Section 29A: A Target On Party Autonomy

Section 29A: A Target On Party Autonomy.

[Shashank Chaddha]

The author is a fourth-year student of National Law Institute University, Bhopal.

The Arbitration and Conciliation Act, 1996 (“Act”), amended by the Arbitration and Conciliation (Amendment) Act, 2015 (“Amending Act”), introduced a host of changes, one of them being the insertion of two new sections– Section 29A and Section 29B- to the Act. The two sections, essentially, place an obligation on the parties, in addition to placing an obligation on the arbitral tribunal, to conclude the arbitration proceedings within a time period of 12 months, or if an extension is granted, within 18 months.[i] Section 29B talks about a new mode of procedure that may be adopted by an arbitral tribunal towards completing arbitration proceedings within 6 months’ time period. While this insertion may cure the evil of delays that used to considerably hamper the arbitration proceedings, section 29A, which forms the focus of this post, compromises with the grund-norm or the backbone on which arbitration lies– party autonomy. The present article attempts to highlight this scenario.

Demystifying the Provision

Section 29A uses the word ‘shall’,[ii] which implies a mandate on the part of the arbitral tribunal to deliver a final award within 12+6 months; else, there will be a penalty imposed by the High Court on the arbitrator’s fee,[iii] or the arbitrator’s mandate may be terminated.[iv] However, the section overlooks the possibility of cases where the parties themselves are responsible for delay in cases, or where due to reasons attributable to complex nature, the proceedings cannot be completed within the 12+6 months’ time, without any fault of the arbitrator or the parties. The section does not provide any mechanism to deal with such situation. Where the parties enter into an arbitration agreement, in case of ad-hoc arbitration, they lay down the procedure to deal with various aspects, such as evidence, submission of claims, etc., which might take some time when seen from a practical point of view. Therefore, when the agreement itself has provided for detailed steps to be undertaken during a proceeding, which cannot be practically completed within the statutory limited time frame, the provisions of the agreement come in direct conflict with section 29A. This means, on the one hand, that we have the arbitration agreement reflecting parties’ intention based on party autonomy, and, on the other hand, that we have the legislature’s will to complete the arbitration proceedings within a certain period, even if that has the power of overriding the express procedure laid down by the parties.

When we deal with this section, it is also important to understand the intention behind the insertion of this section. The Law Commission of India, in its 176th Report[v] (2001), had suggested inserting a statutory limit to be imposed for completion of arbitration proceedings. However, in that Report, the Commission had suggested introduction of a 24-month time limit (inclusive of an extension of 12 months). The Commission observed in this regard:

“We are not inclined to suggest a cap on the power of extension as recommended by the Law Commission earlier. There may be cases where the court feels that more than 24 months is necessary. It can be left to the court to fix an upper limit. It must be provided that beyond 24 months, neither the parties by consent, nor the arbitral tribunal could extend the period. The court’s order will be necessary in this regard.”[vi]

However, after this Report was released, the Central Government released a Consultation Paper,[vii] based on the said Report, and the Committee was of the opinion that:

“…neither any time limit should be fixed as contemplated by the proposed section 29A nor should the court be required to supervise and monitor arbitrations with a view to expediting the completion thereof. None of these steps is conducive to the expeditious completion of the arbitral proceedings. Moreover, court control and supervision over arbitration is neither in the interest of growth of arbitration in India nor in tune with the best international practices in the field of arbitration. The Committee is of the opinion that with the proposed amendment the arbitral tribunal will become an organ of the court rather than a party-structured dispute resolution mechanism. The Committee, therefore, recommends the deletion of the proposed section 29A from the Amendment Bill.”[viii]

However, taking source from the 176th Report, the Parliament inserted section 29A to the Act, ignoring the Consultation Paper.

Comment

Observing that section 29A has the potential to comprise the basic tenets of arbitration, it would have been a pro-arbitration approach had there been a provision regarding allowing parties to give their own thought as to how long, and in what manner, do they wish to carry the proceedings forward through according primacy to the arbitration agreement, by beginning the section with “Unless otherwise agreed by the parties…”. The express intention of the parties must be respected, in entirety. Anything to the contrary might result in further litigation, rather than minimizing it, where a party can allege that the arbitration proceedings were carried out hastily and that proper opportunity was not given to such party. The sanctity of the principle of party autonomy must be restored, and the parties should be free to contract the methods for carrying out the private mode of dispute resolution mechanism.

[i] The Act, section 29A(3).

[ii] Ibid, section 29A(1).

[iii] Ibid, section 29A(4),

[iv]  Ibid, section 29A(6).

[v]  Law Commission of India, 176th Report, available at http://lawcommissionofindia.nic.in/arb.pdf, pages 126-127.

[vi]  Ibid, page 125, ¶ 2.21.4.

[vii]  Ministry of Law & Justice, Government of India, Proposed Amendments to the Arbitration & Conciliation Act, 1996, available at http://lawmin.nic.in/la/consultationpaper.pdf (Annexure-IV of the Paper).

[viii]  Ibid, ¶127.

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