Indian businesses increasingly sign contracts with arbitration seated in Singapore, London or Dubai — and then find themselves sued, or wanting to sue, in an Indian court. Section 45 of the Arbitration and Conciliation Act, 1996 is the provision that decides what happens next: a judicial authority seized of an action in a matter covered by a New York Convention arbitration agreement must, at the request of a party, refer the parties to arbitration, unless it finds the agreement null and void, inoperative or incapable of being performed.
When Section 45 is triggered
Three elements must coincide. First, a judicial authority — a civil court, a commercial court, sometimes even a consumer forum or company tribunal — must be seized of an action. Second, the matter must be one in respect of which the parties made an arbitration agreement to which the New York Convention applies, as defined in Section 44: a commercial legal relationship under Indian law, an agreement in writing, and a seat in a Convention country notified in the Official Gazette. Third, a party must ask for the reference. The court does not act on its own motion; a request is the hinge of the provision.
The three exceptions, briefly
| Exception | What it covers |
|---|---|
| Null and void | The agreement never validly came into existence — incapacity, absence of consent, or invalidity under the law governing the agreement |
| Inoperative | The agreement once existed but has ceased to bind — for instance, it has been abandoned, waived or superseded by the parties |
| Incapable of being performed | The arbitration cannot practically proceed — the agreed mechanism has become impossible to implement |
Each exception is construed narrowly, and after the 2019 amendment the court’s scrutiny is expressly prima facie. Grounds that go to the merits of the dispute — that the claim is weak, barred or inflated — are irrelevant at the reference stage. So, generally, are complaints about cost or inconvenience of arbitrating abroad: those are consequences of the bargain, not defects in it.
Strategic points for both sides
Drafting pointer: most Section 45 battles are lost at the drafting table. A clause that names the seat unambiguously, specifies the institutional rules and the law governing the arbitration agreement, and is signed in the main contract leaves the resisting party almost nothing to argue at the reference stage.
The larger picture
Indian courts’ approach to Section 45 mirrors the pro-arbitration direction of the last decade: minimal interference at the gateway, full argument reserved for the tribunal, and enforcement questions postponed to Section 48 when the award returns to India. Parties who signed a foreign-seated clause should expect to be held to it — and parties who want Indian courts to retain jurisdiction should say so in the contract, not in the litigation.
This article is for general information only and is not legal advice or a solicitation.
Frequently Asked Questions
How is Section 45 different from Section 8?
Section 8 of Part I governs references where the arbitration is seated in India; Section 45 sits in Part II and governs agreements within the New York Convention — in practice, foreign-seated arbitrations with a commercial subject matter between parties from Convention countries notified by India. The exceptions are also worded differently: Section 45 retains the Convention’s trilogy of null and void, inoperative or incapable of being performed.
How deeply does the court examine the arbitration agreement?
Only prima facie. Since the 2019 amendment, Section 45 itself says the finding that the agreement is null and void, inoperative or incapable of being performed is to be prima facie, leaving the full question to the arbitral tribunal under the kompetenz-kompetenz principle. The reference stage is a gateway, not a trial.
Who can seek the reference, and when?
Any party to the arbitration agreement — or a person claiming through or under a party — may request the reference. The request should come before submitting the first statement on the substance of the dispute; a defendant who contests the suit on merits without reserving the objection risks waiving it.
Is an order under Section 45 appealable?
A refusal to refer parties to arbitration is appealable under Section 50(1)(a) of the Act. An order making the reference is not separately appealable under the Act, which reflects the pro-enforcement tilt of the Convention scheme.