Advocate Prabhakar Meher

A practitioner’s analysis of the judicial architecture now governing high-value commercial dispute resolution in India

Over three decades of commercial litigation and arbitration practice across India’s corporate and real estate sectors, I have watched the resolution of high-value disputes transform almost beyond recognition. Real estate in this country no longer operates as a standalone industry. It is bound up with corporate joint ventures, private equity financing, special purpose vehicles, development management agreements and layered security structures — a matrix in which contractual, statutory and jurisdictional questions rarely arrive one at a time.

When a multi-crore project stalls on construction delay, title defect or shareholder deadlock, conventional civil litigation seldom moves at the speed commercial viability demands. Arbitration has therefore become the default forum for the sector. But applying arbitration to real estate and corporate transactions is far from straightforward. It requires navigating four persistent questions: whether the dispute is arbitrable at all; whether the arbitration agreement reaches entities that never signed it; whether the tribunal has been constituted neutrally; and where the supervisory jurisdiction lies.

What follows is an examination of the precedents that now define this terrain, together with the practical consequences each carries for how agreements should be drafted and disputes should be run.

I. Arbitrability: Which Real Estate Disputes Can a Tribunal Decide?

The most persistent obstacle in real estate arbitration has been the threshold objection that disputes touching immovable property are simply incapable of private adjudication. For years, parties resisting arbitration argued that property rights are rights in rem — enforceable against the world at large — and therefore belong exclusively to the public civil courts.

The in rem / in personam divide

The framework for answering that objection was laid down in Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532, where the Supreme Court distinguished rights in rem from rights in personam. The Court held that while the enforcement of a mortgage operates in rem and must be determined by a judicial forum, subordinate rights in personam arising out of the underlying contractual relationship remain fully arbitrable. The distinction is not merely academic: it determines whether a claim survives a Section 8 or Section 11 challenge at the outset.

The four-fold test in Vidya Drolia

The jurisprudence reached its decisive turn in Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1. Overruling the restrictive line of authority that preceded it, the Supreme Court articulated a four-fold test for identifying non-arbitrable subject matter. A dispute is non-arbitrable where:

1. the cause of action relates to actions in rem that do not pertain to subordinate rights in personam;

2. the subject matter affects third-party rights, has an erga omnes effect, and requires centralised adjudication;

3. the dispute concerns inalienable sovereign or public-interest functions of the State; or

4. the dispute is expressly or by necessary implication rendered non-arbitrable by statute.

Critically for this sector, Vidya Drolia confirmed that tenancy and lease arrangements governed by the Transfer of Property Act, 1882 create subordinate rights in personam and are arbitrable — provided they do not fall within a special rent control regime that vests exclusive jurisdiction in a designated forum.

Case study: high-value commercial lease default

In a substantial dispute between a leading corporate tenant and a commercial developer in Mumbai, the developer sought eviction and mesne profits on expiry of the lease. The tenant invoked statutory protections and contended that lease termination was a matter in rem reserved to the civil courts.

Applying Vidya Drolia, the tribunal held that because the premises were commercial and expressly exempt from the local rent control legislation, the lease created a contractual relationship generating rights in personam. The tribunal proceeded to award vacant possession and mesne profits. The case illustrates a point I make to clients repeatedly: clarity on arbitrability at the drafting stage is what prevents a recalcitrant counterparty from converting a jurisdictional objection into two years of delay.

The carve-outs practitioners overlook

Arbitrability in real estate is not settled simply because a lease or development agreement creates rights in personam. Two statutory carve-outs regularly defeat otherwise valid arbitration clauses, and both are commonly missed at the drafting stage.

First, consumer and homebuyer claims. In Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 SCC 751, the Supreme Court confirmed that a valid arbitration clause in a builder-buyer agreement does not oust the jurisdiction of the consumer fora. Read alongside the remedial architecture of the Real Estate (Regulation and Development) Act, 2016, the practical position is one of election: a purchaser who elects the specialised statutory remedy cannot be compelled into arbitration, though a party who has not invoked that remedy may still be referred. For developers, this means an arbitration clause in a sale agreement offers materially less protection than the same clause in a business-to-business development agreement.

Second, corporate governance disputes. Petitions alleging oppression and mismanagement under Sections 241 and 242 of the Companies Act, 2013 invoke the exclusive jurisdiction of the National Company Law Tribunal and the wide remedial powers conferred on it; they are consistently held non-arbitrable. A shareholder deadlock in a real estate special purpose vehicle may therefore fracture into parallel proceedings — contractual claims before a tribunal, governance claims before the NCLT. Allegations of fraud, by contrast, are no longer the obstacle they once were: following Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd., (2021) 4 SCC 713, only fraud of a genuinely public character — permeating the entire contract or carrying implications in the public domain — displaces arbitration.

