Introduction

The Arbitration and Conciliation Act of 1996, as it was originally

drafted, didn’t contain any provision imposing a hard time limit
upon the mandate of the Arbitral Tribunal. This limitation, along
with other provisions of Sec 29A, were inserted into the
principal Act by way of the 2016 Amendment Act. 1 The Act of
1940, in s. 28, also contained provisions whereby the court
could extend the time for making an award. It should be noted,
however, that the 1940 Act did not contain any mandatory
statutory limits upon the time available to the Arbitrators.
However, there was an “implied time limit” condition of four
months.2 Parties were free to impose such limits by contractual
agreement. Further, it was open to the parties to extend the
time by way of mutual consent 3.4 But the omission of the
1 Sec 15 of the 2016 Amendment act.
2 See section 3 read with the First Schedule of the Arbitration Act, 1940.
Section 3- Provisions implied in arbitration agreement- An arbitration agreement,
unless a different intention is expressed therein, shall be deemed to include the
provisions set out in the First Schedule in so far as they are applicable to the reference.
Rule 3, First Schedule- The arbitrators shall make their award within four months after
entering on the reference or after having been called upon to act by notice in writing
from any party to the arbitration agreement or within such extended time as the Court
may allow.

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.
provision for extension of time and therefore the absence of
any time limit has given rise to another problem, namely, that
awards are getting delayed before the arbitral tribunal even
under the 1996 Act. One view is that this is on account of the
absence of a provision as to time limit for passing an award. 5

This said provision stipulated under Section 29A is only

applicable to arbitral proceedings (both domestic and
international arbitrations) commenced on or after 23rd October,
2015 wherein the place of arbitration is in India. Thus, it is
prospective in nature.

(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.

5 176th Law Commission Report, Page 122

Section. 29 A (1)

The first subsection of section 29A states-

1. “The award shall be made within a period of twelve

months from the date the arbitral tribunal enters upon the
reference. Explanation.—For the purpose of this sub-
section, an arbitral tribunal shall be deemed to have
entered upon the reference on the date on which the
arbitrator or all the arbitrators, as the case may be, have
received notice, in writing, of their appointment.” 6

The award in question, would also include an interim award. 7

However, as per Sec. 32, Arbitral proceedings are terminated
upon the delivery of a final award and not an interim award.
8
This time limit also applies to International Commercial

6 The Arbitration Amendment Bill, 2018 proposes the following substitution to s. 29A (1)-
"(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."; Thus, the time period shall begin to run from the point when
parties have completed their pleadings. Thus, it seems that the legislature wishes to give
a years’ time to the Arbitral Tribunal to deliberate and decide upon the issues, as
opposed to quickly wrap up the proceedings. This proposed amendment requires to be
reconsidered. The term “completion of pleading” is vague. Further, parties are free, with
the leave of the Tribunal, to amend their pleadings. As such, it would be open for
unscrupulous litigators to employ dilatory tactics and keep extending their pleadings
indefinitely. The Act does not specifically authorize the Arbitrator to compel a Party to
quickly wrap up its pleadings.

7S 2. (C), Arbitration Act, 1996 “arbitral award” includes an interim award; whereas
the old Act specified that ‘“award” means an arbitration award”
8 Termination of proceedings.—
 Arbitrations seated in India. The Arbitration and Conciliation
(Amendment) Bill of 2018 will exempt International
Commercial Arbitrations from any time limits. 9

The procedure for the appointment of arbitrators is laid out

under section 11 of the Act. It is worth noting that the time
limit begins from the date of the “appointment” of the
Arbitrator(s), as opposed to “commencement of arbitral
proceedings”. It is worth nothing that in the 1940 Act,
“reference” was defined as “reference to arbitration”, which,
in turn, meant when the Respondent received notice of
Arbitration proceedings. The UNCITRAL Model Law is also on
similar lines.10 This appointment may be challenged in

(1) The arbitral proceedings shall be terminated by the final arbitral award or by an order
of the arbitral tribunal under sub-section (2).
(2) The arbitral tribunal shall issue an order for the termination of the arbitral
proceedings where—
(a) the claimant withdraws his claim, unless the respondent objects to the order and the
arbitral tribunal recognises a legitimate interest on his part in obtaining a final settlement
of the dispute,
(b) the parties agree on the termination of the proceedings, or
(c) The arbitral tribunal finds that the continuation of the proceedings has for any other
reason become unnecessary or impossible.
(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
 accordance with S. 13, based on the grounds noted in s. 12.
It is for the Tribunal to decide upon the validity of the
challenge. The appointment must be according to the rules
of the Arbitration Agreement and the procedure agreed to by
the parties, or according to the directions of the Chief Justice
(or his designee). If the appointment made is not proper,
then the award may be rendered void.1112 If the challenge
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
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)
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.”
 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.

