What is the time limit for Arbitration

What is Time frame for completion of Arbitration ?

Section 29A of the Arbitration and Conciliation Act, 1996 provides the time limit for passing of an Arbitral award in India. As on date, the statute has fixed a time limit of 12 months to be reckoned from the time when the pleadings are completed. It is for the tribunal to complete the arbitration proceeding and hearings and pass the arbitral award within this period.

What is Section 29A of the Arbitration and Conciliation Act, 1996?

CHAPTER VI

Making of Arbitral Award and Termination of Proceedings

Section 29A. Time limit for arbitral award - (1) The award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings under sub-section (4) of section 23:

Provided that the award in the matter of international commercial arbitration may be made as expeditiously as possible and endeavour may be made to dispose of the matter within a period of twelve months from the date of completion of pleadings under sub-section (4) of section 23.]

(2) 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.

(3) The parties may, by consent, extend the period specified in sub-section (1) for making award for a further period not exceeding six months.

(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:

Provided that while extending the period under this sub-section, if the Court finds that the proceedings have been delayed for the reasons attributable to the arbitral tribunal, then, it may order reduction of fees of arbitrator(s) by not exceeding five per cent. for each month of such delay.

[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.]

(5) The extension of period referred to in sub-section (4) may be on the application of any of the parties and may be granted only for sufficient cause and on such terms and conditions as may be imposed by the Court.

(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.

(7) In the event of arbitrator(s) being appointed under this section, the arbitral tribunal thus reconstituted shall be deemed to be in continuation of the previously appointed arbitral tribunal.

(8) It shall be open to the Court to impose actual or exemplary costs upon any of the parties under this section.

(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.

Scope of Section 29A of the Arbitration and Conciliation Act, 1996?

The Act fixes a time limit of 12 months, upon completion of the pleadings before the tribunal, to complete the arbitration proceedings, final hearing and pass the arbitral award.

As per Section 23 of the 1996 Act, the completion of pleadings, i.e., statement of claim, statement of defence and rejoinder, if any, shall be completed within six months from the date of issuance of Notice to the Arbitrators, in writing, for their appointment.

Statutarily a maximum of six months is available for completion of pleadings and additional 12 months is available for completion of the remaining the Arbitral proceedings.

What is the timeline within which arbitral award need to be passed?

time limit of 12 months to be reckoned from the time when the pleadings are completed. It is for the tribunal to complete the arbitration proceeding and hearings and pass the arbitral award within this period.

Can the time period for Arbitration be further extended?

This timeline of 6 months + 12 months can be further extended by another six months only by the mutual consent of the parties.

The said timeline has been introduced through the amendment of the Act made by way of the Arbitration and Conciliation (Amendment) Act of 2019, which was rendered effective through a notification dated 30 August 2019. While the said timeline under section 23 is mandatory for domestic arbitration, it is only recommendatory for international commercial arbitration. Before the amendment of 2019, a total time of 12 months was available to the tribunal to complete the entire arbitral proceeding including the pleadings.

Is arbitration time bound?

Yes. The Arbitration and Conciliation (Amendment) Act of 2019, notified on 30 August 2019 provides that time limit of 12 months is provided to complete the arbitration proceedings, final hearing and pass the arbitral award, post completion of the pleadings before the tribunal within initial 6 months.

However this timeline of 6 months + 12 months can be legally further extended by another 6 months with the mutual consent of the parties.

What is the timeline within which arbitral award need to be passed?

This timeline of 6 months (Completion of Pleadings) + 12 months (Completion of Hearings and passing of Award) can be further extended by another 6 months only by the mutual consent of the parties.

Hence, the time limit for making the Award under the 1996 Act now is 18 months from the arbitral tribunal entering upon the dispute Arb. proceeding. If the award is not made within the aforesaid period of 18 months, the mandate of the arbitrator(s) was to terminate unless the Court has, either prior to or after the expiry of the period so specified, extended the period. This can be further extended by another period of 6 months only under the mutual consent of the parties.

In case titled Shapoorji Pallonji and Co. Pvt. Ltd. v. Jindal India Thermal Power Limited the High Court of Delhi took a view that the amended sections 23(4) and 29A(1) of the Act, being procedural law, would be applicable to the pending arbitrations as on the date of the amendment.