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The Arbitration and Conciliation Act of 1996, did not have a time limit
upon the mandate of the Arbitrator.. This limitation, along with other
provisions of Sec 29A, were inserted into the principal Act by way of
the 2016 Amendment Act.1 The Act of 1940, in s. 28, also contained
provisions whereby the court could extend the time for making an
award. However, the 1940 Act did not contain any mandatory limits
upon the time available to the Arbitrators. There was an “implied
time limit” condition of four months.2 Parties were free to impose
such limits by contractual agreement. Further, it was open to the
parties to extend the time by way of mutual consent3.4 But the
omission of the provision for extension of time and therefore the
absence of any time limit has given rise to another problem, namely,
that awards are getting delayed before the arbitral tribunal even
under the 1996 Act. One view is that this is on account of the absence
of a provision as to time limit for passing an award.5
1
Sec 15 of the 2016 Amendment act.
2
See section 3 read with the First Schedule of the Arbitration Act, 1940.
Section 3- Provisions implied in arbitration agreement- An arbitration agreement, unless a different intention
is expressed therein, shall be deemed to include the provisions set out in the First Schedule in so far as they are
applicable to the reference.
Rule 3, First Schedule- The arbitrators shall make their award within four months after entering on the reference
or after having been called upon to act by notice in writing from any party to the arbitration agreement or within
such extended time as the Court may allow.
3
Shyam Telecom Ltd. vs Arm Ltd, 2 004 (3) ARBLR 146 Delhi, 2004 (77) DRJ 91 Para 17- “It is true that
1996 Act does not prescribe any time limit for making and publishing the Award but that does not mean that
parties cannot by mutual agreement provide for a time limit for making the Award by the Arbitrator and if so
prescribed it would run contra to the provisions of the Act. This view appears to be more plausible and acceptable
having regard to the object of having Arbitration as the alternate mode for settlement of disputes/differences
between the parties.”
4
28. Power to Court only to enlarge time for making award.
(1) The Court may, if it thinks fit, whether the time for making the award has expired or not and whether the
award has been made or not, enlarge from time to time the time for making the award.
(2) Any provisions in an arbitration agreement whereby the arbitrators or umpire may, except with the consent
of all the parties to the agreement, enlarge the time for making the award, shall be void and of no effect.
5
176th Law Commission Report, Page 122
This said provision stipulated under Section 29A is only applicable to
arbitral proceedings (both domestic and international arbitrations)
commenced on or after 23rd October, 2015 wherein the place of
arbitration is in India. Thus, it is prospective in nature.
Section. 29 A (1)
6
The Arbitration Amendment Bill, 2018 proposes the following substitution to s. 29A (1)-
"(1) The award in matters other than international commercial arbitration shall be made within a period of twelve
months from the date of completion of pleadings under sub-section (4) of section 23."; Thus, the time period shall
begin to run from the point when parties have completed their pleadings. Thus, it seems that the legislature wishes
to give a years’ time to the Arbitral Tribunal to deliberate and decide upon the issues, as opposed to quickly wrap
up the proceedings. This proposed amendment requires to be reconsidered. The term “completion of pleading” is
vague. Further, parties are free, with the leave of the Tribunal, to amend their pleadings. As such, it would be
open for unscrupulous litigators to employ dilatory tactics and keep extending their pleadings indefinitely. The
Act does not specifically authorize the Arbitrator to compel a Party to quickly wrap up its pleadings.
7
S 2. (C), Arbitration Act, 1996 “arbitral award” includes an interim award; whereas the old Act specified
that ‘“award” means an arbitration award”
8
Termination of proceedings.—
(1) The arbitral proceedings shall be terminated by the final arbitral award or by an order of the arbitral tribunal
under sub-section (2).
(2) The arbitral tribunal shall issue an order for the termination of the arbitral proceedings where—
(a) the claimant withdraws his claim, unless the respondent objects to the order and the arbitral tribunal recognises
a legitimate interest on his part in obtaining a final settlement of the dispute,
(b) the parties agree on the termination of the proceedings, or
(c) The arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary
or impossible.
(3) Subject to section 33 and sub-section (4) of section 34, the mandate of the arbitral tribunal shall terminate with
the termination of the arbitral proceedings.
