The fine print in a contract can decide not just how a dispute is fought, but where, and at what cost. Leading law firms are urging companies to tighten arbitration clauses in their contracts, as ambiguous drafting continues to trigger disputes over where arbitration should take place and which courts have jurisdiction.
Lawyers say such ambiguity can add as much as 20% to arbitration costs and delay proceedings, as parties may first have to approach courts to settle jurisdiction before the underlying dispute can even be heard.
The problem comes amid a sizeable backlog, with about 2.9 lakh arbitration-related cases currently pending in Indian courts, according to legal-tech and data analytics firm CubicTree.
“Ambiguous clauses leading to a pre-arbitration dispute can add at least 20% to the cost of arbitration, as opposed to a watertight, well-drafted clause,” said Mumtaz Bhalla, partner at Economic Laws Practice. She said ambiguity over the seat continues to create legal challenges, and that the issue is particularly relevant as ad-hoc arbitration remains common and the arbitration clauses are not uniform.
In ad-hoc arbitration, the parties and arbitrators manage the proceedings themselves, without an institution overseeing them. In institutional arbitration, an organization such as the Singapore International Arbitration Centre (SIAC), International Chamber of Commerce (ICC), or Mumbai Centre for International Arbitration (MCIA) administers the proceedings under its rules.
An arbitration clause is the part of a contract where parties agree to settle certain disputes through arbitration, instead of courts. It usually covers the appointment of arbitrators, the seat, venue and rules of the proceedings. The seat determines which courts supervise the arbitration, while the venue is where hearings are held. The two can be different.
Many a slip
The problem arises when these clauses use standard wording, or boilerplate clauses, without tailored them to the contract, which could lead to disputes and litigation. If the seat, venue and jurisdiction are not clearly mentioned, it can create further confusion.
Abhileen Chaturvedi, partner at Cyril Amarchand Mangaldas, said common drafting problems include using “venue” and “place” interchangeably without making the parties’ intention clear. Another problem is naming only a venue, without specifying the seat or the courts that will have jurisdiction. Disputes can also arise when an agreement gives exclusive jurisdiction to courts in one city, while the arbitration clause refers to another location.
Law firms say such ambiguities can also lead to seat shopping, where parties seek a favourable court or legal regime. While choosing a seat is legitimate, problems arise when an unclear clause is used to seek a favourable forum after a dispute has started.
“Seat-shopping, or forum-shopping is a common dispute strategy, particularly in cross-border contracts and disputes,” said Shaneen Parikh, partner at Shardul Amarchand Mangaldas & Co. The seat is important because it determines the courts that supervise the arbitration and deal with challenges to the award, she said.
Nusrat Hassan, managing partner at Dentons Link Legal, said the choice of seat can determine the supervisory court, procedural law and forum for challenging an award. In India, he said, it can also determine whether a challenge goes before a district court or a high court, affecting timelines, appeals and costs.
The issue is not limited to domestic arbitration; it can also arise in international arbitration, where an unclear seat can create jurisdictional disputes and lead to litigation in another country.
Hassan recalled a case where Indian law governed the contract, Singapore was the venue and SIAC administered the arbitration, but the seat was not clearly specified. Although India appeared to be the intended seat, Singapore was treated as the implied seat, meaning any challenge to the award had to be filed before Singapore courts, leading to lengthy litigation.
The fineprint
The issue has received fresh attention from courts this year.
In April, the Supreme Court held that the seat is the legal location of arbitration and determines which courts will have jurisdiction over the proceedings. Once the seat is fixed, those courts have jurisdiction over the arbitration. The venue is only the place where hearings are held and does not determine jurisdiction. While deciding a dispute between J&K Economic Reconstruction Agency and Rash Builders, the top court held Srinagar was the seat of arbitration, while New Delhi was only the venue.
Similarly, in June 2026, while deciding a dispute between Bhartia Infra Projects and Vishwa Samudra Engineering, the Supreme Court held that where an arbitration clause mentions two possible seats or venues but gives exclusive jurisdiction to one court, that court will have supervisory jurisdiction. It also held that there was no need to consider whether another court would be a more convenient forum to hear the case.
Lawyers, however, said such disputes are likely to recur despite the courts providing greater clarity, particularly when contracts continue to rely on standard wording.
“As arbitration volumes grow and contracts get more complex, multi-party, multi-jurisdiction, boilerplate clauses reused across deals lead to a repetition of these issues,” said Chaturvedi.
Piling backlog
CubicTree’s latest dataset, shared with Mint by its chief executive and founder Hitesh Jirwala, shows a significant backlog of arbitration-related cases in Indian courts. As of 2 September 2026, 289,525 cases were pending of the total 729,761 in the dataset. Of these, 440,236 cases had been disposed of, giving a disposal rate of 60.3%.
The data shows that delays remain a major concern. 152,649 pending cases were more than three years old, including 98,379 cases older than five years and 21,494 cases older than 10 years. The median age of a pending case was 40 months, while the average age was 52.2 months.
District and sessions courts accounted for 598,792 cases, compared with 130,966 cases in the high courts. The average time taken to dispose of a case was 21.1 months, while the slowest 10% of cases took 59.1 months or more.
The data also shows a strong role for financial institutions, with 55.2% of cases filed by banks, non-bank financial companies (NBFCs) or financiers.
“Arbitration is rising as it is now written into almost everything we sign, which includes vehicle loan, infrastructure contract with a vendor agreement that carries a clause along with a retail credit and arbitration expanded with it,” said Hitesh B. Jirawla, founder of Cubictree. “Hence, filings have grown 13.5% a year since 2015.”
A 2024 Khaitan & Co. survey found that while arbitration remains preferred over litigation, only 40% of respondents were satisfied with domestic arbitration. About 66% said time limits were not being followed, with most cases taking 24-36 months.
The survey also found that 52% of respondents preferred institutional arbitration, while 40% preferred ad-hoc arbitration.
Responses to queries emailed on Sunday to major arbitration centres, including the Mumbai International Arbitration Centre, Delhi International Arbitration Centre and the International Chamber of Commerce, as well as to the law and justice ministry, were awaited.