If you have received an arbitration notice, someone is formally starting a case against you under a contract. It is not a court summons, but it is just as serious. If you ignore it, the other side can get an arbitrator appointed, run the case without you, and obtain an award that can be enforced against your bank accounts and property.
This page is for businesses and individuals who have just received such a notice, including borrowers who have received one from a bank or NBFC. In short: you usually have about 30 days before the other side can approach the court. Use that time to read the clause, check the claim, object to any arbitrator you have not agreed to, and send a written reply. Most of the damage in arbitration is done by silence in the first month.
A reply does not mean you accept the claim. A careful reply protects your position on the arbitrator, the amount, limitation and jurisdiction, and keeps settlement open if that makes sense.
हिंदी में सारांश
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Is this your situation?
- You have received a letter or email saying a dispute is being "referred to arbitration"
- The notice names an arbitrator you have never heard of or agreed to
- A bank, NBFC or finance company has sent the notice over a loan or vehicle finance
- You dispute the amount, or believe you have your own claim against the sender
- You never signed an agreement with an arbitration clause, or the signature is disputed
- The claim relates to events more than three years old
- You have been asked to attend a "hearing" before a named arbitrator
What to check first
Is there a valid clause?
Find the signed agreement. Check whether it contains an arbitration clause, whether you actually signed it, and whether the dispute falls within it.
Who is the proposed arbitrator?
If the sender alone has chosen the arbitrator, and especially if that person is its employee, panel lawyer or regular appointee, you have grounds to object.
Is the claim within time?
Most money claims must be started within three years. Look at when the amount fell due and whether you ever acknowledged it in writing.
Is the amount right?
Compare the claim with your own ledger, payments made, credit notes and deductions. Note each difference.
Do you have a counter-claim?
If the other side also owes you money or has caused you loss, you can raise it in the same arbitration, if it falls within the clause.
Are your assets at risk?
Some claimants apply for freezing orders early. If you have received any court or arbitrator order, act on it immediately.
The arbitrator question is the one that matters most
The single most important decision in the first 30 days is who will decide your case. Many contracts, especially loan agreements and standard-form contracts, say the lender or company "shall appoint" the sole arbitrator. That kind of clause is no longer safe ground for the party relying on it.
In TRF Ltd v Energo Engineering (2017) and Perkins Eastman v HSCC (2019), the Supreme Court held that a person who cannot act as arbitrator because of their interest also cannot appoint a sole arbitrator. In November 2024, a five-judge bench in CORE v ECI-SPIC-SMO-MCML went further: clauses giving one side control over the composition of the tribunal offend the principle that both sides must be treated equally. Under Section 12(5) and the Seventh Schedule, people such as the claimant's employees, advisers and those with business relationships with it are ineligible, and that ineligibility can be waived only by an express written agreement made after the dispute arose.
So if the notice names an arbitrator chosen by the claimant alone, say in writing that you do not consent and propose independent names or a court appointment. Do not sign any consent form sent by the arbitrator's office without advice. Taking part in hearings without objection can later be argued as acceptance. In Gujarat Water Supply and Sewerage Board v Saryu Plastics (May 2026), a party that took part without objection was held unable to complain later about the arbitrator's mandate.
If the arbitrator is truly independent and qualified, agreeing may save time and cost. Not every proposed name is a problem. What matters is that you make the choice knowingly.
How we prepare your reply
Collect the notice and the contract
We note the date you received the notice, because the 30-day period and other time limits run from it. We read the full agreement, not just the clause quoted.
Check validity and scope
We check whether the clause is a binding arbitration agreement, whether it covers this dispute, and whether all named parties are bound by it.
Test the claim
We compare the claim with your accounts and check limitation, contract terms on penalties and interest, and any settlements or waivers already signed.
Respond on the arbitrator
We object to any unilateral appointment, propose independent names, or agree to an institution if that suits you.
Reserve your objections
We reserve objections to jurisdiction under Section 16, to limitation, and to any part of the claim outside the clause, so nothing is treated as waived.
Raise your own claims
If you have a counter-claim, we say so in the reply, so it is part of the dispute from the start.
Plan the next step
If the claimant goes to court under Section 11, we appear and argue on the appointment. If a unilateral arbitrator goes ahead anyway, we consider a challenge to the arbitrator and other remedies.