Under Article 12 (3) of the UNCITRAL Arbitration Rules (as

revised in 2010), if a party’s challenge to the appointment of an
Arbitrator fails, he could proceed to the Court at that stage,
instead of waiting for a final award. However, s. 13 (4), (5) of
the Arbitration Act make a distinct departure from the same.
The Parliament, with a view to prevent the dilatory tactics of an
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

14 Harike Rice Mills v State of Punjab, 1997 (Sup) Arb LR 342

15 Assam Urban Water Supply and Sewerage Scheme v Subhash Projects and Marketing
Ltd. AIR 2003 Gau 146
16 See S 11, Arbitration Act, 1940-
11. Power of Court to remove arbitrators or umpire in certain circumstances.
(1) The Court may, on the application of any party to 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.
(2) The Court may remove an arbitrator or umpire who has misconduct himself or the
Proceedings.
(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.
(4) For the purposes of this section the expression “proceeding with the reference”
includes, in a case where reference to the umpire becomes necessary, giving notice of
that fact to the parties and to the umpire.
The International Chambers of Commerce has similar provision
in its 2017 Arbitration rules, where Article 31 Provides for the
time limit for the final award.17 It should be noted that the ICC
clearly refers to the Final award, thus removing the ambiguity
present in the 1996 Indian Act.

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

17 Article 31 Time Limit for the Final Award

1. The time limit within which the arbitral tribunal must render its final award
is six months. Such time limit shall start to run from the date of the last signature
by the arbitral tribunal or by the parties of the Terms of Reference or, in the case
of application of Article 23(3), the date of the notification to the arbitral tribunal
by the Secretariat of the approval of the Terms of Reference by the Court. The
Court may fix a different time limit based upon the procedural timetable
established pursuant to Article 24(2).
2. The Court may extend the time limit pursuant to a reasoned request from
the arbitral tribunal or on its own initiative if it decides it is necessary to do so.
https://cdn.iccwbo.org/content/uploads/sites/3/2017/01/ICC-2017-Arbitration-and-2014-
Mediation-Rules-english-version.pdf.pdf
proceedings. This termination cannot be challenged in anyway
1819
except by a petition under section 34 of the Act.

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
Section. 29A (2)

The second subsection of section 29A states-

“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.”

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

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-

(13) An application made under this section for

appointment of an arbitrator or arbitrators shall be
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.’
 disposed of by the Supreme Court or the High Court or the
person or institution designated by such Court, as the
case may be, as expeditiously as possible and an
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.
(14) For the purpose of determination of the fees of the
arbitral tribunal and them manner of its payment to the
arbitral tribunal, the High Court may frame such rules as
may be necessary, after taking into consideration the
rates specified in the Fourth Schedule.

Further, the Court has a certain amount of discretion with

regard to the costs of arbitration.21

The Legislature has proposed an amendment to the current

scheme by way of Section 3 of the Arbitration and Conciliation
(Amendment) Bill of 2018. It seeks to amend section 11 of the
Principal (1996) Act. After the amendment, the fees of the
Arbitrators shall be decided by the Arbitral Institutions subject
to the rates specified in the Fourth Schedule. Further, the
amendment removes International Commercial Arbitrations
from the 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

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”.
22 S. 11 (14) as proposed in the 2018 Amendment bill-
“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.
 [THE FOURTH SCHEDULE]23

Sum in dispute Model fee

Up to Rs. 5,00,000 Rs. 45,000
Above Rs. 5,00,000 and up to Rs. Rs. 45,000 plus 3.5 per cent. of the claim
20,00,000 amount over and above Rs. 5,00,000
Above Rs. 20,00,000 and up to Rs. Rs. 97,500 plus 3 per cent. of the claim
1,00,00,000 amount over and above Rs. 20,00,000
Above Rs. 1,00,00,000 and up to Rs. 3, 37,500 plus 1 per cent. of the claim
Rs. 10,00,00,000 amount over and above Rs. 1,00,00,000
Above Rs. 10,00,00,000 and up to Rs. 12, 37,500 plus 0.75 per cent. of the
Rs. 20,00,00,000 claim
amount over and above Rs. 1,00,00,000
Above Rs. 20,00,00,000 Rs. 19, 87,500 plus 0.5 per cent. of the
claim amount over and above Rs.
20,00,00,000 with a ceiling of Rs.
30,00,000

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.”
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)

The third subsection of section 29A states-

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

This sub-section implies that the parties need to reach a new

agreement in order to extend the time period for further
Arbitration. The use of the words “may, by consent, extend”
implies the need for a new agreement. Thus, there may not be
a prior agreement, whether by way of the main contract, or by
way of the Arbitration Agreement.

