DR.

RAM MANOHAR LOHIYA NATIONAL LAW

UNIVERSITY

LEGISLATIVE DRAFTING
FINAL DRAFT: SEMINAR PAPER

TOPIC – A DISCORDANT TALE OF LEGISLATIVE DRAFTING:

ARBITRATION ACT, 1996

SUBMITTED BY: UNDER THE GUIDANCE OF:

AVINASH MAURYA DR. SHASHANK SHEKHAR

ENROLL NO: 150101033 ASST. PROF. (LAW)

SECTION ‘A’ DR. RAM MANOHAR LOHIYA

B.A. LLB (Hons.), SEMESTER X NATIONAL LAW UNIVERSITY

SIGNATURE OF STUDENT: SIGNATURE OF PROFESSOR

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 TABLE OF CONTENTS

1 INTRODUCTION.................................................................................................................5

2 CAN THE FAILING FATE OF THE ACT BE ATTRIBUTED TO BLIND

ADHERANCE TO MODEL LAW?.......................................................................................6
2.1 PREFACE....................................................................................................................................................... 6
2.2 EVOLUTION OF ARBITRATION LAW AND LEGISLATIVE HISTORY OF THE
1996 ACT................................................................................................................7
2.3 POOR DRAFTING COUPLED WITH ERRONEOUS INTERPRETATION: A DEATH
NOTE......................................................................................................................8

3 SHOULD THE AMENDMENTS HAVE BEEN MADE SOONER?..........................10

4 FINDING THE LEGISLATIVE INTENT....................................................................11

5 IMPLICATIONS OF THE NEW SECTION 29A: THE OVER AMBITIOUS 12+6

MONTH TIME LIMIT.........................................................................................................13
5.1 THE PAST, THE PRESENT...................................................................................................................... 14
5.2 THE POSITION IN OTHER COUNTRIES...............................................................15
Spain:....................................................................................................................15
Belgium.................................................................................................................16
Brazil.....................................................................................................................17
Turkey...................................................................................................................17
5.3 ANALYSIS.................................................................................................................................................. 18
5.4 AND THE FUTURE: SPEEDIER RESOLUTION OF DISPUTES OR DUE
PROCESS AND OTHER PROCEDURAL CONCERNS (ONE STEP FORWARD, TWO
STEPS BACK)?...................................................................................................................19
5.5 BEST SOLUTION: SECTION 29A....................................................................................22

6 ENFORCEABILITY OF ORDERS UNDER SECTION 17 OF THE

ARBITRATION AND CONCILIATION ACT, 1996.............................................................23
6.1 SRI KRISHAN V. ANAND....................................................................................................................... 23
6.2 CRITIQUE OF SRI KRISHAN.................................................................................................................. 25

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 History of Section 27(5)........................................................................................25
6.3 SECTION 27(5) APPLIES ONLY TO WITNESSES................................................................................ 27
6.4 ERRONEOUS INTERPRETATION OF SECTION 27(5).........................................................28
6.5 MODEL LAW DIDN'T PROVIDE FOR ENFORCEABILITY OF TRIBUNAL'S INTERIM ORDER...29
6.6 DISOBEDIENCE OF COURT ORDERS AND CONTEMPT OF COURT—CHOICE OF REMEDIES 30
7 CONCLUSION: A BLEAK WAY FORWARD, AMENDMENTS AFTER
AMENDMENTS....................................................................................................................32

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 ACKNOWLEDGEMENT

On the successful completion of this case analysis first of all I would like to thank our
professor DR. SHASHANK SHEKHAR for his constant guidance and support. Sincere
thanks to my seniors and friends for being a great support throughout.

This project could not have been completed without acknowledging Dr. Madhu Limaya
Library (RMLNLU) for providing all useful information that helped me throughout my
research.

- AVINASH MAURYA
 1 INTRODUCTION

The Statement of Objections and Reasons to the Arbitration and Conciliation (Amendment)
Act, 20151 stated, inter alia, that “Interpretation of the provisions of the Act by courts in some
cases have resulted in delay of disposal of arbitration proceedings and increase in interference
of courts in arbitration matters” and that these delays and increase in interference has
defeated the object of the Arbitration and Conciliation Act, 1996 in providing for “speedy
disposal of cases relating to arbitration with least court intervention.” Conversely, several
courts, including a three-judge Bench the Supreme Court of India, had held that the said Act
(as originally enacted) was not “a well-drafted legislation.” 2 It is also interesting to note that
neither the five-judge Bench in Bharat Aluminium Co. v. Kaiser Aluminium Technical
Services Inc.3 which overruled Bhatia International, made no complaints against the quality
of the drafting of the Arbitration and Conciliation Act, 1996 (“Act” or “1996 Act”). The
Arbitration and Conciliation (Amendment) Act, 2015 (“2015 Act”) does not seem to address
the “defects” in the statute; rather it mainly corrects the misinterpretations and improves upon
the 1996 Act.4

There are several reasons why the 1996 Act failed to achieve its objects in the first fifteen
years of its existence. It is well-known that several decisions of the Supreme Court (and of
other courts) were an important reason for the ineffectiveness of the 1996 Act as it originally
stood.5 Apart from these, other reasons such as the failure of the stakeholders of arbitration to
match the reforms have been attributed to the failure of the said law. The 2015 Act has
brought structural changes to the arbitration law. Even so, it is important to examine if the
Legislature could have done more to avoid the problems with the 1996 Act in order that the
lessons learnt could be implemented in future.

1
Bill No. 252 of 2015, as introduced in the Lok Sabha on 3 December 2015, available at
http://www.prsindia.org/uploads/media/Arbitration/Arbitration%20and%20Conciliation%20bill,%202015.pdf
(accessed 30 October 2018).
2
Para 35, Bhatia International v. Bulk Trading SA (2002) 4 SCC 105 (hereinafter “Bhatia International”).
3
(2012) 9 SCC 552 (hereinafter “BALCO”).
4
One could argue that expressly empowering the courts to issue interim measures in foreign seated arbitration is
curing a defect. But this argument depends on whether the lack of such a power under the statute (as was
enacted originally) was deliberate.
5
Examples of such decisions include Bhatia International, Venture Global Engineering Vs. Satyam Computer
Services Ltd. (2008) 4 SCC 190 (hereinafter “Venture Global”); ONGC v. SAW Pipes AIR 2003 SC 2629; N.
Radhakrishnan v. Maestro Engineers (2010) 1 SCC 72 (hereinafter “Maestro Engineers”); Phulchand Exports
Limited v OOO Patriot (2011) 10 SCC 300 and so on
This short paper presents the following theses: the Legislature was not wrong in basing the
arbitration provisions of the 1996 Act on the UNCITRAL Model Law on International
Commercial Arbitration, 1985 (“Model Law”) since it afforded legitimacy to Indian dispute
resolution system from the perspective of foreign investors. The decision to import the Model
Law substantially into the 1996 Act meant that the Indian Legislature had to fill up those gaps
which were deliberately left out in the Model Law (for each country’s legislature to fill up
those gaps). Further, in the absence of an authoritative document explaining the reasons for
the law, it was difficult for courts to find out the legislative intent merely on the basis of the
statutory provisions. The Legislature could have been more dynamic in bringing about
amendments to the 1996 Act as and when judicial constructions had the potential of
undermining the legislative object.

2 CAN THE FAILING FATE OF THE ACT BE ATTRIBUTED TO BLIND

ADHERANCE TO MODEL LAW?

2.1 Preface

As is well-known, Part I of the 1996 Act borrowed heavily from the Model Law. But why did
the Legislature do so? In 1991, India adopted the New Industrial Policy to achieve economic
development through the adoption of market friendly practices including allowing Foreign
Direct Investment (“FDI”) and the abandoning of anti-private sector policies. It was felt that
the then existing system of commercial dispute resolution was riddled with enormous delays
and unpredictability and therefore, there was a need for making a new market friendly law on
dispute resolution.6 The rationale for such a law is not difficult to fathom. A proper
arbitration mechanism would act as an efficient alternative to the courts where enormous
delay and unpredictability were the norm. An effective arbitration scheme had the potential to
create an alternative dispute resolution process by which the vices of delay and
unpredictability in the courts could be avoided. Such a system could ensure that the
contractual expectations of the parties are enforced by the state and disputes concerning such
expectations are easily resolved. This would give fillip to commercial transactions- both
domestic and international. If the courts are allowed to interfere during and after the

6
The Statement of Objects and Reasons to the Arbitration & Conciliation Bill, 1995 inter alia, declared: “It is
also recognised that our economic reforms may not become fully effective if the law dealing with settlement of
domestic and international commercial disputes remain out of tune with such reforms.”
arbitration (in terms of allowing challenge to arbitral awards on substantive aspects), it would
lead to delay and would, in turn, defeat of contractual expectations of the parties.

2.2 Evolution of Arbitration Law and Legislative History of the 1996 Act.

Since the 1970s, it has been argued that a robust legal system was essential to economic
development because the former provided elements indispensable for the effective
functioning of the market system.7 The elements, referred to as “ideal paradigms”, included a
set of universal rules that applied uniformly and predictably, a regime of property law that
protected future labour and, more importantly, a regime of contract law that secured future
expectations of the parties.8 The absence of effective and inexpensive contract enforcement
mechanisms has been regarded as one of the reasons for the stagnation in economic
development in developing countries.9 Even the World Bank’s oft-cited annual report on
Doing Business recognises these aspects.10 Therefore, it was important for India to enact a
law that is seen as being in consonance with the best practices on international arbitration.