2018 will exempt International Commercial Arbitrations from any
time limits.9
9
Section 6 of the Arbitration and Conciliation (Amendment) Bill, 2018-
“In section 29A of the principal Act,—
(a) for sub-section (1), the following sub-section shall be substituted, namely:—
"(1) the award in matters other than international commercial arbitration shall be made within a period of twelve
months from the date of completion of pleadings under sub-section (4) of section 23.”
10
Article 21. Commencement of arbitral proceedings- Unless otherwise agreed by the parties, the arbitral
proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be
referred to arbitration is received by the respondent.
11
Jimmy Construction Pvt. Ltd. V UoI, 2008 (2) Arb LR 591 (Bom)
12
Haresh Chinnubhai Shah v Rajesh Prabhakar Jhaveri, 2004 (1) Arb LR 536 (Bom)
13 The Observations of the Delhi High Court in Newton Engineering and Chemicals v IOL 2006 (4) Arb LR 257
(para 24) -
“To conclude, I have no hesitation in holding that there is no provision in the Act empowering this Court
to terminate the mandate of the Arbitrator who has entered upon the reference and/or to substitute the same with
an Arbitrator appointed by this Court. The necessary corollary is that the challenge to the appointment of the
Arbitrator must be raised by the petitioner before the Arbitral Tribunal itself. If such challenge succeeds, the
new arbitrator is appointed, then s. 15 (4) comes into effect, which
states-
“Unless otherwise agreed by the parties, an order or ruling of
the arbitral tribunal made prior to the replacement of an
arbitrator under this section shall not be invalid solely because
there has been a change in the composition of the arbitral
tribunal.”
petitioner shall have no cause for grievance left. If, however, the petitioner is unable to succeed before the Arbitral
Tribunal, it shall have no option except to participate in the arbitral proceedings and if aggrieved by the arbitral
award, to challenge the same in accordance with the provisions of Section 34 of the Act.”
14
Harike Rice Mills v State of Punjab, 1997 (Sup) Arb LR 342
15
Assam Urban Water Supply and Sewerage Scheme v Subhash Projects and Marketing Ltd. AIR 2003 Gau 146
16
See S 11, Arbitration Act, 1940-
11. Power of Court to remove arbitrators or umpire in certain circumstances.
(1) The Court may, on the application of any party to reference, remove an arbitrator or umpire who fails to use
all reasonable dispatch in entering on and proceeding with the reference and making an award.
(2) The Court may remove an arbitrator or umpire who has misconduct himself or the
The International Chambers of Commerce has similar provision in its
2017 Arbitration rules, where Article 31 Provides for the time limit
for the final award.17 It should be noted that the ICC clearly refers to
the Final award, thus removing the ambiguity present in the 1996
Indian Act.
In case the first time period of one year runs out and one or both
parties do not consent to the extension of the proceedings, the
Arbitrator / Tribunal shall terminate the proceedings. This
termination cannot be challenged in anyway except by a petition
under section 34 of the Act. 1819
Section. 29A (2)
Proceedings.
(3) Where an arbitrator or umpire is removed under this section, he shall not be entitled to receive any
remuneration in respect of his services.
(4) For the purposes of this section the expression “proceeding with the reference” includes, in a case where
reference to the umpire becomes necessary, giving notice of that fact to the parties and to the umpire.
17
Article 31 Time Limit for the Final Award
The time limit within which the arbitral tribunal must render its final award is six months. Such time limit shall
start to run from the date of the last signature by the arbitral tribunal or by the parties of the Terms of Reference
or, in the case of application of Article 23(3), the date of the notification to the arbitral tribunal by the Secretariat
of the approval of the Terms of Reference by the Court. The Court may fix a different time limit based upon the
procedural timetable established pursuant to Article 24(2).
The Court may extend the time limit pursuant to a reasoned request from the arbitral tribunal or on its own
initiative if it decides it is necessary to do so.
https://cdn.iccwbo.org/content/uploads/sites/3/2017/01/ICC-2017-Arbitration-and-2014-Mediation-Rules-
english-version.pdf.pdf
18 In The India Trading Company vs. Hindustan Petroleum Corporation Ltd. 2016 SCC Online Cal 479, a
Division Bench of the Calcutta HC has held-
"13. There is a difference between a decision which puts an end to the arbitral proceedings and a decision whereby
the arbitrator withdraws from the proceedings. Where the arbitrator withdraws from the proceedings, a substitute
arbitrator may appointed in accordance with the procedure, applicable to the appointment of the arbitrator who is
replaced, but where the arbitrator puts an end to the arbitral proceedings, the claimant cannot pursue his claim.
