Best Defending an Arbitration Claim and Filing a Counter-Claim Lawyer

If a claim has been filed against you in arbitration, your statement of defence is your answer. It is where you dispute the facts, challenge the amounts, raise legal defences such as limitation and contractual exclusions, and, importantly, raise any objection that the tribunal has no jurisdiction. It is also where you can file your own counter-claim, if the claimant owes you money or caused you loss.

This page is for respondents in arbitration: buyers sued by suppliers, employers sued by contractors, borrowers sued by lenders, and companies sued by former partners or shareholders. In short: file your defence within the time the tribunal fixes; raise any jurisdiction objection no later than your defence, or you may lose it; deal with every allegation specifically; and file your counter-claim with your defence so that both are decided together.

A respondent who takes the defence seriously from the start often narrows the dispute, reduces the claim, and opens the way to a sensible settlement.

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What a strong defence does

Jurisdiction objections: raise them or lose them

Section 16 lets the tribunal rule on its own jurisdiction, including any objection about the existence or validity of the arbitration agreement. Section 16(2) says a plea that the tribunal does not have jurisdiction must be raised not later than the submission of the statement of defence. Section 16(3) says a plea that the tribunal is exceeding the scope of its authority must be raised as soon as the matter alleged to be beyond its scope is raised during the proceedings. The tribunal can admit a later plea if the delay is justified, but do not rely on that.

Typical jurisdiction objections include: there is no arbitration agreement with you, for example because you are a guarantor who signed a separate deed; the clause does not cover this dispute; the claim is an "excepted matter" excluded by the contract; the tribunal was not properly constituted; or the dispute is not arbitrable. If the tribunal rejects the objection, the arbitration continues, and you can raise it again in a Section 34 challenge after the award. The Supreme Court in Tarini Prasad Mohanty v Sunflag Iron and Steel (May 2026) said that writ petitions against such rulings midway are generally not appropriate; the remedy is to wait for the award and challenge it.

If the tribunal accepts the objection and holds it has no jurisdiction, the claimant can appeal to the court under Section 37(2)(a).

How we prepare your defence

Time and typical cost range

Our fees are agreed in writing at the start, stage by stage, and are not linked to the outcome.

Documents needed

Common defences and what supports them

Counter-claims: when and how

Section 23(2A), added in 2015, allows the respondent to submit a counter-claim or plead a set-off, which the tribunal will decide if it falls within the scope of the arbitration agreement. File the counter-claim with your statement of defence, so that the two are decided together and the timetable is not disrupted. A counter-claim filed late may be refused or may lead to costs.

A counter-claim needs the same care as a claim: separate heads, amounts, calculations, and documents. It is also subject to limitation; a counter-claim is treated as commenced on the date it is filed, or in some cases the date it was first raised, so old claims may be time-barred even if the claimant's claim is not. In MSME council arbitrations, the Supreme Court in Silpi Industries v KSRTC (2021) held that buyers can file counter-claims before the council.

Set-off is related but different: it reduces the amount payable to the claimant by an amount the claimant owes you, without seeking a separate award. Plead it expressly.

If you do not file a defence

Section 25 says that if the respondent fails to communicate its statement of defence without sufficient cause, the tribunal shall continue the proceedings without treating that failure in itself as an admission of the claimant's allegations, and may treat the respondent's right to file the defence as forfeited. So the claimant must still prove its claim, but you lose the chance to present your side in writing, and possibly to lead evidence.

If you have missed the deadline for a good reason, apply to the tribunal promptly with the defence and an explanation. Tribunals usually allow late defences where the delay is short and explained, especially with costs. If you were never properly served with the claim, that is a ground to challenge any award later.

Laws that apply

How we work

We are a litigation and advisory practice led by Advocate BK Singh, with offices in Dwarka (New Delhi) and Vaishali (Ghaziabad). This is what you can expect:

• Objections raised in time: jurisdiction and limitation, not lost by delay.
• Number-checking: claimed amounts reconciled line by line.
• Counter-claims built properly: quantified and documented.
• Realistic advice: admitting what is due when that helps the overall outcome.
• Written fee terms: agreed stage by stage, never linked to the outcome.

