The efficiency and expediency of the arbitral process are paramount to its efficacy as a dispute resolution mechanism. Recognizing this, the Arbitration and Conciliation Act, 1996 (ACA) has been amended over time to address concerns regarding delays in the issuance of final awards. A significant provision in this regard is Section 29A, which lays down specific time limits for rendering awards in domestic arbitration and clarifies the approach for international commercial arbitration, while also outlining the consequences of delays and the court's powers in such situations. This article delves into the nuances of Section 29A, examining the stipulated timelines, the ramifications of non-compliance, and the court's role in ensuring the timely conclusion of arbitral proceedings.

The Stipulated Timeframe for Domestic Arbitration:

Section 29A of the ACA sets a clear timeline for the issuance of a final award in domestic arbitration. The provision mandates that the arbitral tribunal must render its final award within 12 months from the date of submission of the statement of claim and defense. Given that the statement of claim is required to be submitted within six months from the date of appointment of the arbitrator(s), this effectively translates to a total period of 18 months from the date of appointment for the tribunal to deliver the final award.

Recognizing that unforeseen circumstances can sometimes lead to delays, the legislation provides a window for extending this timeframe. The stipulated period of 18 months can be further extended by a maximum of six months if both parties to the arbitration mutually agree to such an extension. This consensual extension acknowledges the autonomy of the parties in managing the arbitral process and allows for flexibility when genuine reasons necessitate additional time.

However, the legislation also addresses situations where the award is not issued within the initial 18-month period or the mutually agreed extended period of six months. In such instances, the mandate of the arbitral tribunal automatically terminates, unless the court intervenes by granting a further extension. This automatic termination underscores the legislative intent to ensure timely resolution of disputes through arbitration.

Consequences of Delay Attributable to the Arbitral Tribunal:

To further incentivize the arbitral tribunal to adhere to the prescribed timelines, Section 29A empowers the court to take specific action in cases of delay. When an application for an extension is brought before the court, it is entitled to evaluate the reasons for the delay. If the court finds that the delay is attributable to the arbitral tribunal, it possesses the authority to reduce the fees of the arbitrators by up to 5% per month of the delay. This provision serves as a deterrent against unwarranted delays caused by the tribunal and ensures a degree of accountability.

The Arbitration Process When the Tribunal Fails to Meet the Deadline:

As previously mentioned, if the arbitral tribunal fails to issue the final award within the stipulated timeframe, including the potential six-month extension agreed upon by the parties, its mandate automatically ceases. However, the ACA also provides a mechanism to address this situation. If an application for a court-ordered extension is filed before the mandate expires, the tribunal's mandate continues until the court reaches a final decision on the extension request. This ensures that the arbitral proceedings do not abruptly halt while the court considers the merits of granting an extension.

Time Limit in International Commercial Arbitration - A Shift in Approach:

Recognizing the unique complexities and potential for longer timelines in international commercial arbitrations, the recent amendments to the ACA have adopted a different approach regarding the time limit for issuing final awards in such cases. Unlike domestic arbitration, where a strict timeline was initially in place, the amended Section 29A states that in international commercial arbitration, the tribunal should "endeavour" to issue a final award within 12 months from the date of completion of the statement of claim and counterclaim.

This amendment marks a significant departure from the previous regime, which applied the same mandatory 12-month timeline from the arbitrator's appointment to international commercial arbitrations. The use of the word "endeavour" clearly indicates that this 12-month period is now a guideline rather than a legally mandated deadline. While the ACA encourages adherence to this timeline to promote efficiency, there is no automatic termination of the tribunal's mandate or provision for fee reduction solely based on the failure to meet this indicative timeframe in international commercial arbitration.

This reflects a more pragmatic approach, acknowledging the often cross-jurisdictional nature of these disputes, which can involve complex legal issues, diverse parties, and the need for international cooperation, potentially leading to longer durations.

Court's Authority to Change Arbitrators During Extension:

Furthermore, Section 29A grants the court a significant power when considering an application for an extension of time to issue the final award. If the court deems it necessary, after reviewing the reasons for the delay, it has the authority to replace the arbitrator(s). This power underscores the court's commitment to ensuring the efficient and effective resolution of disputes and provides a mechanism to address situations where the delay is attributable to the incompetence or inaction of the arbitral tribunal.

Crucially, the legislation clarifies that if the court does decide to substitute the arbitrator(s), the arbitral proceedings do not need to start afresh. The newly appointed arbitrator(s) are mandated to continue the arbitration from the same stage at which it was when the previous arbitrator(s) were replaced. This ensures that the progress made in the arbitration is not lost and that the newly constituted tribunal can build upon the existing materials and documentation submitted by the parties.

Conclusion:
Section 29A of the Arbitration and Conciliation Act represents a significant step towards streamlining the arbitral process in India, particularly in domestic arbitrations. By setting clear timelines for the issuance of final awards and outlining the consequences of delays, the legislation aims to enhance the efficiency and credibility of arbitration as a preferred mode of dispute resolution. The flexibility provided for consensual extensions acknowledges the practical realities of arbitration, while the court's power to grant further extensions and even replace arbitrators serves as a crucial safeguard against undue delays.

The nuanced approach adopted for international commercial arbitration, where the 12-month timeframe is now an aspirational goal rather than a strict mandate, reflects a recognition of the unique challenges inherent in such disputes. Ultimately, Section 29A seeks to strike a balance between promoting timely resolution and ensuring a fair and effective arbitral process, thereby bolstering confidence in arbitration as a viable and efficient alternative to traditional litigation.

Written By: Md.Imran Wahab, IPS, IGP, Provisioning, West Bengal
Email: imranwahab216@gmail.com, Ph no: 9836576565