Showing posts with label Indian Contract Act 1872. Show all posts
Showing posts with label Indian Contract Act 1872. Show all posts


In today's time when there is a sudden spike in the new wave of COVID-19, it can be foreseeable that this period can again be construed as a “force Majeure” event for all the commercial contracts due to a detrimental effect in the industries and could result in loses for the parties in a contract

 Seeing the sudden increase in COVID-related contracts all over the world, like awarding of the 19-billion-pound worth of contract by the UK to a vaccine company [1] or seeing the observation by many freelancers that there is a rise in the need for demand of contracts, which led to an increase in their daily income. It is showing the more-than-ever need to look at the basics of the contracts under the Indian contracts act 1872.

Definition of Contract:

According to section 2 (h) of the Indian contracts act 1872 any agreement which is enforceable by law is called a contract.[2] Elaborating the above definition, a contract is a written or oral agreement between two parties who have the capacity to contract, that creates a legal obligation on each other to do or refrain to do something for a valid consideration.

For an agreement to become a valid contract it should specify some specific conditions as listed under section 10 of the Indian Contracts act 1872.[3] These essential conditions for a valid contract will be further analyzed in the present paper.

Essentials of a valid contract:

The essentials for a valid consideration are as follows:

·       Offer: Offer is the first step that helps in the formation of the contract. According to section 2(A) of the Indian contracts act, 1872

 When one person signifies to another his willingness to do or to abstain from doing anything, to obtain the assent of that other to such act or abstinence, he is said to make a proposal”.[4]

Illustration: If person A who is a vegetable vendor offers to sell his 1 kg of onion to person B for 25 rupees, he is said to make an offer or proposal.

·       Acceptance: It is illustrated in section 2 (B) of the Indian contracts act, and tells that if the person to whom the offer is made, signifies his assent to the offer, he is said to accept it.[5] An acceptance should be definite and absolute and should be communicated to the offeror in a reasonable time to make it valid. There should not be any kind of counteroffer. Counteroffer overrules the existing offer. The best example to explain acceptance is the case of Hyde v. Wrench [6] where the court said “There was no contract because acceptance had not occurred. Where a counteroffer is made this destroys the original offer so that it is no longer open to the offeree to accept. Hence, the acceptance must be absolute and unconditional.”

Illustration: When person A i.e. the vegetable vendor offers person B to sell 1 kg onions for 25 rupees, person B should accept it without any condition like counter offering 22 rupees for the vegetable.

·       Presence of lawful consideration: A consideration is one of the most important parts of a valid contract. However, an unlawful consideration can make the whole contract void and result in the unenforceability of the contract in the court of law. It is talked about in section 25 of the contracts act and was given a proper definition in the case of Currie v. Misa where it was said that

“A valuable Consideration in the perception of law may comprise either in certain Rights, Interest, Profit or Benefit accumulating to one gathering or some avoidance disservice, misfortune or duty given, suffered or attempted by the other”.[7]

Illustration: Suppose in the above example, if person B in place of 25 rupees promised to supply 25 grams of any illegal drug, then that consideration would not be legal and invalid in the court of law.

· Capacity to contract: The parties should be competent to contract and fulfil the requirements provided under section 14 of the Indian contract act 1982.[8]


The people who are coming in a contract should attain the age of majority i.e. 18 years and should be of sound mind to understand the contract. As given in the case of Mohri Bibi v. Dharmodas9 which said that a contract would be void-ab-inito if the concerned parties are minor.


Section 14 also specified that the contract will also be not enforceable if a party is disqualified under the law to make contracts.

·       Presence of free consent: The parties in the contract should enter by their own will. The consent should be following section 14 which says that free consent is consent that is not obtained by coercion, undue influence, fraud,​​ misrepresentation, and mistake.

Illustration: If person A i.e. the vegetable vendor threatens person B to buy the vegetables at 5 times their value or his kid will be kidnapped, then the resultant contract would be voidable at the option of person B. 

Similarly, if Person A fraudulently gives 250 grams of onion in place of 1 kg for the same rate, then the contract between them would be voidable because of the absence of free consent.

·      Lawful Object: The object of the contract should be lawful and in respect to the public policy or else the contract would be void.

