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Section 43 of the Arbitration and Conciliation Act, 1996: Limitation in Arbitration

Section 43 applies the Limitation Act, 1963 to arbitration in substantially the same manner as it applies to court proceedings. It also links the commencement of arbitration for limitation purposes to Section 21 of the Arbitration and Conciliation Act, 1996.

Updated for current law: September 7, 2026.

Key point: A claim does not escape the law of limitation merely because the dispute is referred to arbitration. For limitation purposes, the date on which arbitral proceedings commence under Section 21 is especially important.

Section 43: Limitations

(1) The Limitation Act, 1963 (36 of 1963), shall apply to arbitrations as it applies to proceedings in court.

(2) For the purposes of this section and the Limitation Act, 1963 (36 of 1963), an arbitration shall be deemed to have commenced on the date referred to in section 21.

(3) Where an arbitration agreement to submit future disputes to arbitration provides that any claim to which the agreement applies shall be barred unless some step to commence arbitral proceedings is taken within a time fixed by the agreement, and a dispute arises to which the agreement applies, the Court, if it is of opinion that in the circumstances of the case undue hardship would otherwise be caused, and notwithstanding that the time so fixed has expired, may on such terms, if any, as the justice of the case may require, extend the time for such period as it thinks proper.

(4) Where the Court orders that an arbitral award be set aside, the period between the commencement of the arbitration and the date of the order of the Court shall be excluded in computing the time prescribed by the Limitation Act, 1963 (36 of 1963), for the commencement of the proceedings (including arbitration) with respect to the dispute so submitted.

Official text: Arbitration and Conciliation Act, 1996 on India Code.

Meaning and effect of Section 43

Section 43 makes limitation law applicable to arbitral claims. The arbitral tribunal must therefore consider whether the claim was brought within the limitation period prescribed by the Limitation Act, 1963, subject to any provision that permits exclusion, extension, acknowledgement, continuing causes of action, or other legally recognized adjustments to computation.

The precise limitation period depends on the nature of the claim and the relevant article of the Schedule to the Limitation Act, 1963. Section 43 does not itself prescribe a single limitation period for every arbitration.

Section 21: When arbitral proceedings commence

Section 43(2) expressly refers to Section 21 of the Arbitration and Conciliation Act, 1996. Unless the parties have agreed otherwise, Section 21 provides that arbitral proceedings in respect of a particular dispute commence on the date when the respondent receives a request that the dispute be referred to arbitration.

Practical effect: Sending a notice and the respondent receiving the request can have direct limitation consequences. Parties should preserve proof of dispatch, delivery, electronic transmission, or other evidence showing when the request was received.

Contractual time limits and undue hardship under Section 43(3)

Some arbitration agreements require a party to take a specified step within a contractually fixed time, failing which the claim may be treated as barred. Section 43(3) gives the Court a limited statutory power to extend such contractual time where refusing an extension would cause undue hardship. The Court may impose terms and grant such further period as the justice of the case requires.

This provision concerns a contractual time bar for taking a step to commence arbitration. It should not be treated as a general power to rewrite every limitation period prescribed by the Limitation Act.

Exclusion of time when an arbitral award is set aside

Section 43(4) protects a party where an arbitral award is set aside by the Court. In computing limitation for fresh proceedings concerning the dispute, the period between commencement of the arbitration and the date of the setting-aside order is excluded.

The provision can therefore become important when a dispute has already spent substantial time in arbitration before the award is set aside and further proceedings are required.

Current Supreme Court position on Section 43 and Section 21

In a 2026 judgment, the Supreme Court reiterated that Section 43 applies the Limitation Act to arbitration and that, under Section 43(2), commencement is tied to the date referred to in Section 21, namely receipt by the respondent of the request to initiate arbitration. The Court rejected an attempt to revive a claim after an exceptionally long delay where arbitration had not been invoked within the applicable limitation period.

Official judgment: Supreme Court of India, 2026 INSC 358.

Related provisions

State law note: India Code records a Bihar State amendment concerning Section 43(3). Where a dispute is governed by a State amendment or a special statute, the applicable local and special-law position should be checked separately.