Can a contract prevent both parties from going to court?

No. Section 28 voids any agreement that absolutely restricts legal proceedings, even if both parties agree to it. However, arbitration and mediation clauses that require disputes to go through those processes first are usually enforceable, as they do not eliminate the right to seek a remedy.

Are arbitration clauses allowed under Section 28?

Yes. Arbitration clauses are valid because they do not completely bar access to justice; they redirect disputes to an alternative forum. Courts recognise arbitration as a lawful and enforceable way to resolve disputes, provided the clause is clear and fairly agreed.

What if a contract says a claim must be filed within 30 days?

Such a clause is likely void under Section 28 if it unreasonably shortens the statutory limitation period (normally 3 years for contract breaches). Courts will not enforce overly short time limits that deny parties a reasonable opportunity to pursue their rights.

Can a contract limit the damages or remedies available?

Yes, liability caps and remedy limitations are generally enforceable. Section 28 prohibits clauses that eliminate the right to sue, not clauses that limit the amount of compensation. However, such caps must be reasonable and not imposed unfairly.

Section 28 of the Indian Contract Act, 1872: Agreements in restraint of legal proceedings, void

Section 28 Indian Contract Act voids agreements blocking court access or shortening time to sue. What it means for your contracts and dispute clauses.

The provision

Every agreement by which any party is restricted absolutely from enforcing his rights under or in respect of any contract by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights, is void to that extent.

Indian Contract Act, 1872, Section 28. Official text.

What Section 28 Prohibits

Section 28 of the Indian Contract Act makes void any agreement that stops a party from taking legal action to enforce their contractual rights. This applies to both absolute restrictions (preventing legal proceedings entirely) and time-based restrictions (shortening the normal period within which a party can sue). The law considers such clauses contrary to public policy because they deny parties access to justice and the courts.

What This Means in Practice

If a contract includes a clause stating that disputes cannot be taken to court, or that a party must file a lawsuit within 6 months instead of the standard 3 years under the Limitation Act, that clause will be unenforceable. A court will strike it down and allow the aggrieved party to pursue their legal remedies in the ordinary way. This protection cannot be waived by agreement, even if both parties consent.

However, the section does not prohibit all alternative dispute resolution. Arbitration clauses and mediation requirements are generally enforceable because they do not absolutely bar legal proceedings; they simply provide a preliminary forum or process. Similarly, agreements that extend the time limit for enforcement (rather than shorten it) are permissible.

Contract Drafting and Negotiation Implications

When drafting or reviewing contracts, avoid any language that purports to prevent a party from suing or that imposes unreasonably short limitation periods. Phrases such as "disputes cannot be referred to court" or "no claim shall be valid if filed after 90 days" will be void and create legal uncertainty.

Instead, consider enforceable alternatives. Include a mandatory arbitration clause that requires parties to submit disputes to arbitration before litigation, provided it does not absolutely bar court access. Add a mediation or negotiation requirement as a precondition to litigation. These are recognised as valid and effective ways to reduce litigation risk.

Be aware that Indian courts interpret Section 28 strictly. Even partial restrictions on the right to sue may be challenged. Draft dispute resolution clauses with precision: specify the arbitral forum, the governing law, the seat of arbitration, and the grounds on which either party may appeal or seek court intervention. This clarity strengthens enforceability.

For contracts with cross-border elements, consider the impact of this section on indemnification caps, liability waivers, and remedies clauses. While these may limit damages, they must not eliminate the right to seek a remedy through legal proceedings.

This page explains the law in general terms for information only. It is not legal advice. Always read the provision in its official source and take advice on your specific facts.

Frequently asked questions

Can a contract prevent both parties from going to court?: No. Section 28 voids any agreement that absolutely restricts legal proceedings, even if both parties agree to it. However, arbitration and mediation clauses that require disputes to go through those processes first are usually enforceable, as they do not eliminate the right to seek a remedy.
Are arbitration clauses allowed under Section 28?: Yes. Arbitration clauses are valid because they do not completely bar access to justice; they redirect disputes to an alternative forum. Courts recognise arbitration as a lawful and enforceable way to resolve disputes, provided the clause is clear and fairly agreed.
What if a contract says a claim must be filed within 30 days?: Such a clause is likely void under Section 28 if it unreasonably shortens the statutory limitation period (normally 3 years for contract breaches). Courts will not enforce overly short time limits that deny parties a reasonable opportunity to pursue their rights.
Can a contract limit the damages or remedies available?: Yes, liability caps and remedy limitations are generally enforceable. Section 28 prohibits clauses that eliminate the right to sue, not clauses that limit the amount of compensation. However, such caps must be reasonable and not imposed unfairly.

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