No, it is not mandatory. Section 18(1) of the MSMED Act, 2006 states that any party may refer a dispute to the MSEFC. This means MSMEs have the option to use the Council for conciliation and arbitration, but they can also pursue other remedies such as civil courts or contractual arbitration. However, if a dispute is referred to the MSEFC, its process takes precedence and becomes binding under the Arbitration and Conciliation Act, 1996. [Pawwan Khanna vs Deepak Bagga-Del. HC. on 03-Jul-2026]

No. once a dispute is referred to the MSEFC, civil courts cannot entertain parallel proceedings. The Council has exclusive jurisdiction, and any challenge must be made after its award under the Arbitration and Conciliation Act. [Gujarat State Civil Supplies Corporation Ltd. v. Mahakali Foods Pvt. Ltd. & Ors. (2022) 2 SCC 150]

No. Once an MSME refers a dispute to the MSEFC under Section 18 of the MSMED Act, 2006, the Council’s process of conciliation and arbitration takes precedence. The Supreme Court in Gujarat State Civil Supplies Corp. Ltd. v. Mahakali Foods Pvt. Ltd. (2022) held that the MSMED Act overrides contractual arbitration clauses. This means the buyer cannot compel arbitration under the agreement while MSEFC proceedings are pending.

No. The Supreme Court has consistently held — in TRF Ltd. (2017), Perkins Eastman (2019), and most recently in Bhadra International (2026, Constitution Bench) — that unilateral appointment clauses are invalid. They violate the principles of independence, impartiality, and equality under the Arbitration and Conciliation Act, 1996. Courts will step in under Section 11(6) to appoint an impartial arbitrator instead.