Illustration: If person A i.e. the vegetable vendor comes in contract with person B for kidnapping the competitor, then the contract between them would be invalid because of an unlawful object.

·       The agreement should not be expressly declared void: Some of the agreements in the Indian contracts act like agreements in restrain of marriage or lawful proceedings or agreements in restraint of trade are expressly declared void. A valid contract cannot be concerning any of them.

·       Agreements must not lack certainty: As per section 29 of the Indian contracts act, an agreement that is not certain and is incapable of being made certain is void in the eyes of the law.[9

·       Legal Formalities: Wherever there are legal formalities prescribed by the particular laws, they should be adhered to. Example- writing, registration, witnesses etc.

·       Intention to create a legal relationship: There must be an intention to enter into a legal relation when two or more parties enter into an agreement. There will be no contract in existence if there’s no such intention. Hence, we can see that social and domestic agreements are not legal relations and so are not contracts


A contract is one of the most important parts of the law as it regulates the relationships between firms or people. It is a dominant part of most of the corporate industries and helps to give legal backing to the conditions or promises by the parties indicated in the contract. Therefore, it is important for an agreement to satisfy all the essentials and as a result, be called a “Valid Contract”.


1.   Gill Plimmer, £19bn of UK Covid-related contracts awarded without seeking rival bids, FINANCIAL TIMES, April 12, 2021.

2. The Indian Contract Act, 1872, § 2(h).

3. The Indian Contract Act, 1872, § 10.

4.   The Indian Contract Act, 1872, § 2(a).

5. The Indian Contract Act, 1872, § 2(b).

6. (1840) 49 ER 132

7. (1875) LR 10 Ex 153

8. Section 14 in The Indian Contract Act, 1872

9. The Indian Contract Act, 1872 § 29.








Different industries and legal relations have been hard hit by the aggressive measures imposed by the authorities worldwide to face the confirmed cases of COVID 19 have soared worldwide with fatalities. Therefore, there are many voices calling for the necessity of declaring this epidemic as a “Force Majeure”, and many questions arose about the impact of the epidemic on contracts and legal agreements. Therefore, it became necessary to clarify the effect of the pandemic on the execution of the international administrative contract? Is it considered a Force Majeure? And the rights and obligations of each party during the period of the pandemic? 


In fact, most civil law jurisdictions apply a different regime and rules to public contracts entered into with the state or a public agency and private contracts between private parties. Moreover, disputes are resolved by administrative courts for public contracts, and civil or commercial courts for private contracts. 
Regarding the Corona Virus and Force Majeure, we can find in common law countries that Force Majeure exists only as a contractual concept. Force Majeure in such jurisdictions may entitle the contractor to an extension of time or to termination without fault but not to compensation for extra costs and losses[1]. We all know that this is probably not the ideal outcome for contractors facing substantial additional charges as a result of the Pandemic! 

Therefore, another legal concept generally referred to as “Hardship” has been created, which may provide to the contractor an alternative way to claim compensation or to ask for a renegotiation of the onerous terms of a contract in order to avoid termination[2].
By contrast, most civil law countries acknowledge Force Majeure as a legal concept, which is generally enshrined in codified law and expanded upon by case law[3]. It became more complicated and the author has to clarify how the Pandemic may qualify as Force Majeure, in both common and civil law countries, and its consequences. The analysis includes France, Germany, India, and International law.

In France:

· Force Majeure: 

Article 1218 French Civil Code stipulated that “There is force majeure in matters relating to a contract when an event, beyond the control of the debtor that was not foreseeable at the time of the contract and whose effects could not be avoided by appropriate means, prevents the debtor from performing his obligations”.
French Courts have established that “to consider an event as a Force Majeure, It had to be:
  • Unforeseeable: the event could not have been reasonably foreseen at the time of the contract and French Courts expected an experienced contractor to foresee most events that could negatively impact the works and;
  • Irresistible: It had to be beyond the control of the contractual Parties and could not be prevented or avoided by adequate steps; and 
  • External: the occurrence of the event did not have any connection with the Parties[4]
  • The burden of proof: The party seeking to invoke force majeure must prove that these conditions are met. Such party will typically need to show a causal link between the force majeure event and the failure to perform contractual obligations[5]
Additionally, the Court of Appeal of Colmar decision, rendered on March 12, 2020, has already ruled that COVID-19 is a force majeure event. We might assume that this case law was the first one issued in France on this issue[6].