Mistakes respondents make

Contract clauses that defeat or limit claims

Many claims can be reduced or defeated by the contract itself. Look for limitation of liability clauses capping total liability; exclusions of indirect, consequential or loss-of-profit claims; notice-of-claim clauses requiring claims to be notified within a fixed period; "no damages for delay" clauses giving only time extensions; liquidated damages clauses that set the maximum recoverable for delay; and clauses making certain decisions of an engineer final.

These clauses are generally enforced between businesses, though tribunals read them strictly and interpret ambiguity against the party relying on them. A clause excluding "consequential loss" may not exclude direct loss of profit. A notice-of-claim clause may be treated as directory if the respondent knew of the claim anyway. Plead each clause specifically, quoting it, and explain how it applies to each head of claim.

Accord and satisfaction: "the matter was settled"

Respondents often argue that the claimant accepted a payment in full and final settlement, or signed a no-dues certificate, and so has no claim. This is the defence of accord and satisfaction. The Supreme Court in SBI General Insurance v Krish Spinning (2024) held that whether there was a genuine settlement is a question for the arbitrator, not for the court at the Section 11 stage.

Before the arbitrator, the respondent must show that the claimant freely agreed to accept the payment in discharge of all claims. Claimants often reply that they signed under economic duress, because the payment was withheld unless they signed. Tribunals look at the circumstances: whether the claimant protested at the time, whether the document was a standard form demanded as a condition of payment, and whether the amount bore a reasonable relation to the claims. Evidence of a negotiated settlement supports the defence; evidence of a take-it-or-leave-it demand weakens it.

Admitting part of the claim

Sometimes the best defence admits part of the claim. If some invoices are clearly due, admitting them narrows the dispute, reduces the time and cost of the arbitration, and builds credibility with the tribunal for the parts you do dispute. Interest on admitted amounts stops if you pay them.

Admitting part of the claim also changes the claimant's calculations. A claimant facing a respondent that has admitted ₹50 lakh, paid it, and contested the rest with documents is more likely to settle than one facing a blanket denial. Discuss this with your accounts team early, and consider paying admitted amounts during the arbitration, without prejudice to your defence on the rest.

Evidence for the defence

A defence is only as strong as the evidence behind it. Identify the people who can prove your version: the stores manager who recorded rejections, the quality engineer who tested samples, the project manager who recorded the claimant's delays, the accounts head who made payments. Their affidavits will be your evidence-in-chief, and they will be cross-examined.

Documents from the time carry the most weight. Emails complaining about quality, rejection notes, inspection reports, minutes of meetings recording the claimant's delays, and letters reserving rights are worth far more than witnesses' recollections years later. If such documents exist, find them now. If they do not, consider whether the defence can realistically succeed, and whether settlement is better.

Respondents in loan arbitrations

For borrowers, the defence in a loan arbitration usually focuses on three areas. First, the tribunal: whether the arbitrator was appointed by the lender alone, making the appointment invalid under Section 12(5) and the Supreme Court's decisions. Raise this as a jurisdiction objection under Section 16, and do not waive it by participation. Second, the amount: whether the statement of account is correct, whether payments were credited, and whether penal charges comply with RBI's 2024 rules. Third, the documents: whether the lender has produced the signed loan agreement and sanction letter.

Borrowers who raise these points promptly often find the lender ready to settle, sometimes at a substantial discount on the amount claimed. See loan arbitration.

MSME council respondents

Buyers defending delayed payment claims before an MSME Facilitation Council face special rules: the 45-day payment cap, deemed acceptance after 15 days without written objection, and compound interest at three times the bank rate. The strongest defences are usually factual: goods rejected in writing within 15 days, short supplies recorded at the time, payments not credited. Jurisdictional defences, such as the supplier not being registered at the time of supply, or the contract being a works contract, depend on unsettled law and should be raised at the start. Counter-claims are allowed. See defend an MSME claim.