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Initiation notice requirement for commencing arbitration proceeding.
Initiation notice requirement for commencing an arbitration proceeding
Usually, the primary formal step in arbitration is that of notice or request for arbitration. The general principle is that arbitration is deemed to be commenced only when one party notices the opposite party intimating that he proposes to invoke the arbitration agreement and calls upon the opposing party to take some steps towards setting the arbitration process in motion. Unless and until notice is served on the other party calling upon them to appoint an arbitrator in terms of the arbitration agreement, it cannot be expected from the other party to understand that the party invoking the arbitration agreement is desirous of getting the disputes resolved through arbitration. Another prime objective of the notice of invocation of arbitration is that it is a record, for limitation purposes, to point to the date when the notice was sent.
A notice of arbitration or the commencement of arbitration might not bear an equivalent meaning, as different dates could also be specified for the beginning of the arbitration for various purposes. What matters is that the context during which the expressions are used. The date on which the request for the dispute to be referred to arbitration is received by the respondent from the claimant is the date on which arbitration commences regarding that specific dispute. And the same was held in Milk Food Ltd V/s GMC frozen dessert (P) Ltd[1].
Section 21 of the A&C Act-
Section 21 of the A&C Act,1996[2] requires a party to send a request to the counter-party for the dispute to be referred to arbitration. It provides that unless otherwise agreed by the parties, the arbitral proceedings regarding a specific dispute commence on the date on which an invitation for that dispute to be referred to arbitration is received by the respondent.
Section 21 of the A&C Act commences with the words, “unless otherwise agreed by the parties”. this means that the parties to an agreement are governed by the mechanism for commencement of arbitration contained within the agreement's arbitration clause. Because of this very reason, the notice under Section 21 serves the crucial purpose of facilitating a consensus on the appointment of an arbitrator. The parties to an agreement having an article can agree to waive the wants of Section 21 of the A&C Act.
As per Section 11(6) of the Act, without the notice under Section 21 of the Act, a party seeking reference of disputes to arbitration will be unable to demonstrate that there was a failure by one party to stick to the procedure and accede to the request for the appointment of an arbitrator.
[1] AIR 2004 SC 3145
[2] https://legislative.gov.in/sites/default/files/A1996-26.pdf
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, or Religion, Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code VIA Mediation and Arbitration Centre Foundation shall not be responsible for any errors caused due to human error or otherwise.
- The primary formal step in arbitration is that the service of a notice or request for arbitration as per section 21 of the Arbitration and Conciliation Act.
- Arbitration is deemed to be commenced only when one party serves a notice on the opposite party intimating that he proposes to invoke the arbitration agreement.
- The prime objective of the notice of invocation of arbitration is that it is a record, for limitation purposes, to point to the date when the notice was sent.