Time and typical cost range
Our fees are agreed in writing at the start, stage by stage, and are not linked to the result.
| Step | Usual time | Cost |
|---|---|---|
| Review of notice and contract | 1 to 3 working days | Our consultation fee |
| Written reply | Within the 30-day window | Our drafting fee |
| Appearance in Section 11 petition, if filed | 2 to 9 months in court | Our fee |
| Challenge to arbitrator under Sections 12 and 13 | Within 15 days of knowing the grounds | Our fee |
| Defence and counter-claim in arbitration | Usually within 6 months of appointment | Share of arbitrator's fee; our fee |
Documents to send us
The notice
- The notice with envelope or email showing the date received
- Any attachments, statements of account or claim sheets
- Any letter from a named arbitrator
Your contract
- The full signed agreement and any schedule with the clause
- Sanction letter, offer letter or purchase order if relevant
- Any later amendment or settlement letter
Your side of the account
- Ledger, payment receipts and bank statements
- Credit notes, debit notes and deduction details
- Emails or messages disputing the amount or quality
Where your case may go next
| Possibility | Forum |
|---|---|
| Claimant applies for court appointment | High Court under Section 11, or Supreme Court for international cases |
| You want urgent protection | Court under Section 9, or the arbitrator under Section 17 |
| Arbitrator appointed and case starts | Before the arbitrator or institution |
| Objection that the arbitrator is biased | First before the arbitrator (Section 13), then in a Section 34 challenge |
| Arbitrator legally ineligible under Section 12(5) | Application to court under Section 14 to end the mandate |
| Award passed against you | Section 34 challenge within 3 months |
If the notice is from a bank or NBFC
Loan arbitration notices have a pattern. The notice often arrives with a statement of account, a demand for the full outstanding amount with penal interest, and the name of an arbitrator chosen by the lender, sometimes with a hearing date already fixed. Some are sent to an old address or by a method that is hard to prove.
Respond in writing to every address the lender uses. Ask for the loan account statement, the sanction letter and the agreement. Object to the arbitrator unless you have agreed to that person after the dispute arose. If you want to settle, say so, but keep the settlement discussion separate from your objection so that one does not undercut the other.
Courts have taken a strong line against one-sided loan arbitrations. In September 2026, in Arth Micro Finance v Shivalik Small Finance Bank, the Supreme Court set aside orders freezing bank accounts that had been passed while an impartiality objection was pending, and declared the arbitration of no legal effect where the lender could not prove the borrower had consented to its tribunal. For more, see bank and NBFC loan arbitration and vehicle and equipment finance.
Laws that apply
The date you receive the notice is the date the arbitration begins.
How arbitrators are appointed when parties cannot agree.
Disclosure by arbitrators, grounds for doubting independence, and the 15-day challenge procedure.
Ends the mandate of an arbitrator who is legally ineligible, on application to the court.
Objections that the arbitrator has no jurisdiction, raised no later than the statement of defence.
A distributor who replied on day 25
Here's a made-up example. A Delhi distributor of consumer electronics received an arbitration notice from a manufacturer claiming ₹1.2 crore for unpaid stock. The notice named the manufacturer's regular legal consultant as sole arbitrator and fixed a "first hearing" in two weeks.
The distributor came to us on day 20. The contract did contain an arbitration clause, seated in Delhi. The ledger showed about ₹38 lakh in credit notes for returned goods that the manufacturer had not accounted for, and a separate claim for unpaid trade incentives.
We replied on day 25, objecting to the consultant under Section 12(5), proposing three independent names, disputing the amount with a reconciliation, and stating the counter-claim. The manufacturer applied under Section 11, and the High Court appointed a retired judge. The distributor's counter-claim then became part of the case, which changed the settlement discussion completely.
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:
- Same-week review: we read the notice and contract quickly and tell you the deadlines.
- Written objections that hold up: each objection is framed so that it is not lost later.
- Respondent experience: we defend borrowers, buyers, contractors and companies.
- Settlement where it makes sense: we will tell you honestly if paying or negotiating is the better path.
- Written fee terms: agreed stage by stage, never linked to the outcome.
Mistakes respondents make
- Ignoring the notice because it came by email or from an unknown arbitrator
- Signing the arbitrator's "consent" or "no objection" form without advice
- Replying only by phone call
- Admitting the full amount in a reply while trying to negotiate
- Forgetting to mention a counter-claim
- Attending a hearing without stating your objection on record
Your first 30 days, week by week
| Week | What to do | Why it matters |
|---|---|---|
| Days 1 to 3 | Note the date of receipt. Collect the contract, notice and any attachments. Do not sign anything sent by the arbitrator's office. | Time limits run from receipt; signed forms can be read as consent |
| Days 4 to 10 | Reconcile the claim with your ledger. Check limitation. Identify any counter-claim. | Your reply should dispute specific numbers, not just say "denied" |
| Days 11 to 15 | Decide your position on the arbitrator. If you object to a named person, do it now. | Section 13 allows 15 days from knowing the grounds to challenge an arbitrator |
| Days 16 to 25 | Send a written reply to all addresses, by email and courier. | Proof of a timely, reasoned reply helps in any later court hearing |
| Days 26 to 30 | Prepare for a Section 11 petition or the first hearing. Consider settlement options. | The claimant may approach the court as soon as the 30 days end |
Settling after a notice without hurting your defence
Paying something, or agreeing a plan, is often sensible. Arbitration costs both sides money, and many respondents genuinely owe part of what is claimed. The risk is that settlement letters are later used against you as admissions.
Keep negotiation letters separate from your formal reply, and mark them "without prejudice". Do not admit a figure in an open letter unless you are prepared to be held to it. If you are making a part payment, say in writing what it is for and that it is without admission of the balance. Remember that a written acknowledgement of a debt can give the claimant a fresh limitation period under Section 18 of the Limitation Act, so be careful about signing balance confirmations while the dispute is live.
If you do agree terms, record them in a signed settlement that deals with withdrawal of the notice, return of documents, release of guarantees and what happens on default. If an arbitrator has already been appointed, ask for a consent award under Section 30. A settlement that leaves the arbitration "pending" can come back to life months later.
Special positions: guarantors, directors and companies in distress
Guarantors. If you are named as a guarantor, check whether your guarantee contains its own arbitration clause or clearly adopts the main agreement's clause. If it does not, you may not be bound to arbitrate at all, and the claim against you would have to go to court. This is a common point in loan arbitrations, where co-borrowers and guarantors sign different documents at different times.
Directors and partners. A director is not personally liable for a company's contract debts just because the company is sued. If the notice names directors personally, ask on what basis. A partner of a partnership firm, on the other hand, can be personally liable for the firm's debts, so the position is different.
Companies under financial stress. If your company is facing insolvency proceedings, the arbitration may be affected. Once an insolvency petition is admitted, the moratorium under Section 14 of the IBC stops the arbitration against the company. Even before admission, the claimant may use an award as a basis for an insolvency petition. If you are in this position, get advice that covers both the arbitration and the IBC side, and see our defend insolvency page.
Respondents abroad. A foreign company receiving a notice in an India-seated arbitration should note that the same rules apply, and that the Supreme Court, not the High Court, will appoint the arbitrator in an international case. See NRI and foreign clients.
What a good reply actually looks like
A useful reply is usually two to five pages. It acknowledges the date the notice was received; states whether you accept that there is a valid arbitration clause covering this dispute; disputes the claim in specific terms, with your own figures; says whether the claim, or any part of it, is time-barred; gives your position on the arbitrator, with reasons and alternative names; states any counter-claim in outline; and reserves all other rights and objections.
What it should not do is argue the whole case, attach every document you have, or make personal allegations. You will have your full say in the statement of defence. The reply's job is to make sure nothing is lost in the meantime, and to show any court later that you acted promptly and reasonably.
Frequently Asked Questions
Do I have to reply to an arbitration notice?
There is no penalty for not replying, but silence carries real risk. The other side can get an arbitrator appointed and the case can proceed without you. A reply protects your position.
How long do I have to reply?
Usually 30 days from receipt before the other side can approach the court, unless the clause sets a different period. Reply within that time.
Can I refuse the arbitrator named in the notice?
Yes, if you have not agreed to that person. Object in writing, give reasons and propose alternatives or a court appointment.
What if I never signed an arbitration agreement?
Say so clearly in your reply and keep the objection alive under Section 16. If the claimant goes to court, the court will check whether an agreement exists.
Will replying count as accepting the claim?
No, as long as the reply is drafted carefully. A reply can dispute the claim, the amount, limitation and the arbitrator at the same time.
Can I file a counter-claim?
Yes. If it falls within the arbitration clause, it can be decided in the same proceedings. Mention it in your reply and file it with your defence.
The arbitrator's office has sent me a hearing date. Should I attend?
If you have objected to the arbitrator, take advice first. If you attend, record your objection in writing at the start so it is not treated as waived.
Can I settle after receiving the notice?
Yes. Arbitration can be ended by settlement at any stage. A settlement recorded by the arbitrator as an agreed award under Section 30 has the force of an award.
What if the notice was sent to my old address?
Write to the sender now at its own address, with a copy to the arbitrator if one is named, and keep proof. Lack of proper notice is a ground to challenge any award later.
Is an arbitration notice from a bank legal?
Banks and NBFCs can use arbitration if the loan agreement has a valid clause. What they cannot do is appoint a one-sided arbitrator without your valid written consent.
Received a notice? Do not wait out the 30 days
Send us the notice and the agreement on WhatsApp. We will tell you the deadlines and prepare a reply that protects your rights.
This page gives general information about arbitration and dispute law in India as it stood when it was last reviewed. It is not legal advice on your case and does not promise any result. Time limits, fees and court rules change, and the right step depends on your own contract, dates and documents, so take advice before acting.
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