) lets the tribunal meet elsewhere for consultation, hearings or inspection, without changing the place.
• Treating appellate arbitration as a court appeal. Fix: Say it is a second arbitration within the exchange mechanism, run by the exchange's panel under its regulations. Court challenge is only under section 34.
• Saying the court can re-examine the merits under section 34. Fix: Quote Explanation 2: the fundamental policy test does not involve review on merits, and section 34(2A) bars setting aside for mere error of law or reappreciation of evidence.

Exam tips

• Write answers as provision, analysis, conclusion. Use the ladder of complaint, cell or SCORES, conciliation and arbitration, and IPF as the frame.
• Do not quote timelines or fund limits unless the question supplies them. Refer to current SEBI circulars and exchange rules instead.
• When a fact pattern mentions an arbitration agreement, check section 7 writing requirements first.
• For interim relief questions, check whether the tribunal has been constituted. This decides between section 9 and section 17.
• Since the elective is open book, mark the relevant sections of the Act and the SEBI circulars so you can cite them quickly.
• Write the section number and then paraphrase it. Examiners reward correct provisions applied to facts.
• For Section 8 versus Section 45, give a short contrast: Part I versus Part II, timing condition, and the wording of the prima facie exception.
• In writing-test questions, name the exact clause of Section 7(4) that fits the facts.