Conduct of Arbitral Proceeding under Arbitration and Conciliation Act
Conduct of Arbitral Proceedings under Arbitration and Conciliation Act, 1996
1. Introduction
The Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act") governs arbitration proceedings in India, aiming to provide a fair, efficient, and expeditious mechanism for resolving disputes outside of courts.
The Act, largely based on the UNCITRAL Model Law, emphasizes party autonomy and minimum court intervention. The conduct of arbitral proceedings is primarily guided by Sections 24 to 30 of the Act.
2. Key Provisions Related to Conduct of Arbitral Proceedings
Section 24: Equal Treatment of Parties
The arbitral tribunal must treat all parties equally and provide each party a fair opportunity to present its case.
Principle of natural justice applies to arbitration.
Parties must be given equal opportunity to participate in hearings and present evidence.
Section 25: Determination of Rules of Procedure
The parties are free to agree on the procedure for conducting arbitration.
If no such agreement exists, the arbitral tribunal may, subject to the provisions of the Act, conduct the proceedings as it deems fit.
This gives the tribunal flexibility to manage procedures efficiently.
Section 26: Place of Arbitration
The place (seat) of arbitration can be agreed upon by the parties.
If there is no agreement, the tribunal decides the place.
The place of arbitration determines the procedural law applicable and supervisory jurisdiction of courts.
Section 27: Commencement of Arbitral Proceedings
Arbitral proceedings commence when the arbitral tribunal receives the notice of arbitration or the statement of claim from the claimant.
Timelines for completion of proceedings begin from this date.
Section 28: Rules Applicable to Substance of Dispute
The tribunal shall decide the dispute according to the substantive law chosen by the parties.
If no choice is made, the tribunal applies the law it deems appropriate.
Section 29A (Insertion by Amendment 2015): Time Frame for Arbitral Award
The arbitral tribunal is required to make the award within 12 months from the date it enters upon the reference.
This period can be extended by the parties or the court, but the tribunal must apply within this period to extend the time.
Section 30: Failure or Inability to Act
If an arbitrator fails to act or is unable to act, the vacancy is filled in accordance with the procedure agreed by parties or prescribed in the Act.
3. General Principles in Conduct of Arbitration
Party Autonomy: Parties have the freedom to agree on procedures, choice of law, venue, language, etc.
Fairness and Equality: All parties must have equal opportunity; no party can be unfairly prejudiced.
Flexibility: The tribunal can adopt flexible procedures to expedite justice.
Minimal Court Intervention: Courts intervene only when necessary (e.g., to appoint arbitrators, enforce awards, or set aside awards on limited grounds).
4. Judicial Pronouncements
Case 1: Bhatia International v. Bulk Trading S.A. (2002)
The Supreme Court held that Sections 9 and 27 (interim relief and court assistance) of the Arbitration Act apply even to international commercial arbitrations conducted outside India unless parties exclude them.
Reinforced the principle that courts have a supervisory role to ensure fair conduct.
Case 2: S.B.P. & Co. v. Patel Engineering Ltd. (2005)
The Supreme Court emphasized the autonomy of arbitral tribunals in deciding procedures.
Courts should not interfere with arbitral proceedings except on grounds permitted by the Act.
Affirmed minimal judicial interference during arbitration.
Case 3: Duro Felguera S.A. v. Gangavaram Port Ltd. (2021)
The Court held that the arbitral tribunal must follow the principles of natural justice.
An opportunity must be given to parties before making any adverse remarks or orders.
Case 4: Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India (2019)
The Supreme Court underscored that time limits prescribed under Section 29A are mandatory but can be extended by the parties or court.
Emphasized efficiency and timely disposal of arbitral proceedings.
5. Practical Aspects in Conduct of Arbitration
Notice and Statements: Claimant initiates arbitration by sending notice; respondent submits statements of defense.
Hearing: Oral or documentary evidence is heard, with parties given equal chance to present their case.
Interim Measures: Tribunal can order interim relief, subject to court’s assistance if needed.
Record Keeping: Arbitrators maintain records and minutes for transparency.
Confidentiality: Arbitration proceedings are generally confidential unless parties agree otherwise.
Award: The tribunal delivers a reasoned award within the prescribed time.
6. Summary
| Aspect | Description |
|---|---|
| Equal Treatment (Section 24) | Parties treated equally with fair opportunity to present case |
| Procedure (Section 25) | Parties decide procedure; if not, tribunal manages procedure |
| Place of Arbitration (Section 26) | Agreed by parties or decided by tribunal |
| Start of Proceedings (Section 27) | When notice or claim is received |
| Applicable Law (Section 28) | Substantive law chosen by parties or tribunal |
| Time Frame (Section 29A) | Award to be made within 12 months, extendable |
| Failure of Arbitrator (Section 30) | Vacancy filled by agreed procedure |
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