II. Binding Non-Signatory Entities in Development Joint Ventures

Modern real estate developments rarely involve only two parties. They are structured through joint venture agreements, development management contracts, parent company guarantees, comfort letters and special purpose vehicles. A familiar tactic follows from that structure: a promoter group executes its substantive obligations through a thinly capitalised SPV while keeping the parent entity — which holds the assets — outside the signed arbitration agreement.

Indian courts have addressed this through the Group of Companies doctrine, whose contours were authoritatively settled by a five-judge Constitution Bench in Cox and Kings Ltd. v. SAP India Pvt. Ltd., (2024) 4 SCC 1. The Court affirmed that a non-signatory within a corporate group may be bound by an arbitration agreement executed by an affiliate where its conduct evidences an intention to be bound. Corporate affiliation alone is emphatically insufficient. The determinative enquiry is the non-signatory’s active participation in the negotiation, performance or termination of the underlying transaction, assessed against the composite nature of the commercial arrangement and the mutual intention of the parties.

Case study: the landowner, developer and holding entity triangle

Consider a joint development in which a landowner contracts with a developer’s subsidiary SPV. The parent holding company negotiates the commercial terms, issues a corporate comfort letter, directs execution on site and controls the flow of funds — yet declines to sign the development agreement containing the arbitration clause.

When the project defaults, the SPV holds insufficient assets to satisfy a damages award. Applying Cox and Kings, the landowner can seek to join the parent to the arbitration. The tribunal looks past the signature page to the substance of the transaction, ensuring that a parent cannot take the commercial benefit of a project while insulating itself from the dispute resolution mechanism that governs it.

A drafting note follows. Cox and Kings is a remedy, not a substitute for competent drafting. Establishing implied consent is an evidence-intensive exercise conducted years after the fact. Where a parent’s involvement is commercially essential, name it as a party or extract an express consent to be bound. The doctrine should be your fallback, never your plan.

III. Tribunal Neutrality: From TRF to the Constitution Bench

For decades, standard-form contracts issued by public sector undertakings, large developers and financial institutions reserved to one party the unilateral power to appoint the sole arbitrator, or to curate the panel from which the counterparty was obliged to select. The structure was indefensible in principle and corrosive of confidence in the process.

The correction came in stages. In TRF Ltd. v. Energo Engineering Projects Ltd., (2017) 8 SCC 377, the Supreme Court held that a person statutorily ineligible to act as arbitrator cannot nominate another — invoking the principle that what one cannot do directly, one cannot do through another. That reasoning was extended in Perkins Eastman Architects DPC v. HSCC (India) Ltd., (2020) 20 SCC 760, which disqualified any party having an interest in the outcome from unilaterally appointing a sole arbitrator.

The position has since been placed on constitutional footing. In Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV), 2024 INSC 857, a five-judge Constitution Bench held that clauses permitting one party to appoint the sole arbitrator, or to compel the counterparty to select its nominee from a panel the first party has curated, offend the principle of equal treatment under Section 18 of the Arbitration and Conciliation Act, 1996. In public-private and public sector undertaking contracts, the Court held further that such clauses violate Article 14 of the Constitution. The Court also clarified that a party may waive an objection to a unilaterally appointed arbitrator only by express agreement after the dispute has arisen, in terms of the proviso to Section 12(5), and directed that the ruling apply prospectively.

The practical consequence is immediate. Any legacy standard-form contract in a development, EPC or concession portfolio that retains a unilateral appointment mechanism should be treated as unenforceable in that respect. Where such a clause is encountered, the correct course is to seek consensus on an independent arbitrator or move the High Court or Supreme Court under Section 11. For contracts being drafted today, appointment should be routed to an established arbitral institution — which resolves the neutrality question structurally rather than leaving it to litigation.

IV. Seat, Venue and the Reach of Party Autonomy

Few drafting failures are as expensive as the conflation of seat and venue. The seat determines the curial law and identifies the court exercising supervisory jurisdiction — over interim relief under Section 9, appointment under Section 11, and challenge under Section 34. The venue is merely the geographical location of hearings. Following Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 and BGS SGS SOMA JV v. NHPC Ltd., (2020) 4 SCC 234, a named venue coupled with a supranational body of procedural rules and the absence of any contrary indicator will generally be construed as the seat — but the safer course is to say so expressly.

Party autonomy in this respect now extends further than many transactional lawyers assume. In PASL Wind Solutions Pvt. Ltd. v. GE Power Conversion India Pvt. Ltd., (2021) 7 SCC 1, the Supreme Court held that two Indian parties may validly designate a foreign seat, and that an award so rendered is enforceable in India as a foreign award. For real estate platforms with offshore sponsors, fund vehicles and Indian operating entities, that ruling materially widens the structuring options available at the term-sheet stage.