Hardship in France

The legal term of Hardship (“théorie de l’imprévision” in French) has derived from the jurisprudence of the council of state. In addition, article 1195 of the French Civil code provided that:

“If a change of circumstances, unforeseeable at the time of the contract, renders performance excessively onerous for a party who has not agreed to bear the risk, therefore, such party is entitled to ask the other party for a renegotiation of the contract. It will however continue to perform its obligation during the renegotiation period. In case of refusal or failure of the renegotiation, the parties may agree to terminate the contract at a date and with the effects of their choice”.

Basically, If the occurrence of an unforeseeable event makes it very difficult or substantially more onerous for the contractor to continue the performance of its obligations as agreed in the contract, hardship may be invoked by the contractor of a public contract. Additionally, the contractor is entitled to seek compensation and/or to ask for a renegotiation of the onerous terms of the contract in the event the economic balance of the contract is likely to be disrupted by some 30% or more[7].


In order to face the Covid-19 Pandemic, Germany has passed “The Law on Mitigating the Consequences of the COVID-19 Pandemic in Civil, Bankruptcy and Criminal Procedure Law”[8].

With regards to Contract Law, the legislator provides, by the new and temporary Art.240 § 1 of the German EGBGB, a “right to refuse performance” for consumers and micro-businesses (and a maximum of EUR 2 million as an annual turnover) until June 30, 2020 (expanded to 30 Sep 2020). These apply to essential long-term contracts which have been concluded before March 8, 2020. This includes, particularly, contracts for the supply of electricity and gas or telecommunications services, and for water supply and disposal.
According to this article, contractors who are unable to fulfil their contractual obligations (due to the COVID 19 Pandemic) are granted the right to temporarily refuse or cease their performance without being subject to legal responsibility. This also excludes liability for damage caused by delay and an obligation to pay interest. 

However, the exercise of the right to refuse performance is excluded if the contractual creditor cannot be reasonably expected to exercise it. In this case, the micro-entrepreneur has the option of being released from the contract[9].


The concept of force majeure finds its genesis under the Indian Contract Act, 1872. When it is relatable to an express or implied Clause in a contract, it is governed by Chapter III dealing with contingent contracts, and more particularly, Section 32 thereof. A force majeure event which occurs de hors the contract, it is dealt with by a rule of positive law under Section 56 of the Act. Section 56 of the Act deals with the agreement to do an impossible act or to do acts which, afterwards become impossible or unlawful. The approach of the Courts has been to examine the issue based on the facts of each case and relief has been granted to parties accordingly.


It is a fact that there are no European regulations or international conventions governing such issues, however, support may be provided by the Vienna Convention of 1980 and by the UNIDROIT principles. 
  • According to Art.79 of the 1980 Vienna Convention on Contracts for the International Sale of Goods (CISG) “failure to perform a contractual obligation which has caused by an impediment (like Force Majeure), beyond the debtor’s control, and not foreseeable at the time the contract was signed is not a source of the contractor liability”[10].
  • More generally, the principles of international trade (UNIDROIT) provide (Art. 6.2.2.) that “if an unforeseeable and uncontrollable event threats the fundamental balance of the contract (either by reducing the value of the performance or increasing its cost), the disadvantaged party is entitled to ask the other party to renegotiate the terms of the contract and, in the alternative, to ask for the termination the contract[11]
Finally, the author refers that, with the rapid spread of COVID-19 and the expansion and escalation of government measures taken to combat and contain the outbreak, we are likely to see more cases of parties declaring force majeure.
Additionally, we recommended that affected companies should review the force majeure provisions in their contracts carefully and consider the implications if such force majeure provisions are to be invoked. Companies may also consider drafting their force majeure clauses more broadly in the future to clearly include epidemics and public health emergencies, without the need to rely on a force majeure certification. 