14. The decision of the arbitral tribunal to put an end to the proceedings is a final award which can only be
challenged by way of an application for settling aside under Section 34 Sub-section (2) of the 1996 Act. Once the
arbitral proceedings are terminated, the claimant cannot re-agitate the same claim by initiation of fresh
proceedings since the claim would be hit by principles of constructive res judicata.”
19
Angelique International Limited vs SSJV Projects Private Limited & Anr, O.M.P. (T) (COMM.) 91/2017 &
I.A. Nos.13595/2017, 14086/2017
The second subsection of section 29A states-
“If the award is made within a period of six months from the
date the arbitral tribunal enters upon the reference, the
arbitral tribunal shall be entitled to receive such amount of
additional fees as the parties may agree.”
The language used here is, “as the parties may agree” and not “as the
parties have agreed”. This implies that there need be no prior
agreement of the parties to the Arbitration with regard to the fee
payable to the arbitrators if the award is made within 6 months. The
parties are thus bound to, in concert, agree to the additional fee
payable.20
20
The Arbitration (Amendment) Bill, 2018 proposes an amendment in sec. 11-
“(14) The arbitral institutions shall determine the fees of the arbitral tribunal and the manner of its payment to the
arbitral tribunal subject to the rates specified in the Fourth Schedule.”
Explanation.—For the removal of doubts, it is hereby clarified that this sub-section shall not apply to international
commercial arbitration and in arbitrations (other than international commercial arbitration) where parties have
agreed for determination of fees as per the rules of an arbitral institution.’
a period of sixty days from the date of service of notice on the
opposite party.
(14) For the purpose of determination of the fees of the arbitral
tribunal and them manner of its payment to the arbitral
tribunal, the High Court may frame such rules as may be
necessary, after taking into consideration the rates specified in
the Fourth Schedule.
Further, the Court has a certain amount of discretion with regard to the costs of
arbitration.21
21
Section 39 (4)
“The Court may make such orders as it thinks fit respecting the costs of the arbitration where any question arises
respecting such costs and the arbitral award contains no sufficient provision concerning them”.
22
S. 11 (14) as proposed in the 2018 Amendment bill-
“The arbitral institutions shall determine the fees of the arbitral tribunal and the manner of its payment to the
arbitral tribunal subject to the rates specified in the Fourth Schedule.
Explanation.—For the removal of doubts, it is hereby clarified that this sub-section shall not apply to international
commercial arbitration and in arbitrations (other than international commercial arbitration) where parties have
agreed for determination of fees as per the rules of an arbitral institution.”
[THE FOURTH SCHEDULE]23
23
24
Proposed Section 29A (7)-
“The parties cannot by consent, extend the period beyond the period specified in sub-section (1) and the maximum
period referred to in sub-section (2) and save as otherwise provided in the said sub-sections, any provision in an
arbitration agreement whereby the arbitral tribunal may further extend the time for making the award, shall be
void and of no effect.”
Section. 29A (4)
The fourth subsection of section 29A states-
“(4) If the award is not made within the period specified in
sub-section (1) or the extended period specified under sub-
section (3), the mandate of the arbitrator(s) shall terminate
unless the Court has, either prior to or after the expiry of the
period so specified, extended the period:
It should be noted that the phrase used in this sub-section is “the mandate
of the arbitrator(s) shall terminate”. This does not mean that the
arbitration proceedings shall terminate. As has been discussed above,
there is a distinction between the termination of an Arbitrator’s mandate
and the termination of proceedings. The later may only be done by an
“order passed by the arbitrator” in terms of s. 32 of the 1996 Act. If the
mandate of the arbitrator terminates as provided in the main provision of
s. 29A (4), then it may be open to the court to appoint new arbitrators. It
is implied that the Arbitrator(s) shall be substituted by the court if it is
found that the Arbitrator(s) has/have failed to act and adjudicate without
undue delay. This becomes amply clear upon an examination of sub-
section 6 of section 29A.26
25
The Arbitration Amendment Bill, 2018 proposes the following amendment to s. 29A (4)
“in sub-section (4), after the proviso, the following provisos shall be inserted, namely:—
"Provided further that where an application under sub-section (5) is pending, the mandate of the arbitrator shall
continue till the disposal of the said application:
Provided also that the arbitrator shall be given an opportunity of being heard before the fees is reduced."