This seems to be based on the proposal of the 176 th Law

Commission Report.24

24 Proposed Section 29A (7)-

“The parties cannot by consent, extend the period beyond the period specified in sub-
section (1) and the maximum period referred to in sub-section (2) and save as otherwise
provided in the said sub-sections, any provision in an arbitration agreement whereby the
arbitral tribunal may further extend the time for making the award, shall be void and of
no effect.”
Section. 29A (4)

The fourth subsection of section 29A states-

“(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
25
month of such delay. ”

It should be noted that the phrase used in this sub-section is

“the mandate of the arbitrator(s) shall terminate”. This does
not mean that the arbitration proceedings shall terminate. As
has been discussed above, there is a distinction between the
termination of an Arbitrator’s mandate and the termination of
proceedings. The later may only be done by an “order passed

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."
by the arbitrator” in terms of s. 32 of the 1996 Act. If the
mandate of the arbitrator terminates as provided in the main
provision of s. 29A (4), then it may be open to the court to
appoint new arbitrators. It is implied that the Arbitrator(s) shall
be substituted by the court if it is found that the Arbitrator(s)
has/have failed to act and adjudicate without undue delay. This
becomes amply clear upon an examination of sub-section 6 of
section 29A.26
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
27
the case.” This is one of the grounds for challenging the
appointment of an Arbitrator.28 It is also a ground which “gives
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.]
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-

“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-

29 See Clause 16, The Fifth Schedule, 1996 Act

30 See ibid, 22
 “……………..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

“…………In this context, it is important to refer to the

IBA Guidelines, which are the genesis of the items
contained in the Seventh Schedule. Under the
waivable Red List of the IBA Guidelines, para 2.1.2
states:
“The Arbitrator had a prior involvement in the
dispute.”
24. On reading the aforesaid guideline and reading
the heading which appears with Item 16, namely
“Relationship of the arbitrator to the dispute”, it is
obvious that the arbitrator has to have a previous

31 HRD Corporation v GAIL India Ltd. (Civil Appeal no 11127 of 2017),

 involvement in the very dispute contained in the
present arbitration.”32
“It has also been argued by learned counsel appearing on
behalf of the respondent that the expression “the
arbitrator” in Item 16 cannot possibly mean “the
arbitrator” acting as an arbitrator, but must mean that the
proposed arbitrator is a person who has had previous
involvement in the case in some other avatar. According
to us, this is a sound argument as “the arbitrator” refers
to the proposed arbitrator. This becomes clear, when
contrasted with Items 22 and 24, where the arbitrator
must have served “as arbitrator” before he can be
disqualified. Obviously, Item 16 refers to previous
involvement in an advisory or other capacity in the very
33
dispute, but not as arbitrator.

The words “termination of mandate” have been used elsewhere

in the 1996 Act. The provisions of Section 15 are relevant here.
It reads as follows-
“15. Termination of mandate and substitution of
arbitrator.—
(1) In addition to the circumstances referred to in
section 13 or section 14, the mandate of an
arbitrator shall terminate—

32 Ibid, Para 23, 24

33 Ibid, Para 16
 (a) where he withdraws from office for any reason;
or
(b) by or pursuant to agreement of the parties.
(2) Where the mandate of an arbitrator terminates, a
substitute arbitrator shall be appointed according to
the rules that were applicable to the appointment of
the arbitrator being replaced.
(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.
(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”

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.
 1. In an arbitration with three arbitrators, each party
shall appoint one arbitrator, and the two appointed
arbitrators shall appoint the third arbitrator who shall act
as the presiding arbitrator.35

2. If the above appointment procedure applies and—

a. a party fails to appoint an arbitrator within thirty days
from the receipt of a request to do so from the other
party; or
b. the two appointed arbitrators fail to agree on the
third arbitrator within thirty days from the date of their
appointment,
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];36

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].

4. Where, under an appointment procedure agreed

upon by the parties,—

35 Section 11 (3)
36 Section 11 (4)
 a. a party fails to act as required under that
procedure; or
b. the parties, or the two appointed arbitrators, fail
to reach an agreement expected of them under that
procedure; or

c. a person, including an institution, fails to

perform any function entrusted to him or it under
that procedure,

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.