[1] (Fn) ALBARIAN A., 2009.
[2] (Fn)K.Zweigert, H. Kötz, 1998.
[3] (Fn)CHAGNY M., 2015. And P. Stoffel-Munck ed. 2015.
[4] (fn) CHAMPALAUNE C., 2015.
[5] (B) Klaus Peter Berger (2004); see also Hubert Konarski (2003).
[6] (Fn)FAGES B., 2009.
[7] (B) See E.Baranauskas, P.Zapolskis 2009.
[8] (S) For example, Germany has already made COVID-19 specific changes to the Introductory Law to the Civil Code which permits consumers and small businesses to withhold performance in certain circumstances. These changes are currently set to expire at the end of June 2020 (see Art.240, §1 “Moratorium”).
[9] (B) See M. Schmidt-Kessel and C. Möllnitz, (2020).
[10] (S)It provided that “(1) A party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences………”. See more at :

Introduction to the Indian Contract Act, 1872

A contract is an agreement between two or more parties, to perform a specific job or work order, often temporary or of fixed duration, and usually governed by a written agreement. In the legal language, the term ‘Contract’ can be defined as an agreement that the law will enforce in some way. It is legally binding and must contain at least one promise i.e., a commitment or offer, by an offeror to and accepted by an offeree to do something in the future. It is executory rather than executed. 
The Indian Contract Act, 1872 was formulated in the year 1872 by the British Government. It frames and validates all agreements between various parties to it. It contains all the provisions relating to the contract laws in India. 

Definition of Contract

Section 2(h) of the Indian Contract Act, 1872 defines the term ‘Contract’ as- “An agreement enforceable by law is a contract.”

Case Laws

Balfour vs. Balfour

This case was filed by Mrs. Balfour against her husband Mr. Balfour. They both lived in Ceylon and went to England for a holiday. During the holidays, Mrs. Balfour became ill and was advised by the doctors to stay back in England and not return to Ceylon. Thus, due to work pressure husband goes back to Ceylon leaving his wife back in England. An arrangement was made between them that Mr. Balfour will provide Mrs. Balfour with Rs. 30 every month as an allowance. For a few months, this arrangement was concrete but due to some differences they got separated and Mr. Balfour stopped sending Rs. 30 as an allowance to Mrs. Balfour. The Court dismissed this case and held that there can be numerous arrangements and agreements between two individuals but not all agreements or arrangements are contracts.

Lalman Shukla vs. Gauri Datt

In this case, the plaintiff, Lalman Shulka is the servant of Gauri Datt, the defendant. The nephew of Gauri Datt flees from the house so Gauri Datt orders Lalman Shukla to go and search for his nephew. When the plaintiff was away searching for the defendant’s nephew then the defendant announced that whoever brings back his nephew will be awarded Rs. 501/-. The plaintiff has no information about the announcement and was successful in finding the nephew of the defendant. Later, after the announcement of the reward Rs. 501/- is known to him he wants to claim that amount and files a suit.
The Court dismissed the case and held that the reward can only be claimed when there is a contract between the parties but when the plaintiff had no knowledge of the offer then there is no acceptance of it and when there is no acceptance of an offer then there is no contract between the parties. Moreover, in this case, it was the duty of the plaintiff to bring back the nephew, and hence no reward will be given to him.

Carlill vs. Carbolic Smoke Ball

In this case, Carbolic Smoke Ball is a company that makes an advertisement for its product ‘Carbolic Smoke Ball’ which states that if any individual uses its product as per the description and still is infected by influenza or cold then they will give Rs. 100/- to them. Then a lady, Carlill starts to use the product as per the description and still catches influenza and thus demands Rs. 100/- from the company and files a suit.

The counter-arguments given by the company was that firstly, the offer given by them is vague as there is no specific time limit. Secondly, there was no intention to enter into a legal obligation with the plaintiff. Thirdly, their offer was not with a particular individual nor any acceptance was communicated by the plaintiff to them. And lastly, there is no consideration.

The Court held that this is not a vague offer but it is a definite offer as the company has itself stated that while using their product if they are infected with any disease then they can claim Rs. 100/ further stated than there is no need to communicate the acceptance of the offer it is made to the public at large and if any individual satisfies all the conditions stated wherein. Thus, the performance of the conditions is sufficient acceptance without notification. Held, the plaintiff will be given the reward of Rs. 100/-.