26
“(6) While extending the period referred to in sub-section (4), it shall be open to the Court to substitute one or
all of the arbitrators and if one or all of the arbitrators are substituted, the arbitral proceedings shall continue from
the stage already reached and on the basis of the evidence and material already on record, and the arbitrator(s)
appointed under this section shall be deemed to have received the said evidence and material.”
It should be noted that once an arbitrator’s mandate has been terminated,
he may be appointed again. There is no specific authority for this
proposition, however, the Supreme Court has decided a case where one of
the Parties challenged the appointment of the Arbitrator on the ground
that he had decided a previous dispute in a prior Arbitration proceeding
arising out of the same Contract, involving identical issues. The ground
taken by the Party, among others, was that the Arbitrator has had “The
arbitrator has previous involvement in the case.” 27This is one of the
grounds for challenging the appointment of an Arbitrator.28 It is also a
ground which “gives rise to justifiable doubts as to the independence or
impartiality of arbitrators.”29 Another ground taken was that if arbitrator
has been appointed as an arbitrator on more than one occasion by a party,
such appointment falls afoul of Clauses 22 and 24 of the Fifth Schedule
and therefore it is justified to doubt his impartiality. It is worth noting
that while the Fifth Schedule lays down certain situations where an
Arbitrator’s appointment may be challenged, it is not an absolute rule. The
Seventh Schedule, however, lays down grounds that render a person
“ineligible to be appointed as an arbitrator”.30 This must be interpreted in
light of Explanation 3 to the Seventh Schedule which says-
27
Arbitration and Conciliation Act, 1996, Seventh Schedule, Clause 16
28
Section 12 (5) Notwithstanding any prior agreement to the contrary, any person whose relationship, with the
parties or counsel or the subject-matter of the dispute, falls under any of the categories specified in the Seventh
Schedule shall be ineligible to be appointed as an arbitrator:
Provided that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub-
section by an express agreement in writing.]
29
See Clause 16, The Fifth Schedule, 1996 Act
30
See ibid, 22
in different cases, this is a relevant fact to be taken into
account while applying the rules set out above.”
The Court drew a distinction between independence and impartiality and
held that a person may not be independent, but may yet be impartial. The
observations of the Supreme Court, as made by Nariman J, in this regard
are as follows-
“……………..every arbitrator shall be impartial and independent of the parties at
the time of accepting his/her appointment. Doubts as to the above are only
the arbitrator may be influenced by factors other than the merits of the case
in reaching his or her decision. This test requires taking a broad common-
sensical approach to the items stated in the Fifth and Seventh Schedules. This
approach would, therefore, require a fair construction of the words used
“…………In this context, it is important to refer to the IBA Guidelines, which are
the genesis of the items contained in the Seventh Schedule. Under the
24. On reading the aforesaid guideline and reading the heading which appears
with Item 16, namely “Relationship of the arbitrator to the dispute”, it is obvious
that the arbitrator has to have a previous involvement in the very dispute
“It has also been argued by learned counsel appearing on behalf of the respondent
that the expression “the arbitrator” in Item 16 cannot possibly mean “the arbitrator”
acting as an arbitrator, but must mean that the proposed arbitrator is a person who
31
HRD Corporation v GAIL India Ltd. (Civil Appeal no 11127 of 2017),
32
Ibid, Para 23, 24
has had previous involvement in the case in some other avatar. According to us, this
arbitrator. 33
The words “termination of mandate” have been used elsewhere in the 1996
Act. The provisions of Section 15 are relevant here. It reads as follows-
“15. Termination of mandate and substitution of
arbitrator.—
(1) In addition to the circumstances referred to in section
13 or section 14, the mandate of an arbitrator shall
terminate—
(a) where he withdraws from office for any reason; or
(b) by or pursuant to agreement of the parties.
(2) Where the mandate of an arbitrator terminates, a
substitute arbitrator shall be appointed according to the
rules that were applicable to the appointment of the
arbitrator being replaced.
