Arbitrability of Trademark Disputes in India: Legal Limitations v. Commercial Realities

Introduction

Suppose, you are the owner of a brand and what if you observed one day that a licensee has quietly expanded the utility of the trademark beyond the agreed jurisdiction. The revenue starts leaking and costs the brand’s reputation. What to do if the conventional litigation is expensive, equally slow and may expose the trade secrets?

That is when the arbitration clause is reached in the licensing agreement. It is fast, enforceable and private. But can this process really be availed by the parties?

The answer to this is not a straight yes or no. The tension lies between the commercial practicalities and the law which makes arbitrability of trademark disputes one of the most consequential questions in contemporary intellectual property law. This article delineates the tension which traces the applicable doctrinal framework which examines the Supreme Court’s significant pronouncements and identifies the categories of trademark disputes where arbitration is not merely permissible but commercially preferable.

Comprehending the Dual Nature of Trademark Disputes

Trademark possesses a dual character. Once registered, it confers a statutory monopoly which is a right that is enforceable against the world. It is not only against the contracting parties. This is the quintessence of a right in rem. Disputes that target the monopoly of the trademark carry an inherent public interest aspect which cannot be resolved by a private tribunal.^[1] Yet, trademarks simultaneously sit at the centre of the confidential commercial systems. Rights that arise from the instruments of franchise contracts, assignments and co-existence arrangements operate only between the contacting parties; they are rights in personam and it is within this arena that arbitration finds its legitimate role in trademark disputes.^[2]

This dual character is an organising principle which determines arbitrability. The nature of the right of being disputed and the nature of the relief being sought, must be examined thoroughly before drawing any conclusion on arbitrability can be reached. Any misrepresentation renders an arbitral award vulnerable to challenge.

The Indian Jurisprudence on the Arbitrability of IP Disputes

The legal position in India on arbitrability has evolved considerably through the judicial pronouncements. The foundational test established by the Supreme Court in ‘Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd.’^[3] lays down, that where the disputes are over subordinate rights in personam, they might be validly referred to arbitration. The categories of inherently non-arbitrable disputes were also enumerated in the relevant pronouncement.

This principle was further reiterated in Vidya Drolia v. Durga Trading Corporation^[4], where the Supreme Court emphasised that arbitration must be encouraged in resolving commercial disputes unless they involve action in rem, sovereign functions or matters that affect public interest. More importantly, the judgment clarified that arbitrability depends on the nature of the relief sought and not merely the subject matter of the dispute.

In the context of trademark law, the Indian courts have taken a cautious approach. Issues that are related to the validity of registration, rectification of the trademark register or infringement that affects the public domain are considered non-arbitrable. These issues require adjudication from the Courts in order to ensure uniformity and consumer protection, However, the judiciary has also recognised that not all trademark disputes are non-arbitrable by their very nature. The controversy arises from the contractual obligations between the parties which may include breach of licensing agreement or royalty payment dispute. These disputes are likely to be resolved through arbitration. The Indian jurisprudence thus, reflects a balanced approach by not only preserving the public character of the trademark rights but also by accepting the commercial utility.

Section 12A mandate v. Urgency in the Dispute

Even where there arises a dispute and is arbitrable in principle, a further procedural complexity demands attention. Section 12A of the Commercial Courts Act, 2015^[5] mandates the pre-institution mediation before a commercial suit can be filed. The Supreme Court in the case of ‘Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd.’^[6] emphasises that the requirement is mandatory and not a procedural recommendation that parties may bypass voluntarily. For trademark owners, this mandate creates a breaking point, as trademark infringement is often a vital situation. To combat this issue, the Supreme Court directly addresses this in the case of Yamini Manohar v. T.K.D. Keerthi^[7], holding that while compliance with the provisions of Section 12A is a mandate, the statutory exception for suits contemplating immediate interim relief is both real and enforceable. Where a party can indicate genuine urgency from the face of its pleadings, the requirement of pre-institution mediation may be waived. However, the urgency in the immediate issue must be demonstrated and not just claimed. A mere prayer for an injunction does not satisfy the exception.^[8]

The practical implication does not apply to the IP practitioners as they do not assume the application of the exception but build the factual record in a manner which makes it apply. The judgment strikes a balance where it preserves the mandatory criterion of pre-institution mediation in ordinary commercial disputes while ensuring that procedural compliance cannot be made dangerous in order to destroy time-sensitive IP rights.

Which Trademark Disputes Are Not Arbitrable?

