Prateek.A, School of Law, Christ (Deemed to be University)
ABSTRACT
With the recent judicial pronouncements in N N Global in its construction of Arbitration Agreements vis-a-vis unstamped contracts and the inherent validity thereof, it is asserted that a binding letter of intent containing an Arbitration Clause must be construed as a valid reference to arbitration, notwithstanding the NN Global verdict. Section 2(1)(b), read with Section 7 of the Arbitration and Conciliation Act, 1996, provides that a reference to arbitration can either be a separate agreement, or a part of a contract in the form of a reference clause. As a norm in modern commercial practice where interim agreements take the form of binding letters of intent, the question of whether such a letter needs to be stamped is inconclusive as neither the Stamp Act nor the Arbitration and Conciliation Act make clear whether a stamp is required for such documents to be given force. It is argued that such a stamping requirement does not exist as the form of letters of intent falls outside the scope of ‘agreement’ as per the Stamp Act and, therefore, operable as valid references to Arbitration.