(3) Unless otherwise agreed by the parties, where an
arbitrator is replaced under sub-section (2), any hearings
previously held may be repeated at the discretion of the
arbitral tribunal.
(4) Unless otherwise agreed by the parties, an order or
ruling of the arbitral tribunal made prior to the
replacement of an arbitrator under this section shall not
be invalid solely because there has been a change in the
composition of the arbitral tribunal”
33
Ibid, Para 16
A combined reading of Sections 15(2) and 29A (4) tells us that if the
mandate of the Arbitrators terminates, then the rules applicable to the
appointment of the initial arbitrator shall be applicable. This, in turn,
means that if the Parties had decided upon the selection criteria34 and
procedure for Arbitrators, such rules and procedures shall be followed
here again. If there is no prior agreement, or the parties do not agree again
as to the procedure, then –
34
Section 11 (2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator
or arbitrators.
35
Section 11 (3)
36
Section 11 (4)
4. Where, under an appointment procedure agreed upon by the parties,—
a party may request [the Supreme Court or, as the case may be, the High
Court or any person or institution designated by such Court] to take the
necessary measure, unless the agreement on the appointment procedure
provides other means for securing the appointment.
The power of the Court to substitute Arbitrators is in addition to, and not
in derogation of, its power to deduct fees. The power of the Court to deduct
fee can be quite severe. Although there is a limit of 5% for every month,
there can be situations where the delay is for multiple months. For
example, the maximum deduction allowed for a delay of 6 months is 30%
of the total fee. In such a case, the cumulative deductions can be quite
great. It is also worth observing that the fee paid to an Arbitrator may be
on more than one basis. It may be fixed, per month, or per session. The
imposition of a high deduction can be especially severe and harsh where
the Arbitrator has agreed to a fixed fee. In such a situation, it is in his
interest to make an award as quickly as possible. It is hoped that the Court,
while imposing a deduction, shall both give a hearing to the Arbitrator as
to the quantum of deduction, as well as consider the basis upon which his
fee is paid. This is certainly the current position of the law, which has also
been made clear by the Legislature. The 2018 Bill includes an amendment
which will add a Proviso to Section 29A (4) which specifies the right of the
Arbitrator to be heard by the court before his fee is reduced.37
There is, however, a likely and unusual contingency which might arise.
The Fourth Schedule specifies the Arbitrator’s fee based upon the “sum in
dispute”. This term is vague. Often times, the exact amount in dispute is
in question. It can be a tedious and complicated task, for example, to
determine the amount of loss of future profits suffered. The determination
of interest (the rate, as well as the quantum) is also very commonly an
issue in commercial Arbitrations. Parties also usually claim the costs of
Arbitration and/or any associated litigation and other legal expenses.
Further, in commercial Arbitrations, for every claim, there is almost
always a counter claim. Thus, even if we assume that the Legislature
intended “sum in dispute” to mean the amount claimed by the party, then
what happens when the Respondent files a counter-claim? Do we take the
“sum in dispute” to mean the sum total monetary value of both the claim,
as well as the counter-claim?
It is worth noting that this provision empowers the court to deduct fees,
and fees only. Black’s Law Dictionary (9th Edn.) defines fee as “A charge
for labor or services, esp. professional services”38. This view is supported
by the fact that section 31 (8) of the 1996 Act uses the words “costs”, as
well as the word “fees”. Costs of Arbitration includes the Arbitrator’s
37
Section 6, Arbitration and Conciliation (Amendment) Bill, 2018-
“In section 29A of the principal Act,—
………………………..
(b) in sub-section (4), after the proviso, the following provisos shall be inserted,
namely:—
…………………………..
Provided also that the arbitrator shall be given an opportunity of being heard before the fees is reduced.”
38
Page 718
fees.39 Article 40, Clause 2 also defines fees as a sub-set of “costs”.40The
Court cannot impose such a deduction, that it also eats away at the
Arbitrators out of pocket expenses and costs. For example, if the
Arbitration is conducted by an Institutional Arbitrator which also charges
rent to let out the office of the Arbitrators, the court cannot deduct such
amount. There are many expenses associated with Arbitration apart from
the fee simpliciter given to the arbitrator. The Indian Institute of
Arbitration and Mediation has published its Fee Schedule and this may be
referenced here.