The challenges to trademark validity, applications for rectifications or cancellation of the register and passing off actions in order to seek to establish rights against the world are non-arbitrable. Their resolution affects all market participants and not just the contracting parties. The statutory adjudication ensures consumer protection, integrity of the public register and consistency. These matters remain firmly within the jurisdiction of the courts and the Intellectual Property Division of the High Courts.

Which Trademark Disputes Are Arbitrable?

Licensing agreements involve complex obligations around quality control, territorial usage, sub-licensing and royalty computation. The disputes over whether a licensee has breached quality standards or whether royalty calculations are accurate, are inherently contractual. An arbitral tribunal can resolve these without affecting the validity of the mark underlying.

The franchise agreements depend on trademark use in order to maintain brand identity. The disputes over unauthorised brand modifications, unpaid franchise fees or unauthorised territorial use are essentially contractual and that their resolution determines rights that are only between the franchisor and the franchisee and does not affect the register or rights of the third party.

Assignment and co-existence agreements and royalty disputes that arise from them, represent the clearest category of trademark marks that can rightfully be arbitrable. Whether a licensee has correctly accounted for royalties, whether minimum payment guarantees have been satisfied or whether audit rights have been properly exercised. These are accounting and contractual questions which have no bearing on rights that are against the world.^[9]

The common thread is that arbitral awards in such categories bind the contracting parties only. They do not alter the trademark register, do not determine rights that are against third parties and do not create precedent on the validity of the mark. Arbitration here is not a substitute for the statutory IP system but a private resolution mechanism which shall operate within the commercial layer that sits above it.

International Perspective on Arbitration in Trademark Disputes and India’s Current Stance

In the international context, arbitration has become an established method for resolving disputes related to intellectual property, particularly in the context of international commerce. Institutions such as the ‘WIPO Arbitration and Mediation Centre and the Singapore International Arbitration Centre’ provide for specialised procedures which are specifically enforced for intellectual property conflicts which reflect a growing recognition of arbitration’s suitability for commercial trademark disputes. WIPO Arbitration and Mediation Centre provides for a specialised procedure for intellectual property conflicts that includes expedited proceedings and the appointment of arbitrators with genuine IP expertise.^[10] Whereas, the Singapore International Arbitration Centre similarly handles complex cross-border IP licensing disputes routinely.^[11]

International commerce often prefer arbitration as it offers neutrality, confidentiality and obligatoriness across jurisdictions under the New York Convention^[12]. Cross-border trademark licensing and technology transfer agreements that frequently incorporate arbitration classes in order to avoid jurisdictional complexities and inconsistent judicial outcomes.

India has not yet developed a specialised framework for intellectual property arbitration that is similar and equivalent to mechanisms established by the WIPO. The Arbitration and Conciliation Act, 1966 does not carve out specific procedures for IP disputes. The result of which is that the parties must navigate general arbitration law with the guidance of judicial precedents that are sophisticated but do not provide the sector-specific certainty which international IP practitioners expect. As India positions itself as a hub for innovation, manufacturing and global commerce, this gap will matter more. But the increasing orientation of Indian arbitration law with international standards suggests a gradual expansion of the role of arbitration in trademark disputes. The evolving global practice may influence Indian jurisprudence for adoption of a more practical and rational approach towards arbitrability in commercial matters in intellectual property.

Challenges

The most important component is the public element which cannot be ignored. The decisions that affect the validity or exclusivity of trademarks must remain within the purview of courts for ensuring consistency and consumer protection. This allows arbitral tribunals to determine the issues that could lead to imploded outcomes and uncertainty in the trademark register. The enforcement challenges may arise when the arbitral award is indirectly impacting third parties. Since arbitration only binds the contracting parties, it cannot resolve disputes conclusively by involving multiple stakeholders or wider market implications.

The lack of a clear statutory guidance on the intellectual property arbitrability in India creates uncertainty for practitioners. Unlike the position under the Lanham Act in the United States, Indians statutory law does not specify which trademark disputes may be referred to arbitration. Until that clarity is provided, the parties cannot always predict with confidence whether an arbitration clause will be upheld.

Also, while judicial precedents provide for general principles, the lack of specific guidelines may deter parties from relying on arbitration clauses alone. While arbitration offers neutrality and confidentiality, the excessive privatization shall undermine the transparency in matters that affect public rights.

Conclusion

The controversy that trademark disputes can be resolved or not through arbitration does not admit a proper one-sided answer. The Indian laws draw careful distinction between disputes that involve rights in rem and those concerning rights in personam. The matters concerning trademark validity, registration or infringement affect the people at large and thus are non-arbitrable. These must be decided by the courts or statutory authorities. However, a significant category of disputes in trademark can effectively be resolved through arbitration. Rather than viewing arbitration as a substitute, it must be treated as a complementary mechanism to the conventional methods of IP prosecution and litigation. Arbitration can accurately deal with the commercial aspect of those transactions.

Disputes that have gone through arbitration are expected to result in substantially reducing the number of lawsuits in courts and also reducing their length, resulting in increased efficiency. The autonomy of the court should be the primary consideration for disputes where public rights are involved. The development of jurisprudence by the Supreme Court clearly illustrates that the judicial system of India is more accepting of using arbitration as an example of a commercial mechanism for resolving disputes while being vigilant in determining the types of disputes for which public adjudication is not negotiable. For example, the ruling issued Yamini Manohar v. T.K.D. Keerthi^[13] demonstrates how the procedural rules regarding arbitration will be amended to protect the rights of holders from being subject to mandatory entrance delays when there has been a showing of good faith and urgency.

India continues to emerge as a global centre for innovation and commerce making it highly likely that the incorporation of arbitration into resolving disputes arising from the use of trademarks will lead to an increase in the growth of disputes and the use of arbitration as a resolution process. A balanced approach to the evolution of the doctrine of arbitration will address the constraints or limitations associated with arbitration while accommodating the realities of commercialism which is essential to the longer-term development of arbitration in relation to intellectual property in India.

Author:– Khushi Shrivastav, in case of any queries please contact/write back to us at support@ipandlegalfilings.com or   IP & Legal Filing.

References

Cases:

1. Booz Allen & Hamilton Inc. v. SBI Home Fin. Ltd., (2011) 5 SCC 532.
2. Vidya Drolia v. Durga Trading Corp., (2021) 2 SCC 1.
3. Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd., (2022) 10 SCC 1.
4. Yamini Manohar v. T.K.D. Keerthi, (2023) 13 SCC 439.

Legislations:

1. Arbitration and Conciliation Act, 1996 No. 26, Acts of Parliament, 1996 (India).
2. Commercial Courts Act, 2015, § 12A, No. 4, Acts of Parliament, 2015 (India).
3. Trade Marks Act, 1999, No. 47, Acts of Parliament, 1999 (India).
4. Singapore International Arbitration Centre, SIAC Rules, 2016 (Singapore).

Journals:

1. Nishith Desai Associates, Intellectual Property Disputes and Arbitration in India (2022).
2. WIPO Arbitration and Mediation Center, Guide to WIPO Arbitration 2^nd edition (2020).

International Instruments:

1. Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 21 U.S.T. 2517, 330 U.N.T.S. 38, New York Convention (1958).

Websites:

1. WIPO Alternative Dispute Resolution (ADR) Services for Specific Sectors, https://www.wipo.int/amc/en/center/specific-sectors/  (last visited Mar 6, 2026).
2. Singapore International Arbitration Centre, https://siac.org.sg/about-us (last visited Mar 6, 2026).

^[1] Trade Marks Act, 1999, §§ 47, 57 (India).

^[2] Arbitration and Conciliation Act, 1996, § 2(1)(e) (India).

^[3] Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532 (India).

^[4] Vidya Drolia v. Durga Trading Corp., (2021) 2 SCC 1 (India).

^[5] Commercial Courts Act, 2015, § 12A (India).

^[6] Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd., (2022) 10 SCC 1 (India).

^[7] Yamini Manohar v. T.K.D. Keerthi, (2023) 13 SCC 439 (India).

^[8] Yamini Manohar v. T.K.D. Keerthi, (2023) 13 SCC 439, ¶ 18 (India).

^[9] Nishith Desai Associates, Intellectual Property Disputes and Arbitration in India 4–5 (2022).

^[10] WIPO Arbitration and Mediation Center, Guide to WIPO Arbitration (2d ed. 2020).

^[11] Singapore International Arbitration Centre, SIAC Rules 2016 r. 30 (2016).

^[12] Convention on the Recognition and Enforcement of Foreign Arbitral Awards art. III, June 10, 1958, 21 U.S.T. 2517 [hereinafter New York Convention].

^[13] Yamini Manohar v. T.K.D. Keerthi, (2023) 13 SCC 439 (India).