Section 43 of the Arbitration and Conciliation Act, 1996 provides that the Limitation Act, 1963 applies to arbitrations as it applies to proceedings in court. For most contractual money claims, the limitation period is three years from when the cause of action arises.
For limitation purposes, arbitration is treated as commenced on the date referred to in Section 21 — the date on which the respondent receives a request for the dispute to be referred to arbitration. This is why a clear notice invoking arbitration remains important even though the Supreme Court has held in 2026 that the absence of a Section 21 notice is not by itself fatal to an otherwise valid claim.
Determining when the cause of action arose is often the difficult part. In construction contracts, it may be when the final bill is rejected; in supply contracts, when payment falls due; in continuing contracts, it may depend on the terms. Acknowledgments of liability in writing and part payments can extend limitation under the Limitation Act.
There are separate time limits for court applications. A petition to appoint an arbitrator under Section 11 is subject to limitation, and an application to set aside an award under Section 34 must be filed within three months of receiving the award, extendable by 30 days only for sufficient cause.
The safest approach is to calculate limitation as soon as a dispute arises, record the reasoning, and invoke arbitration well before the deadline.