Before the deduction of fee, the Court must follow the Principles of Natural
Justice. One of the principles is the rule of audi alterm paterm, which
means “hear the other side”. The Court is bound to give a hearing to the
Arbitrator before passing any adverse order against him, whether for the
deduction of fee, or his substitution. This adds to the amount of time
consumed by the judicial intervention.
39
Section 31 (8), 1996 Act-
“The costs of an arbitration shall be fixed by the arbitral tribunal in accordance with section 31A.]
Explanation.—For the purpose of clause (a), “costs” means reasonable costs relating to—
(I) the fees and expenses of the arbitrators and witnesses,
(ii) legal fees and expenses,
(iii) any administration fees of the institution supervising the arbitration, and
(iv) any other expenses incurred in connection with the arbitral proceedings and the arbitral award.”
40
Article 40 (2), UNCITRAL Arbitration Rules, 2010-
2. The term “costs” includes only:
(a) The fees of the arbitral tribunal to be stated separately as to each arbitrator and to be fixed by the tribunal
itself in accordance with article 41;
(b) The reasonable travel and other expenses incurred by the arbitrators;
(c) The reasonable costs of expert advice and of other assistance required by the arbitral tribunal;
(d) The reasonable travel and other expenses of witnesses to the extent such expenses are approved by the arbitral
tribunal;
(e) The legal and other costs incurred by the parties in relation to the arbitration to the extent that the arbitral
tribunal determines that the amount of such costs is reasonable;
(f) Any fees and expenses of the appointing authority as well as the fees and expenses of the Secretary-General of
the PCA.
This power also includes the ability to specify the qualifications of the
Arbitrators.41 As such, Arbitrators are not likely to be incompetent. Thus,
the penalties by way of deduction of fee and/or substation hangs upon an
Arbitrator’s head like the sword of Damocles. While the 1996 Act, by virtue
of the 2015 Amendment Act does contain such provisions for penalties and
time restrictions, it did not contain any such provisions when it was
originally enacted. This was a departure from the 1940 Act which, by
virtue of an “implied term” included a time limit of four months from the
date of reference. It seems that the Legislature regretted its decision to
give Arbitrators and Parties a free hand and in its wisdom, imposed these
provisions. Perhaps the Legislature was of the view that Arbitrations were
concluded in a much more rapid manner under the 1940 Act. It may be
true that Arbitrations may have been wrapped up faster in earlier times,
but correlation does not equate to causation. Arbitrations today are far
more common that Court litigations, especially in Commercial Contracts
where complex trade deals are involved. In such deals, the Contracts alone
often run into hundreds, if not thousands of pages. This is a clear indicator
of the increase in complexity of today’s commercial disputes. When such
complicated matters are to be adjudicated, it is only natural for the
proceedings to take their time. In order to do complete justice, the
Arbitrators must pay attention to all the materials and arguments
advanced by the parties. It is not reasonable to assume that the Arbitrators
are not working expeditiously, the relevant circumstances must be taken
into context.