The Government of the day clearly recognised the need for such a law. On 31 March 1995, a
Note was circulated by the Secretary, Government of India to the Cabinet. 11 Among other
things, the Note recognised the need for urgent reforms in arbitration law as demanded by the
Indian and foreign business community. It provided that it was prudent to adopt the
UNCITRAL Model law on International Commercial Arbitration, 1985 (“Model Law” or
“UNCITRAL Model Law”) the Model Law provided certain distinct advantages: one, it
harmonised the common and civil law concepts on arbitration and consequently contained
model legal provisions of universal application; two, the Model Law acted as a foundational
basis not only for international arbitration law but even for domestic arbitration law and
thereby eliminated the need for maintaining a dichotomy in arbitration law (between
domestic and international arbitration).

7
See, for example, Kenneth L. Karst, Law in Developing Countries, 60 Law Libr. J. 13 (1967); David M.
Trubek, Toward a Social Theory of Law: An Essay on the Study of Law and Development 82 Yale L.J. 1 (1972)
8
Amanda Perry, An Ideal Legal System for Attracting Foreign Direct Investment? Some Theory and Reality, 15
Am. U. Int'l L. Rev. 1627 (2000).
9
M. Trubek, Toward a Social Theory of Law: An Essay on the Study of Law and Development 82 Yale L.J. 1
(1972); Douglass C. North, Understanding the Process of Economic Change 158-159, Academic Foundation
(Indian Edition. 2006); In the Indian context, see, N.R. Madhava Menon & Bibek Debroy, Introduction xii-xiii,
in, N.R. Madhava Menon & Bibek Debroy, Legal Dimensions of Economic Reforms (1997), Michael
Trebilcock & Jing Leng, The Role of Formal Contract Law and Enforcement in Economic Development, 92 Va.
L. Rev. 1517 (2006).
10
See, www.doingbusiness.org/rankings (accessed on 30 October 2018).
11
The Note, which is not in circulation in the public domain, is available at https://drive.google.com/file/d/0B-
ZUXtJuPbi3R0pHdFJxZjZLRzQ/view?usp=drivesdk (accessed on 30 October 2018).
From the foreign investment angle, what was left unsaid (but clearly recognised) in the Note
was that if the law was based on a universally accepted international instrument, there would
be more investors willing to invest in India and to arbitrate in India. The NELP rounds for
investment in petroleum exploration are a case on point. One of the positive features
highlighted by the Government while inviting investments in the NELP rounds was the fact
that the 1996 Act was based on the Model Law.12

Thus, the Government was of the view that crafting the 1996 Act in the lines of the Model
Law afforded legitimacy and acceptability to Indian dispute resolution process from the eyes
of foreign investors.

2.3 Poor drafting coupled with erroneous interpretation: A death note

Poor drafting of the 1996 Act was considered to be one of the primary reasons for its
failure.13 The view was held perhaps considering that the 1996 Act left remediless a party to a
foreign seated arbitration who wished to seek interim relief in India in relation to those
arbitral proceedings. This criticism seems faulty simply for the reason that the statute did not
empower courts to issue interim measures in a foreign-seated arbitration. This omission
seems to have been deliberate. A similar position existed in Singapore at around the same
time.14

Interestingly, both countries took diametrically opposite directions in addressing the issue. In
Singapore, the Court of Appeal held that courts did not have the power to issue interim
measures.15 The Court stated that the legislature in its wisdom should be taken to have
deliberately omitted such a power from the courts’ purview and that if the court was to order
such measures the same would amount to arrogating to themselves the power to make policy.
The Supreme Court of India, on the other hand, took the totally opposite view to the identical
question in Bhatia International and not only held that Indian courts did have the power to
order interim measures in foreign arbitrations but went a step ahead and held that the 1996

12
See, for instance, Government of India, Notice Inviting Offers for Exploration of Oil and Natural Gas under
New Exploration Licensing Policy Eighth Round (NELP-VIII)(2009), available at
http://www.buylawsindia.com/NELP8%20NIO.pdf (accessed on 27 October 2018).
13
See, for instance, Bhatia International.
14
See, Hon’ble The Chief Justice Sundaresh Menon, Patron's Address: Chartered Institute of Arbitrators
London Centenary Conference (2 July 2015), available at https://www.ciarb.org/docs/default-
source/centenarydocs/london/ciarb-centenary-conference-patron-39-s-address-(for-publication).pdf (accessed on
27 October 2018).
15
Swift-Fortune Ltd v Magnifica Marine SA [2007] 1 SLR(R) 629 (“Swift Fortune”, for short).
Act was a badly drafted law. 16 The Court considered the case was one of casus omissus and
held that where there was a defect in the statute, it was for the courts to construe the statute so
as to address those defects.

The Supreme Court’s decision in Bhatia International holding so was questioned by several
commentators. The flaw in the decision became more palpable when the Supreme Court took
Bhatia International to its logical end in the case of Venture Global and held that by virtue of
Bhatia International, Indian courts could even set aside foreign arbitral awards. It was only
subsequently that a five-judge Bench of the Supreme Court in BALCO decided that Indian
Courts did not have the power to order interim measures in foreign arbitration. In relation to
the present context, the five-judge Bench held that it could not find any anomaly in the statute
as was suggested in Bhatia International. 17 Disagreeing with Bhatia International, the
Supreme Court held: “We would also agree with Mr. Sorabjee that it is not the function of the
Court to supply the supposed omission, which can only be done by Parliament. In our
opinion, legislative surgery is not a judicial option, nor a compulsion, whilst interpreting an
Act or a provision in the Act.”18 (emphasis supplied) One would notice the similarity in the
legal stance taken by the Supreme Court in BALCO (2012) and Singapore’s Court of Appeal
in Swift Fortune (2006).

Several anti-arbitration pronouncements seem to have undermined Indian arbitration. This is

not to state that the 1996 Act is not totally blame-free. But, the omissions and the purported
“defects” could have been taken care of through judicial decisions which would have been
delivered in line with the objectives of the said Act. Hence, it is one of the argument of this
paper that the reasons for the failure of the 1996 Act in achieving its objectives are not
primarily related to the quality of drafting of the 1996 Act.

If the aforesaid argument regarding the poor drafting of the 1996 Act being the cause for
undermining Indian arbitration is rejected, the question is: whether the courts and the other
stakeholders of arbitration and not the legislature were entirely to blame for the failure of the
1996 Act? This part of the paper argues in the negative and takes the stand that the failure of
the government and the legislature on two major counts contributed to the stunted growth of
Indian arbitration. Each of these failures is discussed below:

16
See, Bhatia International.
17
Para 58, BALCO.
18
Ibid, Para 60.
 3 SHOULD THE AMENDMENTS HAVE BEEN MADE SOONER?

It is interesting to note the chronology of the proposals to reform arbitration law. The first
substantive proposal came within five years from the enactment of the 1996 Act in the form
of the Law Commission of India’s 176th Report. The 176th Report, published in September
2001, proposed several amendments to the 1996 Act. Consequent thereto, the Arbitration and
Conciliation (Amendment) Bill, 2003 (“2003 Bill”) was mooted to amend the arbitration law.
Later, a Committee chaired by Justice BP Saraf was constituted in 2004 by the Department of
Legal Affairs, Ministry of Law and Justice to look at the recommendations of the Law
Commission and the acceptability of the 2003 Bill. The Saraf Committee opined that several
of the Law Commission’s suggestions were against the fundamental principles of arbitration
of minimum court intervention and party autonomy. A Parliamentary Standing Committee
considered the 2003 Bill and concluded along the same lines as the Saraf Committee: most
amendments suggested by the Commission increased judicial intervention in arbitration.19

About half a decade later, a Consultation Paper was circulated by the Ministry of Law and
Justice proposing revisions to the 1996 Act.20 This was followed by the Law Commission’s
246th Report in 2014 on the 1996 Act.21 An Ordinance was promulgated in 2015 amending
the 1996 Act. This was followed by the enactment of the Arbitration and Conciliation
(Amendment) Act, 2015 and bringing it into force the 2015 Act in 2016 but with effect from
the effective date of the Ordinance (23 October 2015).

Reckoning the 176th Report of the Law Commission as the first major event towards
reforming Indian arbitration law, it has taken close to fifteen years for even a single
legislative reform to be introduced. As a consequence, the erroneous decisions held the field
for several years. Take the example of Bhatia International: from 2002, the decision was
applied by several courts for a decade till it was finally overruled in 2012 in BALCO. Prior to
2012, several courts did not strictly apply the ratio of Bhatia International 22 Consequently,
there were several lines of precedents evolving from the same erroneous decisions, some

19
Department Related Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice,
Ninth Report on the Arbitration and Conciliation (Amendment) Bill, 2003, (August, 2005).
20
Ministry of Law and Justice, Government of India, Proposed Amendments to the Arbitration & Conciliation
Act, 1996: A Consultation Paper (April 2010) (hereinafter “Consultation Paper”).
21
Law Commission of India, Report No. 246: Amendments to the Arbitration and Conciliation Act 1996 (5
August 2014), available at www.lawcommissionofindia.nic.in/reports/Report246.pdf (accessed on 30 October
2018)(hereinafter “246th Report”).
22
Badrinath Srinivasan, Arbitration and the Supreme Court: A Tale of Discordance Between the Text and
Judicial Determination, 4 NUJS L. Rev. 639, 641-643 (2011)
applying those erroneous decisions in their complete sense while some reading down those
decisions and attempting to distinguishing them on facts. For example, when Maestro
Engineers was applied, some courts applied them according to their ratio while certain other
courts restrictively read the decision as applying only to serious allegations of fraud.23

This lack of clarity on the law led to three problems:

(1) The most obvious result was that it led to conflicting precedents thereby making law
uncertain.
(2) the lack of clarity led to certain unintended consequences. For instance, the decision
in Bhatia International was taken to its logical end and applied in the case of Venture
Global, where even foreign awards could be challenged under Part I of the Act;
(3) questions relating to the matters covered by those erroneous judgements were argued
upon in a lengthy manner in the courts and this led to severe costs on the parties and
wastage of judicial time;
(4) the ultimate effect of these decisions was that foreign investors began looking at India
as an anti-arbitration jurisdiction and refused to agree to India as a seat of arbitration.

Thus, it was for the government (executive) through the legislature to bring amendments as
and when courts misconstrued the Act. As discussed supra, a perusal of the reports proposing
reforms to arbitration law reveal conflicting proposals. Even so, there were some
recommendations that were suggested in all these reports. The clarification that Part I of the
Act did not apply to foreign arbitration and making available interim measures in foreign
seated arbitration is one example. The Government could have at least introduced those
amendments. Instead of the needful legislative surgery, the government through the
legislature were only keen on bringing about big bang reforms. This took more than fifteen
years after the first comprehensive reforms was officially mooted.

4 FINDING THE LEGISLATIVE INTENT

Normally, courts gather the legislative intent from the text of the statute itself. Wherever the
text is ambiguous, the courts rely on certain external aids to construction such has the
Statement of Objects and Reasons to the Act (which subsequently becomes the enactment)
and the legislative history. Often, courts compare the existing provisions with the analogous

23
See, for instance, Vandana Gupta v. Kuwait Airways Ltd, OMP 431/2014 and IA No 7026/2014 (Delhi High
Court: 14 August 2015) which restrictively read Maestro Engineers.
previous prevailing prior thereto to construe a statute. But the 1996 Act was structured in a
manner that was completely different from the Arbitration Act, 1940. The 1996 Act was,
predominantly, a combination of the UNCITRAL Model Law and the UNCITRAL
Conciliation Rules, 1980. This meant that the courts could not effectively compare the text of
the 1940 and the 1996 statutes for interpreting many of the provisions in the latter Act.
Further, a clause-by-clause debate on each Bill in the Indian Parliament is a rare
phenomenon. So was the case with the discussion on the Arbitration and Conciliation, Bill
before the Parliament.24 The discussions in the Parliament mainly centred on whether it was
appropriate to introduce the law in the form of an ordinance. Hence, authoritative source of
the legislative intent was virtually absent when the 1996 Act was enacted.

Even so, in respect of those provisions adopted from the Model Law, the Travaux
Préparatoires of the Model Law25 discussed in detail the rationale for drafting those
provisions in a particular manner. In many cases, the courts either did not choose to rely on
the Travaux or the counsel arguing before the court did not bring to these references to the
court’s attention. In respect of a few provisions (such as Section 9) which were based on the
1940 Act, the court could rely on the text and the jurisprudence under the 1940 Act. But there
were certain provisions in the 1996 Act which were neither addressed in the Model Law nor
were adopted from the 1940 Act. In those cases, it was virtually difficult for courts to trace
the legislative intent when more than one interpretation was put forth to the courts. Bhatia
International is a typical example. Faced with competing claims on whether Indian courts
could issue interim measures in foreign arbitration, the Supreme Court chose to look at the
omission as an inadvertent error attributable to bad drafting rather than a deliberate statutory
device.

A related example is the recent question on whether the Arbitration and Conciliation
(Amendment) Act, 2015 was applicable to arbitration related court proceedings which were
pending as on the date of coming into force of the enactment. This question was argued
before several courts in India. Unfortunately, there were conflicting views on the point which
ultimately has gone to the Supreme Court (as on 1 November 2016). The amendments to the
1996 Act were originally introduced on 23 October 2015 in the form of an ordinance titled
Arbitration and Conciliation (Amendment) Ordinance, 2015. The Ordinance did not contain

24
See, XI Lok Sabha Debates (August 1996), especially the debates on Thursday, August 1, 1996.
25
Travaux Preparatoires of the Model Law is available at
http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration_travaux.html (accessed on
any provision relating to retrospective operation of the law even though such a provision
(Section 85A) was recommended by the Law Commission. When the Ordinance was applied,
this led to an ambiguity on whether it was applicable to pending arbitration and arbitration
related court proceedings. In the absence of any material from which statutory intent could be
culled out, the courts were not sure whether it applied to such proceedings or not. In fact, in
one of the cases, the Hon’ble High Court even issued notice to the Ministry of Law and
Justice to clarify the position.26 Subsequently, Section 26 was introduced in the Bill pending
before the Parliament. Once the 2015 Amendment Act was enacted, the ambiguity was not
completely addressed even by that provision as it was not clear on whether the amendments
applied to arbitration related court proceedings filed before 23 October 2015 or thereafter in
respect of arbitral proceedings pending prior to 23 October 2015. Again, this question has
been agitated before various courts in India.

This discussion goes to show two fundamental aspects relating to Indian arbitration law: (1)
the previous judicial time spent on several hearings all over India in addressing the aforesaid
issue and the cost of clients would have been immense and could have been avoided by
drafting a clear provision on whether the 2015 amendments were prospectively applicable to
pending arbitration related court proceedings; (2) the second related aspect that should be
debated is whether the Government should, before introducing any legislation, explain in
detail the legislative intent behind the legislation and the provisions thereunder. This will aid
courts in finding out the legislative intent behind a provision of law.

5 IMPLICATIONS OF THE NEW SECTION 29A: THE OVER AMBITIOUS 12+6

MONTH TIME LIMIT

Section 29A was introduced into the Arbitration and Conciliation Act, 1996 and, taking into
account the amendments in 2015,by way of the Arbitration and Conciliation (Amendment)
Act, 2015. In a nutshell, the provision requires an arbitral award to be made within a period
of twelve months from the date the arbitral tribunal enters upon the reference, which period is

28 October 2016).
26
or a discussion on the retrospective operation of the 2015 Act, see, Badrinath Srinivasan, Part III:
Applicability of the 2015 Arbitration Amendment Act to Arbitration Related Court Proceedings: The Lok Sabha
Debates (6 June 2016), available at http://practicalacademic.blogspot.in/2016/06/part-iii-applicability-of-
2015.html (accessed on 30 October 2018).
extendable by another six months with the consent of the parties [the initial period of twelve
months, without a subsequent extension by the parties, and/or the total period of 18 months,
after such extension, is hereinafter referred to as the ―Time Limit‖]. If the arbitral award is
not rendered within the Time Limit, the provision stipulates that the mandate of the
arbitrators shall terminate, unless an Indian court of competent jurisdiction [the ―Court‖, as
defined under Section 2(1)(e) of the Act] grants a further extension. This provision only
applies to arbitral proceedings (including domestic arbitration and international commercial
arbitration) commenced on or after October 23, 2015,27 where the place of arbitration is in
India.28

5.1 The Past, the Present…

The concept of a time-bound arbitration is not completely alien to Indian law. Under the
Arbitration Act, 1940 [the ―1940 Act‖], which previously governed domestic arbitrations in
India, the following provision was deemed included in all arbitration agreements - ―unless a
different intention is expressed therein 29: 3. 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 or within such extended time as the Court may
allow.30

27
Arbitration and Conciliation (Amendment) Act, No. 37 of 2016 (India) §§ 26, 27 (while there seems some
uncertainty as to the application of § 26 of the Amendment Act, in the author‘s view the preferred interpretation
is that the amendments do not apply where the arbitration has commenced before Oct. 23, 2015); See
Electrosteel Castings Limited v. Reacon Engineers, AP No. 1710/ 2015, Jan.14, 2016 (Calcutta High Court)
(India); Pragat Akshay Urja v. State of MP and Ors., Arbitration Case No. 48,53 and 54/2014, June 6, 2016
(Himachal Pradesh High Court) (India); However, some High Courts have interpreted this provision more
broadly, see New Tirupur Area Development v. Hindustan Construction Co. Limited, AP No. 7674/2015, Jan.
27, 2016 (Madras High Court) (India); BCCI v. Rendezvous Sports World, AP No. 7674/2015, June 30, 2016
(India).
28
Arbitration and Conciliation Act, No. 26 of 1996 (India), §2(2).The applicability of the Principal Act (Part I)
to arbitrations seated outside India has been the subject of contradictory decisions of the Supreme Court. The
prevailing view is that of Bharat Aluminium Company v. Kaiser Aluminium Technical Services Inc., (2012) 9
S.C.C. 552 (India), ¶¶ 194-196. In this case, the Apex Court held that Part I would have no application to
international commercial arbitration held outside India. Accordingly, in a foreign-seated international
commercial arbitration, no application for interim relief would be maintainable before Indian Courts (pursuant
to § 9 or any other provision). The Court, however, made clear that this decision would apply prospectively, i.e.
to all the arbitration agreements executed after the decision, see at ¶ 197. This position has been slightly altered
by the Arbitration and Conciliation (Amendment) Act, 2015, No. 3 of 2016 (India), which adds a proviso to §
2(2) and enables the application of certain provisions (such as, the power of Indian courts to grant interim relief
under Section 9) of Part I to international commercial arbitrations even if the arbitration is seated outside India,
subject to an agreement to the contrary.
29
The Arbitration Act, No. 10 of 1940 (India), § 3.
30
The Arbitration Act, No. 10 of 1940 (India), First Schedule, r. 3.
A court of competent jurisdiction (as defined under the 1940 Act) was granted the power to
extend this time limit, as follows:

“28. (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.31”

These provisions were, however, not retained in the Principal Act, which inter alia repealed
the 1940 Act.32 As a consequence, Indian courts viewed themselves as having been
―denuded of the power to enlarge time for making and publishing an award‖ stipulated in the
arbitration agreement, particularly in cases where such enlargement could be sought through
an alternative procedure pursuant to the arbitration agreement and the parties had taken
recourse to it.33 Thus, where the arbitration agreement included a reference to the LCIA India
Rules and stipulated a three-month time limit for concluding the arbitration, the Delhi High
Court refused to interfere with a decision of the arbitral tribunal to extend such time limit,
viewing this as the proper exercise of the arbitral tribunal‘s authority under the applicable
arbitral rules, which were ‗part and parcel‘ of the arbitration agreement. 34 Conversely, in
cases where time limits provided under arbitration agreements expired without any
extensions pursuant to the mechanism stipulated therein, the Courts held that the mandate of
the arbitral tribunal had terminated.35

5.2 The Position in Other Countries

In the following section, provisions in the arbitration statutes of some other countries, which
stipulate time limits in respect of arbitral awards, have been referred to in order to understand
how Section 29A compares with them:

Spain:

31
The Arbitration Act, No. 10 of 1940 (India), § 28(1).
32
The Arbitration Act, No. 10 of 1940 (India), § 85 (the Principal Act also repealed the Arbitration Protocol and
Convention Act, 1937 and the Foreign Awards (Recognition and Enforcement) Act, 1961).
33
NBCC Limited v. J.G. Engineering Private Limited, (2010) 2 S.C.C. 385 (India), ¶ 22 [hereinafter ―NBCC
Ltd.‖]
34
Virkaran Awasty v. Hassad Netherland B.V. & Ors., OMP (T) (COMM.) No. 18/2015, Feb. 16, 2016 (Delhi
High Court) (India) available at http://lobis.nic.in/ddir/dhc/MAN/judgement/18-02-
2016/MAN16022016OMPTCOMM182015.pdf.
35
Bharat Oman Refineries Ltd. v. Mantech Consultants, 2012 S.C.C. OnLine Bom 669 (India), ¶ 15 [hereinafter
―Bharat Oman‖].
 Unless otherwise agreed by the [p]arties, the arbitrators shall decide the dispute within six
months from the date of the submission of the statement of defence referred in Article 29 or
from the expiry of the period to submit it. Unless otherwise agreed by the parties this period
may be extended by the arbitrators, for a period not exceeding two months, by means of a
reasoned decision. Unless otherwise agreed by the parties, the expiry of the period without
the issue of the final award shall not affect the effectiveness of the arbitral agreement, nor
the validity of the award, without prejudice to any liability which the arbitrators may have
incurred.36 (emphasis added) Thus, the parties can agree that the arbitrators will
automatically lose their jurisdiction once the time period stipulated in the provision has
lapsed.37 However, if there is no such agreement, the arbitrators may render their award
after this time period without compromising the effectiveness or validity of the award. The
arbitrators may, however, incur liability for damages caused due to bad faith, recklessness
or wilful misconduct.38

Belgium:

The parties may determine the time limit within which the Arbitral Tribunal must render its
award, or the terms for setting such a time limit [and, if necessary, its extension][…] Failing
this, if the arbitral tribunal is late in rendering its award, and a period of six months has
elapsed between the date on which the last arbitrator has been appointed, the President of
the Court of First Instance, at the request of one of the parties, may impose a time limit on
the arbitral tribunal in accordance with Article 1680, § 3. The mission of the arbitrators ends
if the arbitral tribunal has not rendered its award at the expiry of this time limit. 39 (emphasis
added) The sixmonth time limit which applies when the parties have not agreed on a time
limit is understood to be a non-mandatory provision that sets a target for the arbitral tribunal
and opens up an avenue for the courts to speed up the arbitral process. 40 In practice,
however, the parties will typically have determined a time-limit through the applicable
arbitral rules or through a procedural timetable, as is required by many arbitral rules. The
parties may also agree on subsequent extensions of time or the applicable arbitral rules may

36
Law 60/2003 of Dec. 23, 2003, art. 37(2) (as amended by Law 13/2009 of 2 Nov 2009 and Law 11/2011 of 20
May 2011) (Spain).
37
Laura Lozano Correa, Spanish Arbitration Act, Article 37 [Time limit, form, content and notification of the
arbitral award], in THE SPANISH ARBITRATION ACT: A COMMENTARY 225 ( Carlos González-Bueno
ed., 2016).
38
Law 60/2003 of 23 December 2003, art. 21 (as amended by Law 13/2009 of 2 Nov 2009 and Law 11/2011 of
20 May 2011) (Spain).
39
Judicial Code, Part IV, art. 1713(2) (adopted July 4, 1972, last amended June 24, 2013) (Belg.).
 provide for the possibility for such extensions. These agreements will prevail over the
above-quoted provision in Article 1713 of the Belgian Judicial Code.

Brazil:

The arbitration award shall be made within the time frame set up by the parties. If no timing
has been determined, the arbitral award shall be made within six months from the date of
the commencement of the arbitration or from the date of the substitution of an arbitrator
[…] The parties and the arbitrators, by mutual agreement, may extend the timing for the
delivery of the final award.41 (emphasis added) Once again, the stipulated time limit of six
months can be modified by the parties in case they agree on a different time limit. It has
been argued that such an agreement would also include the application of institutional
arbitral rules establishing special time limits. 42 In case a different time limit is provided by
the parties‘ agreement or the institutional arbitral rules, such time limit will prevail.43

Turkey:

Unless otherwise agreed by the parties, an award shall be rendered within one year, in the
case of a sole arbitrator, from the date of his appointment or, in the case where there is an
arbitral tribunal, from the date when the minutes of the tribunal's first meeting are kept […].
The term of arbitration may be extended, upon agreement of the parties, or, in case of
failure, upon a party request, by the civil court of first instance. Upon denial of the request,
arbitration shall come to an end at the date of the expiry of the term of arbitration […]. The
court's decision shall be final.44 (emphasis added) It is doubtful whether the provision of an
arbitration period itself is mandatory or not, or whether it can be opted out of entirely by an
agreement of the parties, such that the arbitration is governed by an undetermined time
period.45 There is a view that the provision is mandatory in nature and that it should be
taken seriously by the arbitral tribunal and the parties because an arbitral award may be set

40
Maud Piers, Commentary on Part VI of the Belgian Judicial Code, Chapter VI: Article 1713, in
ARBITRATION IN BELGIUM 428 (Niuscha Bassiri & Maarten Draye eds., 2016).
41
Law no 9.307 of Sept. 23, 1996, art. 23 (as amended by Law no 13.129 of May 26, 2015) (Braz.).
42
JOAQUIM T. DE PAIVA MUNIZ & ANA TEREZA PALHARES BASILO, ARBITRATION LAW OF
BRAZIL: PRACTICE AND PROCEDURE, Appendix C, 48 (2006).
43
Carlos Nehring Netto, National Report for Brazil (2011), in ICCA INTERNATIONAL HANDBOOK ON
COMMERCIAL ARBITRATION 22-23 (Jan Paulsson & Lise Bosman eds., Supp. No. 66, Sept. 2011).
44
International Arbitration Law, art. 10(B) (Law No. 4686 of 21 June 2001) (Turkey).
45
Bilgehan Yeşilova, Courts‘ Support and Supervision Prior to the Rendering of the Award, in ARBITRATION
IN TURKEY 166 (Ismael Esin & Ali Yesilirmak eds., 2015).; Musa Aygül & Doğan Gültutan, Arbitration
Procedure, in ARBITRATION IN TURKEY 96 (Ismael Esin & Ali Yesilirmak eds., 2015).
 aside where it is not rendered within the arbitration period. 46 The parties may, however,
shorten or extend the arbitration period by agreement. which is understood to include any
time limit provided under the applicable arbitral rules.

5.3 Analysis

Section 29A appears to be unique as a result of a combination of factors when compared to

the above-cited legislations of other countries which are flexible on atleast one of these
factors. First, it does not allow parties to contract out of the provision. Secondly, unless the
interpretation to Section 29A (3) suggested in Part II above is adopted, an extension of the
time limit beyond the twelve-month period for another six months requires a direct agreement
of the parties and cannot be done by reference to the applicable arbitral rules. Thirdly, the
parties cannot agree to an extension beyond the combined time limit of eighteen months.