Mohiri Bibee vs. Dharmodas Ghose

In this case, Brahmodatt is a money lender and Kedarnath is his agent who works under him. Dharmodas Ghose is a minor who mortgages his land to Brahmodatt for Rs. 20,000/-. In the first installment, Kedarnath gives Rs. 10,500 to Dharmodas Ghose. When the mother of Dharmodas Ghose receives information about this arrangement between Kedarnath and Dharmodas Ghose she writes a letter to Kedarnath that when this arrangement was made then Dharmodas Ghose was a minor and thus this arrangement shall be cancelled. On this Kedarnath demanded the money given to Dharmodas Ghose and filed a suit. Till the time the case reached Supreme Court Kedarnath died and it was filed by his wife Mohiri Bibee.

The argument given was that as per Section 64 of the Indian Contract Act, 1872 and Section 65 of the Indian Contract Act, 1872 if any contract is void or voidable then the benefits received by both parties have to restore. Then they relied on Section 41 of the Specific Relief Act, 1963 that stated that is an instrument is cancelled then the court can intervene and ask the party to compensate the benefits received.

The Supreme Court cancelled this contention and stated that Section 64 of the Indian Contract Act, 1872 and Section 65 of the Indian Contract Act, 1872 is not applicable here because it states that there has to be a contract and here there was no contract as one party is minor. By taking into consideration Section 41 of the Specific Relief Act, 1963 the Court held that as Brahmodatt and Kedarnath both knew that the other party is a minor thus, they should not receive any compensation.

Chinnaya vs. Ramayya

This case is a leading case for the ‘Privity of Contract’. Privity of Contract means that a stranger cannot sue in a contract. In this case, an old lady owns the land. A part of that land she gives it to her sister. After some time that lady gifts that land to her daughter on the condition that her daughter will pay Rs. 653/- as an annuity to the old lady’s sister. The daughter agrees to the condition and signs to it but later does not pay it and thus a suit was filed by the old lady’s sister. Here, Chinnaya is the old lady’s sister and Ramayya is the old lady’s daughter.

The argument given by Ramayya is that the estate received by her is a gift and she has no contract with Chinnaya then she has no obligation to pay.
The Supreme Court held that the gift deed and the annuity agreement are both simultaneous agreements and both can be considered as one transaction and thus, consideration has to be paid by Ramayya to Chinnaya.
Hence, Balfour v. Balfour, Lalman Shukla v. Gauri Datt, Carlill v. Carbolic Smoke Ball, Mohiri Bibee v. Dharmodas Ghosh, Chinnaya v. Ramayya is the most important case laws of the Indian Contract Act, 1872.

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A Derivative is a financial contract/security that derives its value from an underlying asset. They are linked to other securities such as bonds and stocks, commodities, currencies, and interest rates. They are not worth anything in and of themselves as there value is based off primary security they are linked to. In each transaction, there is one party that wants to increase their exposure to risk and one party that is looking to take that risk[1].

Some uses of financial derivatives include management of risk, measurement of market, efficiency in trading, price discovery, hedging, price stabilization function, encourage competition, reduction in the transaction cost, etc.


Some of the striking features of derivatives include[2]:
i. Transactions related to derivatives take place on a future date.
ii. A derivative can be used as leverage instruments.
iii. Derivatives have a maturity/expiring date.
iv. The derivatives market is liquid.


i. Options – These are contracts between parties to buy or sell a security at a given price. Derivatives market gives the trader the right to buy CALL or sell PUT an underlying asset. Options are flexible.
ii. Futures – Futures are same as options, although the underlying security is different.
iii. Swaps – They allow both the parties to exchange the benefits of their securities with each other.


Some uses of Financial Derivatives are as follows[4]:
i. Derivatives are used to control, avoid, shift, and manage different types of risks through various strategies like hedging, arbitraging, etc.
ii. Derivatives serve as barometers of the future trends in prices which results in the discovery of new prices.
iii. In derivatives trading, no full amount of the transaction is required.
iv. The derivatives assist the investors, traders, and managers to devise such strategies to achieve investment goals.
v. The derivatives trading develops the market towards complete markets.


This market is estimated to be roughly $1.2 quadrillion in size making it extremely large. Most of the investors prefer buying derivatives rather than the underlying asset. The market has 2 categories namely OTC derivatives and exchange-based derivatives[5].