The 1996 Act remains silent as to what happens when the time has run out
while an application for extension is pending with the court. The 176 th Law
Commission in its Report, suggested that in such a situation, Arbitration
141 Section 11 (8) The Supreme Court or, as the case may be, the High Court or the person or institution designated
by such Court, before appointing an arbitrator, shall seek a disclosure in writing from the prospective arbitrator
in terms of sub-section (1) of section 12, and have due regard to—
(a) any qualifications required for the arbitrator by the agreement of the parties;
proceedings should be allowed to continue.4243 Further, the Commission
was of the opinion that if the proceedings have not been concluded even
after an extension by the Court, they should be allowed to continue.44
It is not explicitly stated in the Act what would happen if no party applies
to the court to extend time. The 176th Commission’s view was that In order
that there is no further delay, after the period of initial one year and the
further period agreed to by the is over, the arbitration proceedings will
stand suspended and will get revived as soon as any party to the
proceedings files an application in the Court for extension of time. In case
none of the parties files an application, even then the arbitral tribunal may
seek an extension from the Court.45 The Arbitration and Conciliation
(Amendment) Bill of 2018 makes a very welcome improvement to the
existing law by stating that while the application for an extension is
pending decision by the Court, the Arbitration proceedings shall continue
till the application is disposed of by the Court.46
42
Page 124., Para 2.21.3
43
Proposed Section 29A (4)-
“Pending consideration of the application for extension of time before the Court under sub section (3), the
arbitration proceedings shall continue before the arbitral tribunal and the Court shall not grant any stay of the
arbitral proceeding”
44
176th Report, page 125, Para 2.21.5- there is no point in terminating the arbitration proceedings. We propose
it as they should be continued till award is passed. Such a termination may indeed result in waste of time and
money for the parties after lot of evidence is led. In fact, if the proceedings were to terminate and the claimant is
to file a separate suit, it will even become necessary to exclude the period spent in arbitration proceedings, if he
was not at fault, by amending sec. 43(5) to cover such a situation. But the Commission is of the view that there is
a better solution to the problem
45
This suggestion was formulated by the Commission in its proposed version of s. 29A (3)-
“If the award is not made within the period specified in sub-section (1) and the period agreed to by the parties
under sub-section (2), the arbitral proceedings shall, subject to the provisions of sub-sections (4) to (6), stand
suspended until an application for extension is made to the Court by any party to the arbitration, or where none
of the parties makes an application as foresaid, until such an application is made by the arbitral tribunal.
46 Section 6 of the Arbitration and Conciliation (Amendment) Bill, 2018-
“In section 29A of the principal Act,—
……………………..
(b) in sub-section (4), after the proviso, the following provisos shall be inserted,
namely:—
"Provided further that where an application under sub-section (5) is pending, the mandate of the arbitrator shall
continue till the disposal of the said application:”
Section. 29A (5)
Looking at the provision, it seems clear that the party applying for
extension must show that an extension of time should be granted. The
burden of proof is upon the applicant. “Party” has been defined in the Act
as “party” means a party to an arbitration agreement. Therefore, the right
to apply to a Court for the extension of time is available only to the parties
to the disputes, and not the Arbitrators. It should be noted that the Law
Commission, in its 176th Report stated that “if the parties do not apply, the
arbitrators can also apply for the same.”47
It should be noted that the phrases “may be granted” and “only for
sufficient cause” has also been used here. “Sufficient cause” has also been
used in section 5 of the Limitation Act.48 Thus, this provision gives the
Court a wide amount of discretion and places a heavy burden upon the
applicant. The use of the word “only” ensures that the court can grant an
extension under a limited set of circumstances. It is possible that lengthy
proceedings in courts may ensue in order to convince the Court of the
validity and existence of “sufficient cause”. The parties may be faced with
the need to lead a large amount of evidence and arguments in order to get
47
176th Law Commission Report, Page 17
48
5. Extension of prescribed period in certain cases.—Any appeal or any application, other than an application
under any of the provisions of Order XXI of the Code of Civil Procedure, 1908 (5 of 1908), may be admitted after
the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not
preferring the appeal or making the application within such period.
Explanation.—The fact that the appellant or the applicant was missed by any order, practice or judgment of the
High Court in ascertaining or computing the prescribed period may be sufficient cause within the meaning of this
section.
an extension. As with other previously discussed provisions in the Act
which necessitate judicial intervention, there is a specific requirement
given in this sub-section for the courts to decide the application in an
expeditious manner, as well as a recommended disposal time (60 days
from the date of service of notice on the opposite party).
It is worth noting that the above provision does not specify the amount of
additional time the Court can grant to the Arbitrator. As such, it is entirely
up to the Courts discretion. While the76th report of the Law Commission
recommended for fixing maxim period for the court to extend time, the
176th Commission wanted to leave it to the Court’s discretion. Further, the
Court has the ability to impose terms and conditions. It is very easy to
foresee that the court may order an extension by a relatively short amount
of time, say, one month, and then force the parties to come back to it. Thus,
the Court will have a sort of supervisory jurisdiction over and above the
kind envisioned by the 1996 Act. This is quite clearly against the intention
of the Legislature, as evidenced under section 5 of the Act (for which, there
is no analogous provision in the 1940 Act).
49
See Art. 12 (2) of the ICC Rules, 1998
(b) by any party to the proceedings (upon notice to the
tribunal and the other parties), but only after
exhausting any available arbitral process for obtaining
an extension of time.
(3) The court shall only make an order if satisfied that a
substantial injustice would otherwise be done.
(4) The court may extend the time for such period and on such
terms as it thinks fit, and may do so whether or not the time
previously fixed (by or under the agreement or by a previous
order) has expired.
(5) The leave of the court is required for any appeal from a
decision of the court under this section”
The 176th Law Commission Report laid down the following things to take
into account while deciding upon the issue of time extension-
(c) the conduct of the parties or of any person representing the parties;
(d) the manner in which proceedings were conducted by the arbitral tribunal;
(f) the amount of money already spent by the parties towards fee and expenses of
arbitration;
50
79 Power of court to extend time limits relating to arbitral proceedings.
Unless the parties otherwise agree, the court may by order extend any time limit agreed by them in relation to any
matter relating to the arbitral proceedings or specified in any provision of this Part having effect in default of such
agreement. This section does not apply to a time limit to which section 12 applies (power of court to extend time
for beginning arbitral proceedings, &c.).
An application for an order may be made—
by any party to the arbitral proceedings (upon notice to the other parties and to the tribunal), or
by the arbitral tribunal (upon notice to the parties).
The court shall not exercise its power to extend a time limit unless it is satisfied—
that any available recourse to the tribunal, or to any arbitral or other institution or person vested by the parties
with power in that regard, has first been exhausted, and
that a substantial injustice would otherwise be done.
The court’s power under this section may be exercised whether or not the time has already expired.
An order under this section may be made on such terms as the court thinks fit.
The leave of the court is required for any appeal from a decision of the court under this section.
(g) any other relevant circumstances,
Section. 29A (6)
51
Section 29A (9)-
“An application filed under sub-section (5) shall be disposed of by the Court as expeditiously as possible and
endeavour shall be made to dispose of the matter within a period of sixty days from the date of service of notice
on the opposite party.”
52
Section. 11 (13)-” An application made under this section for appointment of an arbitrator or arbitrators shall
be disposed of by the Supreme Court or the High Court or the person or institution designated by such Court, as
the case may be, as expeditiously as possible and an endeavour shall be made to dispose of the matter within a
period of sixty days from the date of service of notice on the opposite party.”
53
Section 2 (e)-
“Court” means—
(I) in the case of an arbitration other than international commercial arbitration, the principal Civil Court of
original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction,
having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the
drafted, only empowered the Chief Justice of the High Court / Supreme Court
(or his Designee) to make an initial appointment.
It is worth noting that the Act of 1940 also empowered the Court to substitute
Arbitrators when they were the cause of undue delay. This was to be done upon
an application made by a party. Thus, a Party could initiate subsequent
substitution of an Arbitrator, even if the appointment was valid. Under section
11 (1) of the 1940 Act, it was stated-
“The Court may, on the application of any party to a
reference, remove an arbitrator or umpire who fails to use all
reasonable dispatch in entering on and proceeding with the
reference and making an award.”
Further, if the arbitrator was removed, he would not have been entitled
to any remuneration.54 Upon such removal, any party could apply to have
the vacant Arbitrator’s post filled.55
subject-matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or
any Court of Small Causes;
(ii) in the case of international commercial arbitration, the High Court in exercise of its ordinary original civil
jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same
had been the subject-matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from
decrees of courts subordinate to that High Court;]
54
Section 11 (3) “Where an arbitrator or umpire is removed under this section, he shall not be entitled to receive
any remuneration in respect of his services”
55
Section 12 (1) Where the Court removes an umpire who has not entered on the reference or one or more
arbitrators (not being all the arbitrators), the Court may, on the application of any party to the arbitration
agreement, appoint persons to fill the vacancies.
(2) Where the authority of an arbitrator or arbitrators or an umpire is revoked by leave of the Court, or where the
Court removes an umpire who has entered on the reference or a sole arbitrator or all the arbitrators, the Court
may, on the application of any party to the arbitration agreement, either-
(a) appoint a person to act as sole arbitrator in the place of the person or persons displaced, or
(b) order that the arbitration agreement shall cease to have effect with respect to the difference referred.
Section. 29A (7)
56
This is similar to Section 15 (4) –“Unless otherwise agreed by the parties, an order or ruling of the arbitral
tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there
has been a change in the composition of the arbitral tribunal.”
Section. 29A (8)