V. Interim and Emergency Relief

Real estate disputes are characteristically urgent. The relief that matters is usually the relief that must be obtained within days: restraining the creation of third-party rights in a project, halting unauthorised construction, preserving title documents, or freezing escrow accounts before funds are dissipated. An award obtained three years later against a stripped SPV is a professional consolation, not a commercial outcome.

Two mechanisms deserve deliberate attention at the drafting stage. The first is Section 9, which permits an approach to the competent court before the tribunal is constituted — and, unusually among Model Law jurisdictions, after the award but before enforcement. The second is emergency arbitration under institutional rules. In Amazon.com NV Investment Holdings LLC v. Future Retail Ltd., (2022) 1 SCC 209, the Supreme Court held that an emergency arbitrator’s order in an India-seated arbitration is an order under Section 17(1) and is enforceable under Section 17(2). Emergency relief in India-seated arbitration is therefore not aspirational; it is enforceable — but only where the institutional rules the parties have adopted actually provide for it. That is a clause-level choice, and it must be made before the dispute arises.

VI. The Stamping Question — A Sector-Specific Trap

Real estate instruments attract significant stamp duty, and deficient stamping is endemic. For a period this generated a serious threat to arbitration in the sector, with insufficiently stamped agreements treated as unenforceable at the referral stage. That threat has now been removed. In In Re: Interplay Between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899, (2024) 6 SCC 1, a seven-judge Bench held that non-stamping or insufficient stamping renders an instrument inadmissible in evidence but not void; the defect is curable, and objections on stamping are for the arbitral tribunal rather than the referral court.

The decision is rightly celebrated as pro-arbitration. It should not, however, be read as licence for indifference to stamping. The duty remains payable, the instrument remains inadmissible until it is paid, and the impounding exercise still consumes time before the tribunal. Correct stamping at execution remains the cheapest risk mitigation available in a real estate transaction.

VII. Structuring the Clause: A Practitioner’s Checklist

Drawing on thirty years of practice, the arbitration clause is almost always the least negotiated and most consequential provision in a development or joint venture agreement. The following measures repay the attention they demand.

- Designate the seat expressly. State the seat in terms, and state the venue separately if hearings are to be held elsewhere. Identify the supervisory court by name where the parties intend a particular forum.

- Provide for multi-party and multi-contract disputes. Where SPVs, holding entities, landowners and lenders are involved, make every relevant entity a party to the clause, or include express consent to joinder and consolidation across the suite of project documents. Ensure the clauses in related agreements are compatible; inconsistent clauses across a project’s documentation are a standing invitation to jurisdictional litigation.

- Route appointment through an institution. Post-CORE, unilateral appointment mechanisms are a liability. Institutional appointment resolves the question structurally and avoids a Section 11 detour before the merits are ever reached.

- Secure the emergency relief pathway. Adopt institutional rules that provide for an emergency arbitrator, and preserve the Section 9 route expressly.

- Address the statutory carve-outs. Recognise at the outset that homebuyer claims and Sections 241–242 petitions will not be captured by the clause, and structure the wider dispute strategy accordingly.

- Stamp the instrument correctly. The curability of the defect is not a reason to incur it.

VIII. The Road Ahead

The framework continues to move. The draft Arbitration and Conciliation (Amendment) Bill, 2024 — following the recommendations of the expert committee chaired by Dr T. K. Viswanathan — proposes statutory recognition of emergency arbitration, a revised definition of the term court for domestic arbitration, express provision for online proceedings, and further measures to promote institutional arbitration and limit judicial intervention. Practitioners should track its progress, and should note that the Supreme Court has already observed that the draft would benefit from expressly recognising a tribunal’s power to implead non-signatories — the very question settled judicially in Cox and Kings.

Conclusion

India’s commercial dispute resolution architecture has matured considerably, and the direction of travel is unmistakable. The judiciary has clarified arbitrability in property matters, disciplined the Group of Companies doctrine into a consent-based test, placed tribunal neutrality on constitutional footing, removed the stamping obstacle, and confirmed that emergency relief in India-seated arbitration is enforceable. Each of these developments has strengthened the confidence of developers, institutional investors and corporate counterparties in Indian arbitration.

What remains within the control of the parties is the quality of the clause itself. As India continues to expand its urban and infrastructure footprint — and as the capital financing that expansion becomes progressively more international — a well-constructed arbitration mechanism, grounded in these authorities and drafted with the specific structure of the transaction in view, remains the most effective safeguard available for commercial capital and contractual integrity.

Founder & Managing Partner, PKM Legal

Advocate Prabhakar Meher has over three decades of experience in commercial litigation and arbitration across the corporate, real estate and infrastructure sectors in India.

This article is intended for general information and does not constitute legal advice. Readers should obtain advice specific to their circumstances. Citations are current as at the date of publication and should be verified before being relied upon.