A Step Backward for Arbitration Reform: A Legislative Comment on the Indian Stamp Act with Special Reference to the Maharashtra Stamp (Amendment) Act, 2024

The levy of stamp duty on arbitral awards represents both a constitutional problem and an economic distortion. Unlike court decrees, which are exempt from stamp duty, domestic awards are subject to ad valorem duties under the colonial Indian Stamp Act 1899, a burden drastically escalated by the Maharashtra Stamp (Amendment) Act, 2024. The result is twofold: enforcement of arbitral awards is made prohibitively expensive, and parties are perversely incentivised to arbitrate outside India to avoid these costs. Far from facilitating arbitration, the State has erected a barrier that frustrates its own proclaimed policy of promoting India as an arbitration hub. In addition to these concerns, the Maharashtra Stamp Amendment (Act), 2024 also creates a repugnancy by classifying awards in a manner inconsistent with the Arbitration and Conciliation Act, 1996’s treatment of awards as decrees for enforcement, and further raises an Article 304(a) issue by imposing undue fiscal burdens on inter-State commercial activity. The classification between domestic and foreign awards is constitutionally indefensible, failing the Article 14 test of reasonable classification. These doctrinal flaws are aggravated by the practical consequences: disproportionate costs in high- value claims, exploitation of stamp duty objections by award debtors to delay enforcement, and the deterrence of small and medium enterprises from pursuing arbitration altogether. A narrow workaround, reflected in the Karnataka High Court’s view that money awards for damages fall outside the scope of Stamp Duty, provides a temporary safeguard until broader reform is undertaken. Stamp duty on arbitral awards is problematic on every front. It rests on a flawed doctrine, offends constitutional guarantees, and is economically self-defeating.