OTC is not listed on the exchanges and is directly traded between parties. Exchange-based derivatives are listed on the exchanges and the contract is predetermined as they are public.
In India, the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) are two major exchanges with other markets for derivatives. Both the markets have shown remarkable growth in terms of volume and numbers of traded contracts. Derivatives trading was introduced in 2000 and equity derivative market have registered an explosive growth.


Advantages include providing a way to lock in prices, hedge against risk often for a limited cost. Derivatives can often be purchased on margin thus making them less expensive. In all, they have a diverse portfolio.

Disadvantages/Risks are difficult to predict the value of derivatives, they are difficult to value as they are based on the price of another asset, overpriced options, and potential for scams. Most of the derivatives are sensitive to supply and demand factors, thus making it difficult to match the value of a derivative with the underlying asset. The derivative also has no intrinsic value.


It is very tough for novice investors. Beginners should not take high risks in the market. Thus, it is made up of financial engineers, highly experienced investors, and professional money managers. Granted your experience and knowledge, the investment in derivatives should only make up of a percentage in the investment portfolio. As they are highly volatile, one should not rely very heavily on them.


There are 3 types of traders in the derivatives market namely hedgers, arbitrageurs, and speculators[6].
i. Hedgers – They counteract market risk or a business. The risks include exposure to a commodity, an interest rate, etc.
ii. Arbitrageurs – They are intended to take advantage of the mispriced relationship between a derivative and the commodity, interest rate, etc.
iii. Speculators – They are intended to profit from market price fluctuations.
These groups meet to transact in the derivatives market. All of them have market views, divergent risks, commercial risks, etc.


There are some commonly known myths surrounding Derivatives which are not true. These are[7]:
i. Derivatives are new, high tech and developed by Wall Street rocket scientists.
ii. Derivatives are purely speculative.
iii. Only large MNCs have a purpose for using derivatives.
iv. Derivatives do not have returns.
v. Organisations engaged in risk-related activities only engage in the derivatives.
vi. The risks associated are new and unknown.


From the year 2010 to 2018 there was an increase in the FO segment from 72,392.07 cr. to 6,78,588.45 cr. In the year 2012-13, the average daily turnover was 21,705.62 cr., which reduced in 2014 and 2015 by 16,444.73 cr. and 12,705.49 cr. Afterwards, it increased continuously through 2016, 2017 till 208 standing at 20,759.63 cr[8].
These figures show a positive trend for the derivative market and as well as for investors. It is tremendous growth and a good sign for the Indian economy.


The financial derivatives market plays a vital role in risk management and economic growth. Launch of equity derivatives market in the Indian economy has been extremely encouraging and remarkable. NSE’s derivative turnover has surpassed the equity market turnover. Thus, derivatives play a major role in the financial system.
Although the benefit and costs of derivatives remain a debatable topic, the performance of the economy and the financial system in recent years suggests that those benefits have exceeded the costs.


[1] Derivatives, With Their Risks and Rewards, thebalance,
[2] Derivatives Market: Types, Features, and Functions, IndianMoney (Oct. 24, 2019, 05:29 PM),
[3] James Chen, Derivative, Investopedia (Jan. 27, 2020),,changes%20in%20the%20underlying%20asset.
[4] Dr, Shree Bhagwat & Ritesh More & Deepak Chand, An Analysis of Indian Financial Derivatives Market and its Position in Global Financial Derivatives Market, JBM&SSR, 2012.
[5] Financial Derivatives, Avatrade,
[6] John Vahey & Lauren Oppenheimer, Derivatives: The Risks and Rewards, ThirdWay (Feb. 28, 2014),,events%2C%20like%20a%20bond%20default.
[7] S.L Gupta, Financial Derivatives: Theory, Concepts and Problems 24 (2nd ed. PHI 2017).
[8] Meenakshi Bindal, Present Scenario of Derivative Market in India: An Analysis (2010-2018) IJEMR, Apr. 2, 2018.


When it comes to international investment arbitration, a perusal of awards and articles on the subject of jurisdiction and admissibility will lead one to the conclusion that the concept of admissibility is a fiction that has no role in this field of law,[i] that it is merely illusory. We must therefore analyze the nature of admissibility objections, contrast it with jurisdictional challenges, and see if admissibility manages to carve out a path for its own independent existence, separate from that of jurisdiction. 

