An arbitration notice is often treated as routine legal correspondence. It may be forwarded to the accounts, project or contracts team, and a reply may be prepared only on the merits of the commercial dispute. That approach overlooks the procedural significance of the document.
A notice invoking arbitration is not merely a demand letter. It may mark commencement of arbitral proceedings, activate the appointment mechanism, create the record for a future Section 11 application, raise limitation issues, and require urgent consideration of interim protection. The first response can therefore shape the procedural direction of the dispute.
Commencement and receipt
Section 21 of the Arbitration and Conciliation Act, 1996 provides that, unless the parties have agreed otherwise, arbitral proceedings commence when the respondent receives a request for the dispute to be referred to arbitration. The focus is therefore not only on issuance of the notice, but on receipt.
The date of receipt may become relevant for limitation, appointment timelines, validity of invocation and later court proceedings. Courier records, email headers, delivery reports and internal receipt records should therefore be preserved.
In Arif Azim Co. Ltd. v. Aptech Ltd.[1], the Supreme Court clarified that a valid notice invoking arbitration is relevant to computing limitation for a Section 11 application, and that the clock may begin to run from the date of failure or refusal to appoint.
Read the arbitration clause before replying
A common mistake is to answer the factual allegations first and examine the arbitration clause later. The order should be reversed.
Before any reply is sent, the arbitration agreement must be checked. Is there a valid arbitration agreement under Section 7? What is the seat? Is the arbitration ad hoc or institutional? Is the tribunal to consist of a sole arbitrator or three members? Are negotiation, mediation, conciliation, engineer’s decision or dispute board steps mandatory? Who has the power to appoint? Is the appointment mechanism unilateral?
These questions may determine validity of invocation, appointment strategy, reservation of objections and the likelihood of Section 11 proceedings.
If the parties have chosen institutional arbitration, the institution’s rules may regulate notice, response, appointment, emergency arbitrator procedure and administrative timelines.
Appointment and unilateral appointment concerns
Many arbitration notices do more than invoke the clause. They may propose a sole arbitrator, ask the respondent to consent to an appointment, or require nomination of an arbitrator within a specified period.
Section 11 becomes relevant where parties fail to agree on appointment, or where the agreed mechanism breaks down. In a sole-arbitrator clause, the issue may be failure to agree within the relevant period. In a three-member tribunal clause, the sequence may involve nomination by each party followed by appointment of the presiding arbitrator.
A business should not assume that every notice creates a generic “30-day deadline.” The relevant period is the one prescribed in the arbitration agreement or, in its absence, the period contemplated under Section 11(4) or Section 11(5), or the applicable institutional rules.
The proposed arbitrator should not be accepted mechanically. Section 12, read with the Fifth and Seventh Schedules, requires attention to neutrality and eligibility. In TRF Ltd. v. Energo Engineering Projects Ltd.[2], the Supreme Court held that a person ineligible to act as arbitrator cannot nominate another arbitrator. In Perkins Eastman Architects DPC v. HSCC (India) Ltd.[3], the Court held that a party interested in the outcome should not have exclusive control over appointment of a sole arbitrator.
A casual reply stating that the respondent has “no objection” may therefore create avoidable complications.
Jurisdiction, arbitrability and deadwood claims
A respondent should examine whether arbitration itself can be objected to. The issue may arise because there is no arbitration agreement, the recipient is not party to it, the claimant relies on the wrong contract, mandatory pre-arbitration steps are incomplete, or the dispute falls outside the clause.
Section 16 recognises the tribunal’s competence to rule on its own jurisdiction. At the same time, referral courts have a narrow role at the Section 11 stage. In Duro Felguera S.A. v. Gangavaram Port Ltd.[4], the Supreme Court explained the limited post-2015 enquiry, principally concerning the existence of an arbitration agreement.
In BSNL v. Nortel Networks India Pvt. Ltd.[5], the Court held that although limitation is ordinarily for the tribunal, a court may decline reference where the claim is ex facie time-barred and deadwood. In NTPC Ltd. v. SPML Infra Ltd.[6], the Court reiterated that referral may be declined where there is no subsisting dispute.
If the claim is stale, settled, discharged, or plainly outside the arbitration agreement, the respondent should not reply in a manner that appears to accept the invocation without reservation.
Limitation and interim protection
Limitation is often treated as a later defence. That is unsafe. The first reply may affect how the dispute is characterised.
Relevant dates may include breach, termination, final invoice, final bill, denial of liability, acknowledgment, part payment, settlement communication, no-dues certificate or previous proceedings. In construction and infrastructure disputes, limitation may also turn on running bills, measurements, completion certificates, defect liability periods, extensions of time and closure correspondence.
A reply seeking time to “reconcile accounts” or stating that payment will be considered “after internal approval” may be convenient, but risky if the claim is old.
Some notices are also accompanied by bank guarantee invocation, encashment of securities, termination, removal of goods, diversion of receivables, transfer of assets or project disruption. In such cases, a reply may not be enough. Section 9 permits interim measures from court in appropriate cases, and that decision should be considered at the notice stage.
Draft the first reply for the future record
The first reply should usually do five things: respond without unnecessary admissions, preserve jurisdictional and limitation objections, deal carefully with appointment, identify counterclaims or set-off, and reserve interim remedies where required.
Any response on appointment or merits should expressly reserve objections under Sections 12, 13 and 16, where applicable.
Informal emails and WhatsApp messages are a recurring source of difficulty. A message seeking time, acknowledging liability or commenting on appointment may later form part of the arbitration record. The safer course is to review the notice, contract, correspondence, appointment clause and limitation position before responding.
The practical response to an arbitration notice should therefore begin with a structured review of the contract, appointment clause, limitation position, possible counterclaims and the risks that may require interim protection.
Conclusion
An arbitration notice is the stage at which a commercial disagreement begins to acquire procedural consequences. It may affect commencement, appointment, limitation, jurisdiction, interim relief and the later record before a court or tribunal.
The practical rule is simple: do not reply before reading the contract. Verify the arbitration clause, preserve proof of receipt, examine appointment requirements, assess limitation, identify counterclaims, consider jurisdictional objections and evaluate whether interim relief is required.
A careful first response does not decide the arbitration. But it can preserve procedural control, prevent admissions, avoid waiver and prepare the ground for the next stage of the dispute.
*Dr. Rishabh Gandhi is an Advocate, Arbitrator, Mediator, Former Civil Judge and Founder of Rishabh Gandhi and Advocates
[1] (2024) 5 SCC 313 : 2024 INSC 155
[2] (2017) 8 SCC 377
[3] (2020) 20 SCC 760
[4] (2017) 9 SCC 729
[5] (2021) 5 SCC 738
[6] (2023) 9 SCC 385