The power of the Court to substitute Arbitrators is in addition

to, and not in derogation of, its power to deduct fees. The
power of the Court to deduct fee can be quite severe. Although
there is a limit of 5% for every month, there can be situations
where the delay is for multiple months. For example, the
maximum deduction allowed for a delay of 6 months is 30% of
the total fee. In such a case, the cumulative deductions can be
quite great. It is also worth observing that the fee paid to an
Arbitrator may be on more than one basis. It may be fixed, per
month, or per session. The imposition of a high deduction can
be especially severe and harsh where the Arbitrator has agreed
to a fixed fee. In such a situation, it is in his interest to make an
award as quickly as possible. It is hoped that the Court, while
imposing a deduction, shall both give a hearing to the
Arbitrator as to the quantum of deduction, as well as consider
the basis upon which his fee is paid. This is certainly the current
position of the law, which has also been made clear by the
Legislature. The 2018 Bill includes an amendment which will
add a Proviso to Section 29A (4) which specifies the right of the
Arbitrator to be heard by the court before his fee is reduced. 37

There is, however, a likely and unusual contingency which

might arise. The Fourth Schedule specifies the Arbitrator’s fee
based upon the “sum in dispute”. This term is vague. Often
times, the exact amount in dispute is in question. It can be a
tedious and complicated task, for example, to determine the
amount of loss of future profits suffered. The determination of
interest (the rate, as well as the quantum) is also very
commonly an issue in commercial Arbitrations. Parties also
usually claim the costs of Arbitration and/or any associated
litigation and other legal expenses. Further, in commercial
Arbitrations, for every claim, there is almost always a counter
claim. Thus, even if we assume that the Legislature intended
“sum in dispute” to mean the amount claimed by the party,
then what happens when the Respondent files a counter-claim?
37 Section 6, Arbitration and Conciliation (Amendment) Bill, 2018-
“In section 29A of the principal Act,—
………………………..
(b) in sub-section (4), after the proviso, the following provisos shall be inserted,
namely:—
…………………………..
Provided also that the arbitrator shall be given an opportunity of being heard before the
fees is reduced.”
Do we take the “sum in dispute” to mean the sum total
monetary value of both the claim, as well as the counter-claim?

It is worth noting that this provision empowers the court to

deduct fees, and fees only. Black’s Law Dictionary (9 th Edn.)
defines fee as “A charge for labor or services, esp. professional
services”38. This view is supported by the fact that section 31
(8) of the 1996 Act uses the words “costs”, as well as the word
“fees”. Costs of Arbitration includes the Arbitrator’s fees. 39
Article 40, Clause 2 also defines fees as a sub-set of
“costs”.40The Court cannot impose such a deduction, that it

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.
also eats away at the Arbitrators out of pocket expenses and
costs. For example, if the Arbitration is conducted by an
Institutional Arbitrator which also charges rent to let out the
office of the Arbitrators, the court cannot deduct such amount.
There are many expenses associated with Arbitration apart
from the fee simpliciter given to the arbitrator. The Indian
Institute of Arbitration and Mediation has published its Fee
Schedule and this may be referenced here.
Before the deduction of fee, the Court must follow the Principles
of Natural Justice. One of the principles is the rule of audi
alterm paterm, which means “hear the other side”. The Court is
bound to give a hearing to the Arbitrator before passing any
adverse order against him, whether for the deduction of fee, or
his substitution. This adds to the amount of time consumed by
the judicial intervention.

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
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;
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.

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 176 th
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
42 Page 124., Para 2.21.3
43 Proposed Section 29A (4)-
“Pending consideration of the application for extension of time before the Court under
sub section (3), the arbitration proceedings shall continue before the arbitral tribunal and
the Court shall not grant any stay of the arbitral proceeding”

44 176th Report, page 125, Para 2.21.5- there is no point in terminating the
arbitration proceedings. We propose it as they should be continued till award is passed.
Such a termination may indeed result in waste of time and money for the parties after lot
of evidence is led. In fact, if the proceedings were to terminate and the claimant is to file
a separate suit, it will even become necessary to exclude the period spent in arbitration
proceedings, if he was not at fault, by amending sec. 43(5) to cover such a situation. But
the Commission is of the view that there is a better solution to the problem
45 This suggestion was formulated by the Commission in its proposed version of s. 29A
(3)-
“If the award is not made within the period specified in sub-section (1) and the period
agreed to by the parties under sub-section (2), the arbitral proceedings shall, subject to
the provisions of sub-sections (4) to (6), stand suspended until an application for
extension is made to the Court by any party to the arbitration, or where none of the
parties makes an application as foresaid, until such an application is made by the arbitral
tribunal.
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
decision by the Court, the Arbitration proceedings shall
continue till the application is disposed of by the Court. 46