In investment arbitration, the claimant is opposed by the defendant who seeks to raise the issue of admissibility so as to convince the tribunal to dismiss the claim either before the case is heard on merits, or even regardless of the merits. Procedurally, it bears resemblance to objections raised on jurisdiction. Successful admissibility arguments disallow the tribunal from going into the merits of the case, or even prevent it from exercising its jurisdiction which might otherwise be faultless. Questions of admissibility and jurisdiction are often grouped together as they relate to procedural faults in a broad sense.
One might find strong admissibility objections where parties allege corruption, forum/treaty shopping, illegalities on the part of the claimant and/or their investments, circumvention of jurisdictional limitations, and abuse of processes. The ICJ has observed that objections to admissibility attempt to prove that despite the Court possessing jurisdiction, and the claim having prima facie merit, there are still reasons due to which the Court must not proceed with the merits.[ii]

Interestingly, admissibility objections do not pertain to lack of consent of parties to the arbitration. Consider a contract formed under the provisions of the Indian Contract Act, 1872, with valid consent of parties. Despite consent being present, the contract can be void for want of other requirements – such as being against public policy (Section 23). The same analogy can be extended to that of admissibility objections in relation to consent of parties in the sense that valid consent does not negate considerations external to the parties’ intentions. In fact, an objection based purely on admissibility can even concede the existence of consent, but essentially attempts to disregard said consent. In other words, jurisdictional objections vindicate parties’ consent, while admissibility objections seek to disregard it. Essentially, we borrow the philosophy from the analogy, i.e., party autonomy, as against public goals.

This then leads one into uncharted (or uncodified) waters. Where then do we look for rules that can override parties’ intents, that are not agreed upon the parties themselves? The answer lies in gap-filling sources found in general principles of law and customary international law. Professor Abi-Saab confirms this in his dissent in the Abaclat v. Argentina case at paragraphs 18 and 19.[iii]
The defense of a claim not being admissible is thus available as a mechanism for tribunals to implement general principles of justice in a situation the parties have not foreseen or have not created a contingency where the propriety of arbitration itself is in question.

The following are some general rules of thumb that characterize and contrast an admissibility objection as against a jurisdictional objection, but these are in no way set in stone. 
  • Firstly, the latter objections relate to the powers of the tribunal itself, while the former deals with defects in the claim brought by the claimant. Secondly, the latter objections can be waived by the party, whereas the former cannot. Lastly, the latter objections are irreversible, while the former can be cured.
  • The unwritten nature of admissibility requirements leads to an interesting dynamic. While jurisdictional requirements are completely dependent of party autonomy and have no predetermined content, admissibility requirements have typified content. This is because the latter goes back to the principles of equity and justice. 
  • Another difference can be drawn based on determining what is being punished when each objection succeeds. Admissibility objections that succeed impute a fault on the part of the claimant, or the claim itself. However, jurisdictional decisions are based on mechanical checks built into the treaty or contract itself. 
The question of reviewability, especially in ICSID proceedings is somewhat of a grey area when it comes to admissibility claims. Article 52 does not distinguish between breaches of procedure, or excesses of power.[iv] ICSID ad hoc committees do not take up admissibility decisions of tribunals for review. However, jurisdictional decisions are reviewable. In non-ICSID arbitrations, this depends entirely on the domestic law being applied. 


In conclusion, admissibility stands as a legal mechanism barring tribunals from interfering where principles of justice outside of the parties’ stipulations have been breached. It empowers tribunals to dismiss claims where it has jurisdiction, but equity and justice considerations call for dismissal. This power is inherent and implicit within tribunals to administer justice and stems from unwritten international law, both substantive and procedural justice. It is necessary to protect public interest as it punishes blameworthy claimants or faulty claims, while disregarding the parties’ consent. 


[i] Christer Söderlund, Elena Burova, Is There Such a Thing as Admissibility in Investment Arbitration? , ICSID Review - Foreign Investment Law Journal, Volume 33, Issue 2, Spring 2018, Pages 525–559,
[ii] Croatia v. Serbia, (2008), para 120.
[iii] Abaclat v. Argentina, Dissenting opinion, paras 18-19.
[iv] Article 52, ICSID Convention,