In addition to all of the above, it is possible that the Time Limit will be interpreted by the
Courts as mandatory in nature. Although the Act does not make a clear distinction between
its mandatory and non-mandatory provisions, unlike its English counter-part,47 it has been
held that a phrase such as “unless otherwise agreed by the parties” precedes most of the non-
mandatory provisions of the Act.48 Further, the stipulation that “[t]he award shall be
made[…]”49 within the Time Limit and the express consequence that the mandate of the
arbitral tribunal shall terminate in the event of non-compliance, lend support to the mandatory
character of the Time Limit.

All of the afore-stated factors taken together, particularly the mandatory nature of the Time
Limit along with the limited room for manoeuvre by the parties or arbitral institution, are
likely to create procedural complications for an arbitration unless managed efficiently by the
Courts (discussed in Part-IV below). If one looks at the deliberations that lead up to the
enactment of Section 29A (see below), it is clear that the lawmakers were not ignorant of

46
International Arbitration Law (Law No. 4686 of June 21, 2001) (Turkey), art. 15(A)(1)(c); Stephan Wilske,
Legal Challenges to Delayed Arbitral Awards, 6(2) C.A.A.J. 153, 159 (2013).
47
Arbitration Act 1996 (U.K.)
48
M/s Choday Sanyasi Rao v. Hindustan Petroleum Corporation Limited, (2002) S.C.C. Online AP 1067
(India), ¶ 15 (this basis of differentiation between mandatory and non-mandatory provisions under the Act is
similar to the one adopted under UK Arbitration Act 1996, § 4(2)).
49
On the use of the word ‘shall‘ as indicative of the mandatory character of a provision see Shin-Etsu Chemical
Co. Ltd. v. Aksh Optifibre Ltd. and Anr., (2005) 7 S.C.C. 234 (India), ¶¶ 27-28; Chloro Controls India Private
Limited v. Severn Trent Water Purification Inc. and Ors., (2013) 1 S.C.C. 641 (India), ¶69; Swiss Timing
Limited v. Commonwealth Games 2010 Organising Committee, (2014) 6 S.C.C. 677 (India), ¶¶ 18-19; On the
use of the word ‗may‘ as opposed to ‗shall‘ see MSA Nederland B.V. v. Larsen & Turbo Ltd., (2005) 13 S.C.C.
these consequences, but gave precedence to the need to foster time-bound and speedy dispute
resolution in India.

5.4 and the Future: Speedier Resolution of Disputes or Due Process and
Other Procedural Concerns (One Step Forward, Two Steps Back)?

In its 176th Report, the Law Commission of India took the position that an omission to
provide a time limit for rendering the final award in the Principal Act had resulted in delays
in arbitral awards, in some cases ranging from five to fourteen years.50 It recommended that a
time limit of two years should be provided for this purpose (one year from the arbitrators
entering on the reference, extendable by another year with the mutual consent of the parties)
and the Courts should be given the power to grant extensions thereafter. 51 Alive to the
possibility that “a termination may indeed result in [sic] waste of time and money for the
parties after lot [sic] of evidence is lead”, it was suggested that an arbitration could instead
be suspended after the expiry of the time limit until such time as an extension application was
filed with the appropriate Court – at which point the proceedings would revive.52

In its 246th report, which was submitted after it was asked to take another look at the
provisions of the Principal Act based on comments from several interest groups, the Law
Commission made no mention of Section 29A at all. 53 In between the two reports, the Justice
Saraf Committee, set up by the Indian government in 2004 to study the implications of the
former report (i.e. the 176th report),54 gave the following recommendation: ―

“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

719 (India), ¶¶ 3-4; Malaysian Airlines, (2001) 1 S.C.C. 509 (India), ¶¶ 27-28; Union of India v. Tolani Bulk
Carriers Limited, (2001) S.C.C. Online 1027 (India), ¶ 12
50
LAW COMMISSION OF INDIA, REPORT NO. 176 –THE ARBITRATION AND CONCILIATION
(AMENDMENT) BILL, 2001, ¶¶ 2.20.2- 2.21.6 (2001), available at http://lawcommissionofindia.nic.in/arb.pdf.
51
Id. ¶ 2.21.2.
52
Id. ¶ 2.21.5.
53
LAW COMMISSION OF INDIA, REPORT NO. 246 –AMENDMENTS TO THE ARBITRATION AND
CONCILIATION ACT 1996 (2014); but see DEPARTMENT RELATED PARLIAMENTARY STANDING
COMMITTEE ON PERSONNEL, REPORT NO. 9 – PUBLIC GRIEVANCES, LAW AND JUSTICE, THE
ARBITRATION AND CONCILIATION (AMENDMENT) BILL, 2003, Observation 7 (2005) “[t]he
Committee feels that this provision will yield results only if consequences of non-compliance of such a time
limit are provided for”.
54
Ministry of Law and Justice, Proposed Amendments to the Arbitration and Conciliation Act, 1996, A
Consultation Paper 2-3, ¶ 2 (2010).
 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.”55

In addition to the drawbacks already highlighted in the above-quoted passages, i.e. the
wastage of the time and money of the parties if the proceedings are prematurely terminated
and the unnecessary intervention by the Courts, the Time Limit may compel an arbitral
tribunal to issue an award without giving the defendant adequate opportunity to present its
case,56 making the award vulnerable to an action for nullity or to a successful defense in
enforcement proceedings. Thus, the successful party may find that, instead of having assisted
in a speedy resolution of the dispute, the Time Limit contributed towards an overall delay and
ineffectiveness in the arbitral process. Matters will be further complicated in cases where the
applicable arbitral rules already provide for time limits in respect of the final award. This is
the case, for instance, with the ICC Rules,57 the SCC Rules58 and the newly minted MCIA
Rules.59 On the one hand, after the expiry of the Time Limit under the Act, a party will have
to approach the relevant Court, as the sole competent authority, to seek a further extension of
time. On the other, when the time limit for the final award under the applicable arbitral rules
is set to expire, an extension will be required under those rules pursuant to the mechanism
provided thereunder.

In effect, a situation may arise where the Time Limit under the Act will expire but the time
limit under the applicable arbitral rules will have been extended and may still be subsisting.60
What is the status of the final award in these circumstances? The parties‘ agreement to apply

55
Id. Annexure IV, 127, citing Justice Saraf Committee Report, Implications of the Recommendations of the
Law Commission in its 176th Report regarding Amendment of the Arbitration and Conciliation Act, 1996 and
the Amendments proposed by the Arbitration and Conciliation (Amendment) Bill, 2003 (As introduced in the
Rajya Sabha on 22 December 2003) and Suggestions and Recommendations.
56
NIGEL BLACKABY ET AL., REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION, ¶
9.164 (6th ed., 2015); Stephan Wilske, Legal Challenges to Delayed Arbitral Awards, 6(2) Contemporary Asia
Arb. J. 153, 159 (2013).
57
ICC Rules 2012, art. 30(1).
58
SCC Rules 2010, art. 37.
59
MCIA Rules 2016, arts. 30.2 and 30.3
60
Bilgehan Yeşilova, Courts‘ Support and Supervision Prior to the Rendering of the Award, in ARBITRATION
IN TURKEY 166 (Ismael Esin & Ali Yesilirmak eds., 2015).
arbitral rules arguably overrides only the non-mandatory provisions of the arbitration law of
the place of arbitration, while the mandatory provisions continue to regulate the arbitration. 61
As such, a transgression of the mandatory provisions, even though compliant with the arbitral
rules, may result in the award being set aside at the place of arbitration which, for the present
purpose, is India.

At the same time, an award rendered within the time limit provided by the arbitral rules may
still be enforceable in other countries, where courts may give priority to the arbitral procedure
agreed between the parties (including the institutional rules) over the law of the arbitral seat
(including its mandatory law) while applying the parameters of Article V(1)(d) of the New
York Convention.62 Article V(1)(d) expressly affirms the supremacy of the partie’s
agreement concerning the composition of the arbitral tribunal and arbitral procedure, and
provides that the law of the place of arbitration should apply only “failing such
agreement.”63 For instance, a German Court enforced an award rendered in Turkey where the
parties had agreed to the rules of the Arbitral Commission of the Istanbul Chamber of
Commerce and Industry, and rejected a party‘s argument that the procedure was not in
accordance with the Turkish Code of Civil Procedure.64

Based on the above-mentioned principle of supremacy of the partie’s agreement, care must be
taken that the time limit under the applicable arbitral rules does not expire regardless of the
status of the Time Limit or a subsequent extension under the Act. This could lead to the
unwanted result that the arbitrators are viewed as not having the power to render an award,65

61
MICHAEL MCILWRATH & JOHN SAVAGE, INTERNATIONAL ARBITRATION AND MEDIATION:
A PRACTICAL GUIDE 24 (2010); BLACKABY ET AL., supra note 33, ch. 1 ¶ 1.78 (6th ed., 2015); BORN,
INTERNATIONAL ARBITRATION: CASES AND MATERIALS 633-34 (2d ed. 2015); For Indian
jurisprudence on this issue see National Thermal Power Corporation v. Singer Company & Ors., (1992) 3
S.C.C. 551 (India), ¶¶ 26-28; Transair, (2013) S.C.C. OnLine Del 4184 (India), ¶¶ 40-46.
62
Albert Jan van den Berg, Why Are Some Awards Not Enforceable?, in NEW HORIZONS IN
INTERNATIONAL COMMERCIAL ARBITRATION AND BEYOND 301-302 (Albert Jan van den Berg ed.,
ICCA Congress Series 12, 2005). On mandatory provisions of the place of arbitration; See also, UNCITRAL
SECRETARIAT GUIDE ON THE CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF
FOREIGN ARBITRAL AWARDS, ch. Introduction ¶ 20 (Emmanuel Gaillard & George Bermann eds., 1958),
available at http://newyorkconvention1958.org/index.php?lvl=cmspage&pageid=10&menu=624&opac_view=-
1 [hereinafter ―UNCITRAL GUIDE‖].
63
Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 7 1959, (N.Y.C.) 330
U.N.T.S. 38; Berg, supra note 94, 304-306
64
UNCITRAL GUIDE, supra note 64, ch. Introduction ¶ 9.
65
Stephen R Bond et al., ICC Rules of Arbitration, Awards, Article 30 [Time Limit for the Final Award], in
CONCISE INTERNATIONAL ARBITRATION 417 (Loukas A. Mistelis ed., 2d ed., 2015); HERMAN
VERBIST ET AL., ARBITRAL PROCEEDINGS UNDER THE ICC RULES OF ARBITRATION OF 2012
173 (2d ed.); BORN, supra note 92, ch. 15 ¶¶ 32- 33 (―[T]he consequences of violation of the parties‘ agreed
time limit vary. In some jurisdictions, such violations may be excused (for example, on the theory that ‗time
thereby affecting the potential enforceability of the award in other countries. 66 Finally, the
lapse of either time limit (under the Act or the applicable arbitral rules) could potentially lead
to objections by one of the parties to the tribunal‘s ability to proceed with the arbitration.
Such objections, if entertained by arbitral tribunals or Courts, could place the entire
arbitration in a state of flux. The time and costs incurred by the parties will also be
exacerbated by these disruptions.

5.5 Best Solution: Section 29A.

The best solution would be that both the time limits, i.e. under the applicable arbitral rules
and under the Act, are extended before their expiry, with the extensions under the arbitral
rules mirroring the extensions granted by Indian Courts. In fact, Section 29A(9) of the Act
encourages the Courts to dispose of applications for extensions of time ―as expeditiously as
possible‖ and ―within a period of sixty days from the date of service of notice on the
opposite party‖. Given the overburdened state of the Indian judiciary 67 however, this solution
may be overly simplistic and optimistic.

The only alternative seems to be that any delay in the disposal of extension-applications by
the Courts should not be allowed to disrupt the proceedings. Particularly in cases of
inordinate delay, the arbitration should be allowed to proceed under the applicable arbitral
rules even after the expiry of the Time Limit, with the expectation that when the matter
comes up before the Courts they will, save in exceptional cases, grant the appropriate
extension. If a final award is rendered before the appropriate extension is granted, the award
may be treated as non-est, as discussed above, and brought back to life as and when the
extension is granted by the Court. It would be counterproductive to the efficiency and
integrity of the arbitral process if awards were set aside solely on the ground of being
rendered beyond the Time Limit. To the extent possible, and depending on who is responsible
for the delay, the options of reducing the fees of the arbitrators or imposing actual or
exemplary costs upon the erring parties (provided under Sections 29(4) and (5)) should be
used in preference to refusing an extension or setting aside an arbitral award.

was not of the essence‘), while in other jurisdictions the violation of a time limit will result in the invalidity and
potential annulment of the award.”
66
UNCITRAL GUIDE, supra note 63, ch. Introduction ¶ 13.
67
LAW COMMISSION OF INDIA, REPORT NO. 245 – ARREARS AND BACKLOG: CREATING
ADDITIONAL JUDICIAL (WO)MANPOWER, (2014), available at
http://lawcommissionofindia.nic.in/reports/Report245.pdf.
Where the Court is minded to deny an extension of time under Section 29A in the
circumstances of a case, this decision should be made as soon as possible. The arbitration
may be brought to a halt only when the extension has been categorically refused and until
substitute arbitrators are appointed, as discussed at Part-II (iii) above. In all other
circumstances, the progress of the arbitration under the applicable arbitral rules should not be
seen as a transgression of the provisions of the Act.

6 ENFORCEABILITY OF ORDERS UNDER SECTION 17 OF

THE ARBITRATION AND CONCILIATION ACT, 1996

The text of Section 27(5) reads as below:

“Persons failing to attend in accordance with such process, or making any

other default, or refusing to give their evidence, or guilty of any contempt to
the Arbitral Tribunal during the conduct of arbitral proceedings, shall be
subject to the like disadvantages, penalties and punishments by order of the
court on the representation of the Arbitral Tribunal as they would incur for
the like offences is suits tried before the court.”

In order to examine the true import of Section 27(5), it is important to analyse the whole of
Section 27, that is, the context in which Section 27(5) is placed. As stated earlier, the heading
of Section 27 reads: “Court assistance in taking evidence.” Section 27(1) provides that the
Tribunal or a party, after obtaining approval from the Tribunal, may apply to the Court for
assistance in taking evidence. Section 27(2) of the 1996 Act specifies the contents of such an
application. These two provisions are based on Article 27(1) of the U NCITRAL Model Law on
International Commercial Arbitration, 1985 (as amended) (the Model Law). Section 27(3) of
the 1996 Act deals with how the court is to decide an application made under Section 27(1)
and is based on Article 27(2) of the Model Law. Section 27(4) states that in passing an order
as per Section 27(3), a court has the power to issue the same processes to witnesses as it may
issue in suits tried before it. Section 27(5) deals with the consequences of failure by persons
to attend, or of other actions specified in the said provision. Section 27(6) defines the term
“processes”. Sections 27(4), 27(5) and 27(6) of the 1996 Act are almost identical to Sections
43(1), 43(2) and 43(3) of the Arbitration Act, 1940 (the 1940 Act) respectively.

6.1 Sri Krishan v. Anand

In Sri Krishan68, the question before the Single Judge of the Delhi High Court was whether a
successful applicant could, in a petition under Section 17 for interim measures before the
Arbitral Tribunal, once again file an application for the same relief under Section 9 of the
same Act. The applicant justified the said application for the reason that an order under
Section 17 was not enforceable. The Court disagreed with the applicant's contention and held
that a person failing to comply with the Tribunal's order would fall foul of Section 27(5)
since he would be “making any other default” or would be “guilty of any contempt to the
Arbitral Tribunal during the conduct of the proceedings”.69 According to the court, if a
representation is received under Section 27(5), the “Court” is defined under Section 2(1)(e) of
the 1996 Act.] could proceed either under the Contempt of Courts Act, 1971 or under Rule 2-
A, Order 39 of the Code of Civil Procedure, 1908. Justifying the applicability of Section
27(5), the Single Judge was of the view that restricting the scope of the expressions “any
other default” and “contempt” under Section 27(5) only to appearance of witnesses before the
Tribunal would render these expressions “otiose”.70

The court cited two other reasons as to why the court had the power under Section 27(5) to
proceed against a party disobeying the Tribunal's orders under Section 17: one, the order by a
Tribunal under Section 17 is appealable under Section 37 and is therefore a judicial order.
Two, the Model Law was amended in 2006 to include the power of a court to enforce interim
orders of the Tribunal but such a power was already available under the 1996 Act in the form
of Section 27(5).71

There are several decisions of the High Courts which have held in consonance with Sri
Krishan decision.72 All these decisions rely on Section 27(5) in support of their conclusion.
On the other hand, the Supreme Court and High Courts have held that orders under Section
17 were non-enforceable.73 The learned authors have cited, by way of example, Army Welfare

68
Sri Krishan v. Anand, 2009 SCC OnLine Del 2472 : (2009) 112 DRJ 657
69
Sri Krishan v. Anand, Supra at 69, para 11.
70
Sri Krishan v. Anand, Supra at 69, para 14.
71
Sri Krishan v. Anand, Supra at 69, para 15.
72
See, for instance, Deva Swimming Institute Ltd. v. Anita Yadav, COCP No. 1037 of 2015, decided on 4-5-
2015 (P&H); Anuptech Equipments (P) Ltd. v. Ganpati Coop. Housing Society Ltd., 1999 SCC OnLine Bom 54
: AIR 1999 Bom 219; Maharashtra SEB v. Datar Switchgear Ltd., 2002 SCC OnLine Bom 983 : (2003) 2 Bom
CR 81; Saurashtra Chemicals Ltd. v. K. Ramamoorthy, Special Civil Application No. 7528 of 2004, decided on
13-5-2005 (Guj).
73
Sundaram Finance Ltd. v. NEPC India Ltd., (1999) 2 SCC 479; See, for instance, National Highways
Authority of India v. China Coal Construction Group Corpn., 2006 SCC OnLine Del 115 : AIR 2006 Del 134 :
(2006) 87 DRJ 225.
Housing Organisation v. Sumangal Services (P) Ltd.74 The learned authors argue that these
decisions which hold Section 17 as unenforceable seriously undermine the power of the
tribunal to order interim measures under the said provision. 75 They also point out that the
1996 Act went much beyond the Model Law by providing for enforceability of orders under
Section 17 through Section 27(5) even prior to the amendments to the Model Law in 2006.
On the basis of these arguments, the learned authors conclude by stating, inter alia, that
orders under Section 17 are enforceable under Section 27(5) of the 1996 Act.

6.2 II. Critique of Sri Krishan

History of Section 27(5)

It is important to look at how a statutory provision had evolved over a period of time. 76 The
advantage of this investigation into the past is that it is possible to throw light on the purpose
and the milieu in which such a provision was enacted. 77 A popular commentary on the
principles of statutory interpretation states that where the language is borrowed from an
earlier legislation, the context embraces “the entire historical background of the statutory
provision.”78 This portion attempts to look at the history of Section 27(5).

It is known that Section 27(5) of the 1996 Act is based on Section 43(2) of the Arbitration
Act, 1940 and that Section 43(2) of the 1940 Act was based on the erstwhile Para 7, Schedule
II of the Code of Civil Procedure, 1908. The antiquity of Section 27(5) goes much beyond the
1908 Code. Para 7, Schedule II of the 1908 Code was drawn from the Code of Civil
Procedure, 1882 (the 1882 Code) which in turn was based on Section 513(2) of the Code of
Civil Procedure, 1877 (the 1877 Code).79 Section 513(2) of the 1877 Code drew inspiration
from Section 317 of the Code of Civil Procedure, 1859 (the 1859 Code). The 1859 Code was
drafted by the Indian Law Commissioners and was applicable to those civil courts which
were not established by Royal Charter. The pedigree of these provisions goes all the way
back to 1781 in the form of Regulation XVI of the Regulations for the Administration of
74
Army Welfare Housing Organisation v. Sumangal Services (P) Ltd. [(2004) 9 SCC 619.]
75
“Enforceability of Section 17 of the Arbitration and Conciliation Act, 1996”, (2015) 4 SCC J-12.
76
G.P. Singh, Principles of Statutory Interpretation, 13th Edn. (2012) 39-40 (G.P. Singh)
77
See, Jim Phillips, “Why Legal History Matters”, 41 Univ of Wellington L Rev 293-316, 295 (2010)
<http://www.law.utoronto.ca/documents/Phillips/Phillips_-_Why_Legal_History_Matters.pdf> last accessed 21-
9-2018 & Jonathan Rose, “Studying the Past: The Nature and Development of Legal History as a Academic
Discipline”, 31 Jour of Legal History 101 (2010) (for a discussion on the uses of legal history).
78
G.P. Singh, 40. Also see, R. v. Oxford Shire County Council, (1999) 3 All ER 285, 390 (HL), cited in G.P.
Singh, 40.
79
S.D. Singh, Law of Arbitration (8th Edn., 1980) 4-5.]
Justice in the Courts of the Mofussil Dewannee Adaulut and in the Suddur Dewannee
Adaulut, 1781 (the 1781 Regulation).80

Regulation XVI reads:

“XVI … [T]he Court shall grant the like process as well to the parties and
witnesses to appear before such arbitrator and shall administer such oath to
the parties and witnesses as the Court is authorised to do in causes tried
before the Judge thereof and the several persons not attending in consequence
of such process or making any default or refusing to give their testimony or
sign their depositions or being guilty of any contempt to the munsifs in the
executing of his office shall be subject to like disadvantages penalties and
punishments by order made by the arbitrator as they would incur for the same
causes in suits tried before the Judge of the Court so that the arbitrator do
report such order together with the reason for making the same to the Judge of
the Court and do obtain the consent of the Judge thereto which shall be
signified by such Judge signing such order with his name; [ Ibid. As per the
said Regulation XVI, a Munsif was to be appointed as the arbitrator. Also see,
Section VI of the Regulation for Referring Suits to Arbitration, 1802 which
also contains a provision akin to Regulation XVI.”

Unlike Section 27(5), these provisions were not placed under a heading restricting its scope
to mere summons, processes or witnesses. Nevertheless, none of these enactments
empowered a tribunal to pass interim orders. In Surendra Kumar Roy Chowdhury v. Sushil
Kumar Roy Chowdhury81, the Calcutta High Court had to consider the power of the arbitrator
to pass interim orders under the Code of Civil Procedure, 1908. Relying on the English case
of Willesford v. Watson,82 the Court held that the arbitrator did not have any power to pass
interim orders or an order for the appointment of a receiver. Even under the 1940 Act, it was

80
“Regulations for the Administration of Justice in the Courts of the Mofussil Dewannee Adaulut and in the
Suddur Dewannee Adaulut” (1781) <https://goo.gl/kArxF7> last accessed 19-9-2018.
81
Surendra Kumar Roy Chowdhury v. Sushil Kumar Roy Chowdhury [1927 SCC OnLine Cal 208 : AIR 1928
Cal 256.]
82
Willesford v. Watson [(1873) LR 8 Ch App 473 (CA in Ch).
the Court which could pass interim orders under Section 41(b) of the 1940 Act read with
Schedule II thereto and the arbitrator was not empowered to do so.83

Therefore, it is not possible that the predecessors of Section 27(5) could have applied to
disobedience to an interim order by the Tribunal. It was only for the first time under the 1996
Act that an Arbitral Tribunal was empowered to order interim measures. Hence, history is
against affording an interpretation that Sri Krishan [2009 SCC OnLine Del 2472 : (2009) 112
DRJ 657.] seeks to give to Section 27(5).

6.3 Section 27(5) applies only to witnesses

The scope of Section 43(2) and its predecessors was restricted to witnesses alone. 84, the Law
Commission of India has stated the following in respect of Section 43:

“10.6. Section 43.—Section 43 confers powers on the court to issue processes

for appearance before the arbitrator or umpire. The power is co-extensive
with the corresponding power of the court in suits tried before it. There
are consequential provisions in regard to persons who fail to attend, and
there is a definition of the expression “processes”. No amendment is
required in the section.”

The aforesaid observations clearly imply that Section 43 dealt with the “consequential
provisions” pertaining to failing to honour the summons for witnesses or for production of
documents and other default by the recipient of such summons and did not encompass
contempt to the Arbitral Tribunal for breach of its interim orders.

Although case law under the 1940 Act on this provision seems sporadic, a few cases come
close to discussing the issue in question and are worth noting. In Nihaluddin v. Tej Pratap
Singh85, the Consolidation Officer referred a dispute as to title to the Civil Judge, who in turn,
referred the matter to the arbitrator as per Section 37 of the U.P. Consolidation of Holdings

83
Indu Malhotra, O.P. Malhotra's The Law and Practice of Arbitration and Conciliation (3rd Edn., 2014) 795-
96; Anirudh Wadhwa & Anirudh Krishan (Eds.), Justice Bachawat's Law of Arbitration and Conciliation, Vol. I
(5th Edn., 2010) 1130-31.
84
Interestingly, the 1859 Code formed the basis on which the Jamaican Code of Civil Procedure, 1879 (the
Jamaican Code) was drafted. Section 343 of the Jamaican Code contained a provision virtually identical to
Section 317 of the 1859 Code. Significantly, the Marginal Note to Section 343 read: “Non-attendance or
contempt by witness”. See, Govt. of Jamaica, “The Laws of Jamaica Passed in the Year 1879” (1879)
<https://goo.gl/6TmgfE> last accessed 18-9-2018.] In its 76th Report [ Law Commission of India, 76th Report
on the Arbitration Act, 1940 (Nov. 1978) <http://lawcommissionofindia.nic.in/51-100/Report76.pdf> last
accessed 20-9-2018.
Act, 1953. One of the parties to the dispute allegedly disobeyed the injunction order passed
by the statutory arbitrator. The other party filed a criminal miscellaneous petition under
Section 3 of the Contempt of Courts Act, 1952 alleging contempt. The Court had to decide
whether the arbitrator was a “court”. Having held that the arbitrator was not a court, the
Allahabad High Court went on to hold that the opposite party could not be guilty of contempt
of court in having overlooked the arbitrator's order. On the scope of the provision, the Court
held:

“25. … Under Section 43 of the Arbitration Act, it is the Court (and not the
arbitrator) who has authority to issue process to the parties and their
witnesses whom they or the arbitrator want or wants to examine. It is again the
Court which would enforce the production of documents before the arbitrator.
Thus the arbitrator again lacks the power to enforce the production of parties,
their witnesses and documents, which is a distinguishing feature of courts.”86

The aforementioned arbitrator could pass interim orders since the relevant statute empowered
him to do so. Even in such a case, the Court held that a party disobeying such arbitrator's
interim orders was not liable for contempt. It is also noteworthy that if the Court had the
power to initiate contempt proceedings against a party disobeying the Tribunal's orders, either
the party would have invoked Section 43(2) of the 1940 Act or the Court would have referred
to it, especially when the Court discussed Section 43 of the 1940 Act.

