An analysis of Section 29 A (Inserted by 2015 amendment)
Section 29 A
Section 29A is a debatable provision that has been incorporated by the Amendment Act of 2015. It brought forward a new dimension of fixing the time limit in other words a time deadline before which an arbitral tribunal must render an award in all the arbitration proceedings taking place in India. Originally, there was no such time specific provision in the 1996 Act, while this new provision now mandates a time limit in a strict sense before which the arbitral award must be made in all domestic matters.
This new provision, section 29A, states that a tribunal must make an arbitral award within a time period of 12 months from the date on which the arbitrator receives the letter of appointment. Though, this aforementioned period of 12 months may be extended for a period of 6 months, by the consent of both the parties. If the arbitrator fails to reach a conclusion and within the initial time period or the extended time period, the mandate of the arbitrator will terminate unless the court further extends the time. If the time is extended the arbitrator will receive fess for the extra time period but that would be reduced by 5% for each month of delay.
These provisions for a time bound process of arbitration is used in many countries and has shown positive outputs.
Effect of the Amendment
As per the provisions of Section 29A, a time bound procedure to render an award must be followed by the arbitrator.
This amendment has also provided an increased scope for intervention of judiciary by giving the courts the opportunity to apply its discretion on providing an extension in the time period on certain special terms and having a say in the reduction of the fees of the arbitrator .
- This provision, inserted by the 2015 amendment is criticised on the argument that by fixing a time limit within which the dispute shall be resolved the parties might be forced to go to a court if the matter is not resolved within a period of 18 months which might defeat the basic purpose of arbitration as an alternative to dispute resolution.
- If the matter is not resolved within the stipulated time under section 29A, the matter reaches the court where arguments and evidence recorded during the arbitration proceedings may be discussed which would be a violation to their own agreements of confidentiality.
- The Act incorporates a scheme to reduce the judicial intervention, but by adding a provision by which the court is to be approached if there is a requirement of extension of time period beyond 18 months. Further the court has the discretion to decide whether to provide an extension of time period or not and the time period is only extended when the court is satisfied that there exists ‘sufficient cause’.
- Effect of the Amendment