46 Section 6 of the Arbitration and Conciliation (Amendment) Bill, 2018-

“In section 29A of the principal Act,—
……………………..
(b) 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:”
Section. 29A (5)

The fifth subsection of section 29A states-

“(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.”

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 176th 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
47 Page 17, 176th Law Commission Report
48 5. Extension of prescribed period in certain cases.—Any appeal or any
application, other than an application under any of the provisions of Order XXI of the
Code of Civil Procedure, 1908 (5 of 1908), may be admitted after the prescribed period if
the appellant or the applicant satisfies the court that he had sufficient cause for not
preferring the appeal or making the application within such period.
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 “sufficient cause”. The parties
may be faced with the need to lead a large amount of evidence
and arguments in order to get an extension. As with other
previously discussed provisions in the Act which necessitate
judicial intervention, there is a specific requirement given in
this sub-section for the courts to decide the application in an
expeditious manner, as well as a recommended disposal time
(60 days from the date of service of notice on the opposite
party).

This requirement for a Court’s approval seems rather contrary

to the objectives and purpose of the Arbitration and
Conciliation Act. The entire point of this Act was to provide for
an alternative dispute resolution mechanism whereby the
parties had access to fast and effective remedies and the over-
burdened dockets of the courts could be reduced. The Law
Commission in its 76th Report, which recommended certain
amendments, including a proviso to be inserted in section 28 of
the Act of 1940 forbidding, an extension beyond one year, in
respect of the time for making the award except for special and
adequate reasons to be recorded.

Explanation.—The fact that the appellant or the applicant was missed by any order,
practice or judgment of the High Court in ascertaining or computing the prescribed
period may be sufficient cause within the meaning of this section.
There is also an unintended consequence of this sub-section. In
order to adjudicate upon the sufficiency of cause for extension
of time, one of the most common reasons may be the inherent
complexity of the dispute or the technical nature of the
underlying contract, or even the time taken by an expert to
make his observations and give his evidence. All of these
reasons ensure that the parties must place on the Court’s
record a lot of material which may otherwise be highly
confidential. For example, a lot of joint-ventures or technology
transfer agreements involve intellectual property and trade
secrets which need to be protected. The confidentiality inherent
in Arbitration proceedings is not present in courts.

It is worth noting that the above provision does not specify the
amount of additional time the Court can grant to the Arbitrator.
As such, it is entirely up to the Courts discretion. While the76 th
report of the Law Commission recommended for fixing maxim
period for the court to extend time, the 176 th Commission
wanted to leave it to the Court’s discretion. Further, the Court
has the ability to impose terms and conditions. It is very easy
to foresee that the court may order an extension by a relatively
short amount of time, say, one month, and then force the
parties to come back to it. Thus, the Court will have a sort of
supervisory jurisdiction over and above the kind envisioned by
the 1996 Act. This is quite clearly against the intention of the
Legislature, as evidenced under section 5 of the Act (for which,
there is no analogous provision in the 1940 Act).
Art.24 (1) of the International Chambers of Commerce Rules,
1998 fixed a period of six months from the date of signature or
approval by the International Court of Arbitration of the terms
of reference. However, the International Court of Arbitration
may “pursuant to a reasoned request from the arbitrator or if
need be on its own initiative, extend the time limit if it decides,
it is necessary to do so (Art. 24(2). Where an excessive delay is
attributable to the arbitrators, the International Court of
Arbitration may resort to the provisions of the Rules concerning
the replacement of arbitrators, which apply where the
arbitrators fail to perform their duties within the stipulated time
limits.49

The corresponding provision in the English Arbitration Act is as

section 50 which states-
“Extension of time for making award.
(1) Where the time for making an award is limited by or in
pursuance of the arbitration agreement, then, unless
otherwise agreed by the parties, the court may in
accordance with the following provisions by order extend
that time.
(2) An application for an order under this section may be
made—
(a) by the tribunal (upon notice to the parties), or
(b) by any party to the proceedings (upon notice to
the tribunal and the other parties), but only after
exhausting any available arbitral process for
obtaining an extension of time.
(3) The court shall only make an order if satisfied that a
substantial injustice would otherwise be done.