6.4 Erroneous interpretation of Section 27(5)

Section 27(4) employs the term “witnesses” while Section 27(5) speaks of “persons”.
Consequently, it is possible to contend that Section 27(5) is not merely restricted to witnesses
but to any person, including a person who disobeys an interim order of the Arbitral Tribunal.
However, the placement of Section 27(5) in Section 27 (which is titled “Court assistance in
taking evidence”) itself militates against this argument.87 Even otherwise, the said contention
might not hold much water. Section 27(2)(c) provides that an application under Section 27(1)
shall specify the name and address of a “person” to be heard as witness or expert witness.
Section 27(4) employs the term “witnesses” and not “persons”. Reading Section 27(2)(c)

85
Nihaluddin v. Tej Pratap Singh, 1966 SCC OnLine All 15 : AIR 1968 All 157.
86
Nihaluddin, AIR 1968 All 157, para 25
87
Per contra, see Sri Krishan, (2009) 112 DRJ 657, para 14.
with Section 27(5), it is clear that “person” employed in both sections refer either to a third
party witness or to a party witness.88 Arguing

i. that Sri Krishan, is erroneous as Section 27 does not deal with interim measures by
the Tribunal
ii. the scope of Section 27(5) does not extend beyond failure by a person to attend in
accordance with the process issued by the Court under Sections 27(4) and 27(2)
iii. the expression “any other default” should be read ejusdem generis in the context of
Court assistance in taking evidence by the Tribunal].] Consequently, the difference in
references in Sections 27(4)(witness) and 27(5)(person) cannot be determinative of
the applicability of Section 27(5) to disobedience of orders under Section 17.

6.5 Model law did not provide for enforceability of Tribunal's interim orders

There is yet another reason for non-applicability of Section 27(5) for disobedience of orders
under Section 17. Section 17 is based on Article 17 of the Model Law as it stood in 1985.

Article 17 of the Model Law read:

“17. Power of Arbitral Tribunal to order interim measures.— Unless otherwise

agreed by the parties, the Arbitral Tribunal may, at the request of a party, order
any party to take such interim measure of protection as the Arbitral Tribunal
may consider necessary in respect of the subject-matter of the dispute. The
Arbitral Tribunal may require any party to provide appropriate security in
connection with such measure.”

In the Model Law, the Tribunal did not have the power to punish a party for disobedience of
its order for interim measures but could very well take the same into contemplation at the
time of making the award.89

88
Indu Malhotra, O.P. Malhotra's The Law and Practice of Arbitration and Conciliation (3rd Edn., 2014) 795-
96.
89
The Model Law originally provided for enforcement of Tribunal's orders for interim measures. However, this
was dropped for the following reasons. One, it dealt in an incomplete manner with the question of national
procedural law and court competence to enforce such orders. Two, it was not likely to be accepted by many
States. See, United Nations Commission on International Trade Law (UNCITRAL), Report of the Working
Group on International Contract Practices on the Work of its Sixth Session (22-9-1983)A/CN.9/245, 16
<http://daccess-dds-ny.un.org/doc/UNDOC/GEN/V83/619/69/PDF/V8361969.pdf?OpenElement> last accessed
22-9-2018. From the perspective of legal history, it is noteworthy that India was also a party to the said session
of UNCITRAL and the Indian representative was one of the Vice-ChairmenIn this regard, the Travaux
 (1) The provision on interim measures ordered by the Tribunal neither granted the
Tribunal the power to enforce its orders nor contemplated judicial enforcement of
such orders.
(2) It is probable that a party would comply with such an order considering that it is the
Tribunal which will ultimately decide the outcome of the case.
(3) Further, in appropriate cases, the Tribunal could enhance the force of the provision
by directing such a party to provide security for the costs of such measure.90
(4) Ultimately, the Tribunal could always take the failure to comply with the order for
interim measures in its final decision, especially while assessing the damages.91

The Model Law was amended in 2006 to include provisions pertaining to recognition and
enforcement (Articles 17-H and 17-I) of orders of interim measures. Since Section 17 is
based on the unamended Article 17 of the Model Law and since Section 27(5) is based on
Section 43(2) of the 1940 Act, it is not possible that the drafters of the 1996 Act would have
intended that the Tribunal's interim orders should be made enforceable by empowering the
court to punish a party for disobeying the Tribunal's orders. Absence of amendments to the
1996 Act after the Model Law was amended in 2006 shows the legislative intent of not
making the interim orders of the Tribunal enforceable, except by the Tribunal itself (for
reasons why Article 17 was considered to be of practical value despite its unenforceability).

6.6 Disobedience of court orders and contempt of court—choice of remedies

As stated previously, it was held in Sri Krishan that the Tribunal or the party in whose
favour the interim order was passed could approach the court under Section 27(5) of the 1996
Act against the party disobeying the Tribunal's interim orders and the Court would proceed
either under the Contempt of Courts Act, 1971 (the 1971 Act) or under Rule 2-A, Order 39 of
the 1908 Code.

There is a difference between the consequence of disobedience to an interim order of a civil

court under Rule 2-A, Order 39 of the 1908 Code [ Rule 2-A, Order 39, Code of Civil

Préparatoires of the Model Law reveals the following in regard to the enforceability of orders passed by the
Tribunal under Article 17
90
See, Air Force Naval Housing Board v. Daryao Singh, Arb. Appeal No. 10 of 2013, order dated 10-1-2014,
para 14 (Del) wherein the Court affirmed the existence of such a power.
<http://delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=3820&yr=2014> last accessed 23-9-2018.
91
See, Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL Model Law
Jurisdictions (2010) 236 (arguing that such a view deserves utmost caution and criticism for implying that the
Tribunal could act in a prejudiced manner against the party which did not comply with the Tribunal's orders).
Procedure, 1908:2-A. Consequence of disobedience or breach of injunction.—(1) In the case
of disobedience of any injunction granted or other order made under Rule 1 or Rule 2 or
breach of any of the terms on which the injunction was granted or the order made, the court
granting the injunction or making the order, or any court to which the suit or proceeding is
transferred, may order the property of the person guilty of such disobedience or breach to be
attached, and may also order such person to be detained in the civil prison for a term not
exceeding three months, unless in the meantime the court directs his release.(2) No
attachment made under this Rule shall remain in force for more than one year, at the end of
which time, if the disobedience or breach continues, the property attached may be sold and
out of the proceeds, the court may award such compensation as it thinks fit to the injured
party and shall pay the balance, if any, to the party entitled thereto.] and the 1971 Act. The
first obvious difference is that under the latter Act, disobedience should be wilful while under
the former Code, such a requirement is absent. The second such difference is that a
proceeding under Rule 2-A would be taken up before the same court which issued the interim
order,92 while proceedings under the 1971 Act would be dealt with by the High Court. [ The
relevant portion of Section 10 of the 1971 Act reads:10. Power of High Court to punish
contempts of subordinate courts.- Every High Court shall have and exercise the same
jurisdiction, powers and authority, in accordance with the same procedure and practice, in
respect of contempts of courts subordinate to it as it has and exercises in respect of contempts
of itself.

These differences were noted only to point out the distinct nature of the said remedies. The
question as to whether the remedy under the 1971 Act would be more appropriate than under
the 1908 Code has already formed the ratio of several cases in the context of disobedience to
interim orders of civil courts.93 [ See, for instance. Courts have been more or less unequivocal
in stating that the remedy under the 1908 Code would be more appropriate. Such reasons
include:

(1) proceedings under Rule 2-A are a part of the proceedings for the suit and would be
heard by the same court which granted the interim order while proceedings under the
1971 Act are taken up by the High Court which would be unfamiliar with the facts;

92
Bimal Chandra Sen v. Kamla Mathur, 1982 SCC OnLine Del 153 : ILR (1982) 2 Del 407.
93
Bimal Chandra Sen v. Kamla Mathur, 1982 SCC OnLine Del 153 : ILR (1982) 2 Del 407; Indu
Tewari v. Ram Bahadur Chaudhari, 1981 SCC OnLine All 267 : AIR 1981 All 309; Ram Rup Pandey v. B.K.
Bhargava, 1970 SCC OnLine All 265 : AIR 1971 All 231; Rudraiah v. State of Karnataka, 1980 SCC OnLine
Kar 165 : (1981) 1 Kant LJ 33
 (2) existence of effective alternative remedy in terms of Rule 2-A;
(3) allowing the High Court to entertain such applications could open a floodgate of
litigations under the contempt jurisdiction.

Sri Krishan casefailed to take note of these aspects as well.

7 CONCLUSION: A BLEAK WAY FORWARD, AMENDMENTS AFTER

AMENDMENTS

To conclude, there are a few lessons that could be learnt from the above analysis: (1)
Whenever courts misconstrue a statute or render judgements contrary to, or which undermine,
legislative intent, the government and the legislature should be more dynamic and correct
such errors. Failure to do so will make law uncertain and justice costlier, and at times,
elusive; (2) Authoritative sources from which legislative intent can be gathered should be
made available especially in statutes that address a new area or which is drafted in a manner
different from the previous law on the subject; (3) legislative ambiguities impose immense
costs on the parties and great burden on the judicial system. Therefore, the government and
the legislature should act proactively to address these ambiguities.

In context of Section 29A, the best solution would be that both the time limits, i.e. under the
applicable arbitral rules and under the Act, are extended before their expiry, with the
extensions under the arbitral rules mirroring the extensions granted by Indian Courts. In fact,
Section 29A(9) of the Act encourages the Courts to dispose of applications for extensions of
time ―as expeditiously as possible‖ and ―within a period of sixty days from the date of
service of notice on the opposite party‖. Given the overburdened state of the Indian judiciary
however, this solution may be overly simplistic and optimistic.