A Critical Analysis Of S.29A And The Controversy Related To It Amidst The Covid-19 Pandemic
Vejayalakshmi Puli(3rd Year) & Nasima Abidi(2nd Year), Gujarat National Law University, Gandhinagar
Through this article, the author wishes to outline the scope of Section 29A inserted via the 2015 Amendment Act and amendments brought forth under the Arbitration Amendment Act, 2019 with an objective to make India a preferred seat for International Arbitration. The amendment was to ensure prompt and cost - effective arbitration with minimum interference from the judiciary. However, various cases have demonstrated the objective sought to have been unaccomplished. Further, this article seeks to examine how S.29A is going to have an impact on the ongoing proceedings in light of the recent lockdown due to the pandemic. The author concludes by suggesting certain recommendations which may help reduce the burden of courts.
Section 29A inserted through the Arbitration and Conciliation (Amendment) Act, 2015 seeks to tackle the criticism on arbitration being a lengthy process by imposing a time limit of twelve months within which an arbitral award is to be enforced commencing from the date on which the arbitration tribunal is called upon reference and upon mutual consent extend the enforcement period by another six months, post which if an award is not passed within the stipulated eighteen months, the mandate of the tribunal shall stand terminated unless the court having competent jurisdiction grants further extension upon showcasing sufficient cause. In the author’s opinion, the insertion of this section though prospective in nature only adds to further delay as the court possesses jurisdiction to interfere in matters where the award has not been enforced within the stipulated period being eighteen months. The aspect of sufficient cause as under clause five of the 2015 amendment act further invokes section 5 of the limitation act, 1963, where courts would take to a judicial decision for guidance thereby paving the way for appeals which will only lead to continued delay.
Moreover, Party autonomy being one of the most fundamental aspects of Arbitration is violated through this section as it only grants courts the power to extend the time limit beyond 18 months upon an application by either party which must fall under the scope of sufficient cause. Therefore, any arbitral award passed after the limitation period shall stand terminated . Thus the mandatory time limit contradicts the idea of parties having the autonomy to set down procedures for adjudicating disputes via arbitration thereby failing to recognize the diverse nature of each case, its magnitude based on complexities by setting a common time line.
The main objective of Arbitration being minimal judicial intervention stands unachieved through the imposition of S. 29A as sub- section (9) of the same specifies that applications filed under sub- section (5) shall be disposed of as expeditiously as possible ,within 60 days from the date of service to the opposite party. This seems counterproductive and imaginary considering the backlog of cases that the Indian Courts are already facing. Thus forcing the parties to approach the courts after 18 months not only administers judicial intervention but also increases the burden on the courts.
One of the key features that makes arbitration distinct from litigation is the aspect of confidentiality which stands negated when parties are required to approach courts under S. 29(A), disclose the nature of the dispute, divulge the name of the parties, produce evidence and other related information. The proviso also has a negative impact on the arbitral tribunal in case delays occur, leading to a reduction of fee up to 5% for each month if the delay is attributable to him/her discouraging them from taking up cases that may involve complexity and extensive evidence. Further, it may fetter a renowned arbitrator to accept appointment in complicated cases where he/she must go through capacious documents and evidences produced before it, within a stipulated time period which restricts the arbitrator’s freedom given the constrained atmosphere without having a clear insight into the intricacies of the respective case.
While extending the time period, the court also possesses jurisdiction to substitute the arbitrators and the award enforced by them therein, shall be stayed and remain "non-est" until the substitute arbitrator takes charge and the proceedings shall commence from where it had been stayed leaving the observations and records of the previous arbitrators unhampered, yet the parties face dissatisfaction as the freshly appointed arbitrator shall merely enforce the award via writing without hearing the contentions of both parties leading to the non- enforcement of the award as they would file an application to set aside the arbitral award further invoking unnecessary delays. The continuation of the proceeding based on the records will impede the arbitrator from getting into the details considering the limited time period given. Further the substituted arbitrator will also need time to get into the complexities of the case and familiarize himself with it.
In light of the above-cited reasons and taking into consideration the clear cut violation of Article 19 of the UNCITRAL Model Law which governs the 1996 Act and Article V(1)(d) of the New York Convention which recognizes party autonomy, the 2019 amendment act based on the recommendations of the BN Sri krishna Committee was enacted with an intention to enlarge the scope of the 2015 amendment act, aiming towards making India a preferred hub for International Arbitration. The said act excludes international commercial arbitration from the scope of 29A and provides for the completion of pleadings (statement of claim and defence excluding the time spent in cases of rejoinder or rejoinder with counterclaim under the time limit for pleadings) within a time limit of six months from the date the arbitrator is called upon the reference. Post the six-month completion, irrespective of the pleadings being concluded, a one-year time limit is imposed to grant the award and if the pleadings conclude prior to six months, then the award shall commence forthwith. Further, if parties approach the court for grant of extension, the mandate of the arbitral tribunal shall continue throughout the pendency of the application.
Arbitration amidst the Covid -19 pandemic
The pandemic covid-19 which has staggered the world has its ramification on the on-going legal proceedings, both litigation and arbitration. During such a phase, the challenge faced by arbitration is the inability to carry out proceedings through physical hearing bearing in mind the time period mandate imposed under S.29A. Currently, the arbitration proceedings are under “stay” due to the spread of Covid-19 virus and shall resume once the lockdown is lifted. However, there are a number of cases which are already running out of time. In such a scenario, upon reopening of the courts, the parties will have to file an application for extension of time period. This may pose as a burden on courts to dispose off the application expeditiously, with a plethora of similar applications coming along with the already increasing backlogs.
Though suggestions have been recommended to carry out arbitration proceedings through online modes particularly for cases which are in its initial phases, parties must be intimated via mail, telephone or video conferencing. Further parties can also file applications, claim and counter claims etc but one obstacle that stands unsolved is the exchange of voluminous documents in complex cases. The main factor is the unavailability of infrastructure especially in countries like India where arbitration through online forums is still at its infant stage. Further there are certain complex cases which require multiple participants to replicate a ‘proceeding in person’. This seems slightly difficult given the technologies that we possess at the moment. Though applications can still be filed online, the burden to dispose it off still remains, all being attributable to S.29A.
On a concluding note, though the amendments laid under Section 29A of the 2019 Act are of a commendable nature which has indeed broadened the scope of the 2015 Act, the same does not clarify the aspect of statement of claim and defence which would enforce the parties to file on jurisdiction without holding a two-stage bifurcation process being initial pleadings and issues pertaining to the preliminary award and substantive pleadings and the issues pertaining to the final award leading to inflexibility. The authors are also of the opinion that the exclusion of time limit should not only extend to international arbitration but to other forms of arbitrations such as institutional which shall help reduce both the burden and the pending backlog of cases in courts as such institutions have their own rules and working and do not require judicial intervention to dispose of their matters in an expeditious manner. In addition to the above, party autonomy being one of the key features of arbitration should be maintained and they must be given the freedom to extend the time span not just for a period of six months but depending upon the nature and complexity of the dispute. Thus, the role of judicial intervention should prevail only upon lack of mutual consensus upholding the objective of the Arbitration & Conciliation Act, 1996 and the Amendment Act of 2015 to minimize judicial intervention.
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