49 See Art. 12 (2) of the ICC Rules, 1998

 (4) The court may extend the time for such period and on
such terms as it thinks fit, and may do so whether or not
the time previously fixed (by or under the agreement or
by a previous order) has expired.
(5) The leave of the court is required for any appeal from
a decision of the court under this section”

Section 79 of the English Act is also relevant in this

regard.50

The 176th Law Commission Report laid down the following

things to take into account while deciding upon the issue
of time extension-
(a) the extent of work already done;

50 79 Power of court to extend time limits relating to arbitral proceedings.

(1) Unless the parties otherwise agree, the court may by order extend any
time limit agreed by them in relation to any matter relating to the arbitral
proceedings or specified in any provision of this Part having effect in default of
such agreement. This section does not apply to a time limit to which section 12
applies (power of court to extend time for beginning arbitral proceedings, &c.).
(2) An application for an order may be made—
a. by any party to the arbitral proceedings (upon notice to the other
parties and to the tribunal), or
b. by the arbitral tribunal (upon notice to the parties).
(3) The court shall not exercise its power to extend a time limit unless it is
satisfied—
a. that any available recourse to the tribunal, or to any arbitral or
other institution or person vested by the parties with power in that regard,
has first been exhausted, and
b. that a substantial injustice would otherwise be done.
(4) The court’s power under this section may be exercised whether or not the
time has already expired.
(5) An order under this section may be made on such terms as the court
thinks fit.
The leave of the court is required for any appeal from a decision of the court under this
section.
(b) the reasons for delay;
(c) the conduct of the parties or of any person
representing the parties;
(d) the manner in which proceedings were conducted by
the arbitral tribunal;
(e) the further work involved;
(f) the amount of money already spent by the parties
towards fee and expenses of arbitration;
(g) any other relevant circumstances,
Section. 29A (6)

The sixth subsection of section 29A states-

“(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.”

As noted earlier, in addition to sanctions by way of fee

deduction, the supervising court can substitute the
Arbitrator(s). However, this can cause additional delays. While
the Legislature has urged the Courts not to dawdle while
appointing substitutes, it will not be instantaneous. The Courts
must appoint substitute Arbitrators within 60 days “from the
date of service of notice to the opposite party.” 51 The duration
is similar to when the Arbitrator is first appointed. 52 It is worth
noting that while the initial appointment may be done only by
the Supreme Court/High Court, a substitute may be appointed
by the Court having supervisory jurisdiction. As such,
51 Section 29A (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.”

52 Section. 11 (13)-” An application made under this section for appointment of an

arbitrator or arbitrators shall be disposed of by the Supreme Court or the High Court or
the person or institution designated by such Court, as the case may be, as expeditiously
as possible and an 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.”
depending upon which court has jurisdiction, the parties may
be able to approach a district court/Principal Civil Court or Court
of Small Causes as well, which may result in a faster
appointment. 53 This seems to be a trend since the 1996 Act, as
it was originally drafted, only empowered the Chief Justice of
the High Court / Supreme Court (or his Designee) to make an
initial appointment.

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

53 Section 2 (e)-
“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”
Section. 29A (7)

The seventh subsection of section 29A states-

“(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.”

This provision ensures that no additional time is wasted by

restarting the proceedings de novo. This is in contradistinction
to section 15 (3) of the 1996 Act which stated “(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.” The
fact that the reconstituted tribunal is deemed to be in
continuation of the previously appointed tribunal means that
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.
any orders passed by the previous tribunal are not rendered
ineffective due to their substitution. 56 This shall hold even if the
parties agree otherwise.

According to Section 27 (4) of the English Arbitration Act,

1996,”The tribunal (when reconstituted) shall determine
whether and if so to what extent the previous proceedings
should stand. This does not affect any right of a party to
challenge those proceedings on any ground which had arisen
before the arbitrator ceased to hold office “

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)

The eighth subsection of section 29A states-

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

This sub-section is incorporated to deter unscrupulous parties,

especially those who are only interested in delaying the cause
of justice. The use of the phrase “any of the parties under this
section” is ambiguous. Since this section also refers to
Arbitrators, they may be included in the ambit of this penal
provision. As stated earlier, the principles of Natural Justice in
general, and the rule of audi alterem patrm are to be followed
and before imposing any costs, the Court must give a hearing
to the party likely to be effected.
Section. 29A (9)

The ninth subsection of section 29A states-

“(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.”