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3Shyam 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.
is on account of the absence of a provision as to time limit for
passing an award.5
(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.
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)
fails, then the date of appointment stands. 13 However, if the
challenge succeeds and a 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.”
Further, s. 15 (3) states-
“(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.”
Thus, if an Arbitrator is substituted, then the previous
proceedings are not held to be void.
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 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.”
unsuccessful party, has compelled it to await an award. 1415 The
inclusion of this provision is also a departure by the legislature
from the old Act of 1940, where the Court was empowered to
remove arbitrators or umpire.16
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
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
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
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.’
The Fourth Schedule to the Arbitration and Conciliation Act of
1996 may be of some benefit in determining the appropriate
fee. S. 11 (13) and (14) are relevant in this regard. They are as
follows-
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”.
vice of the Fourth Schedule. It also exempts parties that have agreed for
determination of fees as per the rules of an arbitral institution. 22
23
246thLaw Commission Report, Page 19, para 11, 12-
11.The model schedule of fees are based on the fee schedule set by the Delhi High Court International
Arbitration Centre, which are over 5 years old, and which have been suitably revised. The schedule of fees
would require regular updating, and must be reviewed every 3-4 years to ensure that they continue to stay
realistic.
12. The Commission notes that International Commercial arbitrations involve foreign parties who might have
different values and standards for fees for arbitrators; similarly, institutional rules might have their own schedule
of fees; and in both cases greater deference must be accorded to party autonomy. The Commission has,
therefore, expressly restricted its recommendations in the context of purely domestic, ad hoc, arbitrations.
Section. 29A (3)
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."
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.” 27
This 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-
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.”
27Arbitration 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
“For the removal of doubts, it is clarified that it may be the
practice in certain specific kinds of arbitration, such as
maritime or commodities arbitration, to draw arbitrators from
a small, specialised pool. If in such fields it is the custom
and practice for parties frequently to appoint the same
arbitrator 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 justifiable if a
reasonable third person having knowledge of the relevant
facts and circumstances would reach the conclusion that
there is a likelihood that 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 therein, neither tending to
enlarge or restrict them unduly……….”31
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)
3. Failing any agreement referred to (1), in an arbitration with a
sole arbitrator, if the parties fail to agree on the arbitrator within
thirty days from receipt of a request by one party from the other
party to so agree the appointment shall be made, upon request of a
party, by [the Supreme Court or, as the case may be, the High Court
or any person or institution designated by such Court].
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.
38 Page 718
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.
It is noteworthy that most Arbitrators, especially those appointed by
the Court, are retired Judges, who are well versed with the law. If
necessary, the Court may also appoint subject matter experts.
Further, the 1996 Act allows the parties to decide the criteria for the
appointment of Arbitrators. 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.
411 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;
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 176th Law Commission in its Report, suggested that in such a
situation, Arbitration 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
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 176 th 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
The 176th Law Commission Report laid down the following things to
take into account while deciding upon the issue of time extension-
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
“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 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)