India: Section 29A Of The Amended Indian Arbitration And Conciliation Act, 1996

Last Updated: 10 May 2017
Article by Ruchika Darira

Most Read Contributor in India, December 2018

The Arbitration and Conciliation (Amendment) Act, 2015 was notified on 1st January 2016 and is deemed to have come into force on 23rd October 2015. The (amendment) Act, 2015 has introduced a new provision of concluding the arbitration proceeding within a specified time limit by adding Section 29A.

The said provision requires that an arbitral award has to be passed within a period of 12 months from the date the arbitral tribunal enters upon the reference1. The said period can be extended further by another six months with the consent of both the parties. 2 Therefore, Section 29A provides a total time frame of 18 months (12+6 months) to complete the arbitral proceedings and to pass an award. If the arbitral award is not passed by the arbitrator within the time frame of 18 months, the provision stipulates that the mandate of the arbitrators shall be terminated, unless a court of competent jurisdiction grants a further extension.3

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.

COMPARISON WITH THE ARBITRATION ACT, 1940:

That even under the Arbitration Act, 1940, there was a provision which specified the time frame to conclude the Arbitration proceedings. Rule 3 of the First Schedule of the 1940 Act provided that the arbitrator shall pass the arbitral award within a time limit of four months after entering upon reference. Rule 3 of the First Schedule of the 1940 reads as under:

"Rule 3: 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."

Further, Section 28(1) of the 1940 Act provided 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.

However, the said provisions of the 1940 Act were not retained in the Arbitration and Conciliation Act, 1996 which inter alia repealed the 1940 Act.

INTERPRETATION OF SECTION 29A

First and Foremost, the scheme of the Arbitration and Conciliation Act is to minimize judicial intervention as much as possible. Section 5 of the 1996 Act reads as under:

"Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part."4

However, section 29(4) forces the parties to the arbitration proceedings to approach the Competent Court in order to extend the time limit beyond the time frame of 18 months, even if the parties mutually agree to such an extension. Such a conduct by the parties foists judicial intervention upon them which is complete contradiction to the scheme and purpose of arbitration specified under the 1996 Act. In fact such a judicial intervention is likely to cause more delay in the resolution of the dispute. The Amendment Act, 2015 provides that an application for extension shall be disposed of as expeditiously as possible and endeavour shall be made by the Court to dispose of the said application within a period of sixty days from the date of service of notice on the opposite party5. Given the overburdened state of the Indian judiciary however, this solution may be overly simplistic and optimistic.

Secondly, Section 29A of the 1996 Act provides that an arbitral award must be passed within a time limit of 12 months from the date of entering upon the reference (which is the effective day on which the tribunal is constituted). It is pertinent to mention that Section 29A(3) grants the parties to the arbitration, by consent/ agreement, to extend this period of 12 months by another 6 months. The UNCITRAL Model Law provides that the parties to an arbitration agreement are free to agree on the procedure to be followed by the arbitral tribunal in conducting the arbitral proceedings6. The purpose of the said provision under the UNCITRAL Model Law is to provide freedom and party autonomy and to allow the parties to the arbitration to structure composition of the tribunal, proceedings and procedure keeping in mind the magnitude and complexity of the nature of the dispute. Section 29A of the 1996 Act indirectly forces the parties to the arbitration to approach the court in the event that a dispute could not be resolved by arbitration within a time frame of 18 months. By adding the said provision, the parties have been restricted from deciding between themselves the nature of the arbitration, as per their needs and more importantly per the dispute.

Thirdly, there is a substantial possibility that in many disputes the fact that arbitration proceedings are ongoing may be protected by an agreement of confidentiality between the parties. In situations wherein the parties to the arbitration agreement are forced to appear before a Competent Court and place on record the state of the arbitration, they might have to violate their own confidentiality agreements.

Fourth, Section 29A(4) provides that, if the Court finds that the reason of the delay is attributable to the arbitral tribunal, it may order a reduction in the fees of the arbitrators. As per the principles of natural justice and audi alterm paterm it is important that the relevant party be heard, which in present scenario would be the arbitral tribunal itself. In the event that the application is decided in favour of the arbitral tribunal and against a party wherein the party had urged for costs to be imposed on the Arbitral tribunal, then such a party might even seek the arbitral tribunal's recusal based on the perception of bias on the tribunal's part.

Thus, Section 29A has been introduced to fix the issue of lengthy arbitral proceedings but the said provision can give rise to more problems than it seeks to solve. One of the solution to resolve the said problem which has been created by adding Section 29A would be to ensure that party autonomy is still maintained and that parties to the arbitration have the freedom to decide to extend the arbitration proceedings till whenever is required (i.e. not just for the six months allowed by the Section) keeping in mind the nature and complexity of the matter. The Court should interfere only in the event when the parties to the arbitration cannot come to a common consensus agree on whether the time frame should be extended or not.

Moreover, the courts must take into account due care while dealing with the issue of imposition of costs on the Arbitral Tribunal. The Courts must take into consideration certain amount of finesse and with great care so as not to disrupt the arbitration proceedings unnecessarily.

In its present form, the Section 29A is only likely to further lengthen proceedings and allow parties to prolong the arbitration proceedings which are ongoing when they believe that the arbitral tribunal is unlikely to rule in their favor.

Footnotes

1 Section 29A(1) of the Arbitration and Conciliation (Amendment) Act, 2015

2 Section 29A(3) of the Arbitration and Conciliation (Amendment) Act, 2015

3 Section 29A(4) of the Arbitration and Conciliation (Amendment) Act, 2015

4 Section 5 of the Arbitration and Conciliation Act, 1996

5 Section 29A(9) ) of the Arbitration and Conciliation (Amendment) Act, 2015

6 Article 19 of the UNCITRAL Model Law

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions