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Is It Legally Feasible To Extend The Mandate Of An Expired Arbitral Tribunal?

The extension of the mandate of an expired arbitral tribunal presents a significant legal challenge in the field of arbitration. This article explores the legal feasibility of extending the mandate, analyzing statutory provisions, case law, and international arbitration rules. It delves into the implications of extending an expired mandate on the arbitral process, including issues of jurisdiction, party autonomy, and the enforceability of arbitral awards.

By examining various jurisdictions and their approaches to this issue, the article provides a comprehensive understanding of the conditions under which an extension might be considered legally valid. It also discusses potential reforms and best practices to address the practical difficulties faced by parties and arbitrators when an arbitral tribunal's mandate expires before the resolution of the dispute.

Arbitration has become a cornerstone of alternative dispute resolution, offering parties a flexible and efficient means of resolving conflicts outside traditional court systems. Central to the efficacy of arbitration is the mandate of the arbitral tribunal, which is typically set within a specific timeframe. However, complications arise when the mandate of an arbitral tribunal expires before the dispute is resolved. The question of whether it is legally feasible to extend this mandate involves navigating a complex interplay of statutory provisions, case law, and international arbitration rules.

These statutory and judicial perspectives underscore the nuanced legal landscape governing the extension of arbitral tribunal mandates. This article aims to provide a comprehensive analysis of the legal feasibility of extending expired mandates, examining the statutory framework, relevant case law, and international practices. It also proposes potential reforms and best practices to address the challenges faced by arbitrators and parties when an arbitral tribunal's mandate expires prematurely. By doing so, it seeks to enhance the understanding and practical application of arbitration law in ensuring effective and timely dispute resolution.

Period Of Limitation And Power Of Extension:
Section 43. Limitations:
  • The Limitation Act, 1963 (XXXVI of 1963), shall apply to arbitrations as it applies to proceedings in court.
  • For the purposes of this section and the Limitation Act, 1963 (XXXVI of 1963), an arbitration shall be deemed to have commenced on the date referred in Section 21.
  • Where an arbitration agreement to submit future disputes to arbitration provides that any claim to which the agreement applies shall be barred unless some step to commence arbitral proceedings is taken within a time fixed by the agreement, and a dispute arises to which the agreement applies, the Court, if it is of opinion that in the circumstances of the case undue hardship would otherwise be caused, and notwithstanding that the time so fixed has expired, may on such terms, if any, as the justice of the case may require, extend the time for such period as it thinks proper.
  • Where the Court orders that an arbitral award be set aside, the period between the commencement of the arbitration and the date of the order of the Court shall be excluded in computing the time prescribed by the Limitation Act, 1963 (XXXVI of 1963), for the commencement of the proceedings (including arbitration) with respect to the dispute so submitted.
The essence of these provisions is that the Limitation Act applies to arbitration proceedings as well as to the accrual of the cause of action. As to the commencement of arbitration, the section says that arbitration shall be deemed to have commenced when one party serves on the other a notice requiring the appointment of an arbitrator, or requiring that the dispute be submitted to the person named or designated in the agreement.

Where the agreement provides the time within which the matter must be referred to arbitration and after which the right shall be barred, the court can extend the time in order to relieve a party of undue hardship.

Where the court orders the setting aside of an award, for computing the period of limitation under the limitation act, the period from commencement of arbitration proceedings to the order of the court has to be excluded.

Extension of time fixed in the agreement for making a reference is at the discretion of the court. The court may exercise its discretion if undue hardship would otherwise be caused. Extension may be granted on such terms as the justice of the case may require and for such period as the court thinks proper.

A charter party contract contained an arbitration clause providing that "any claim must be made in writing and the claimant's arbitrator appointed within nine months of final discharge of the ship". The vessel completed final discharge on November 3, 1975 so that the time for the appointment of the claimant's arbitrator expired on August 3, 1976. Late in August 1977, the charterer appointed an arbitrator. The shipowner raised the point that the claim was timebarred. The charterer then applied to the court for an extension of time for commencing arbitration. He also filed a case in the High Court for summary judgment. Both applications were heard together. At the hearing the shipowner admitted that there was no defence as to the liability or quantum apart from the fact that the arbitration was commenced out of time.

It was held that the timebar could be overcome by an extension under Section 27 of the (English) Act of 1950. The liability having been admitted by the shipowner no hardship was likely to be caused to him. On the other hand, the claimant would suffer hardship if his claim was defeated on a technical ground. The fact that the claimant commenced a High Court action and wished to pursue that action and the arbitration proceedings concurrently were not a bar to the court granting an extension of time. An extension of time being granted and the bar to the claim being removed, the claimant could recover summary judgment in the High Court action[1]. The proceedings will be in accordance with the provisions of the Act as far as applicable.

The Supreme Court refused to extend the time where the party seeking to enforce the arbitration clause had been sleeping over his rights for more than 10 years.[2] The court cited the following passage from Russell on Arbitration:

"Disputes under a contract may also be removed, in effect, from the jurisdiction of the court, by including an arbitration clause in the contract, providing that any arbitration under it must be commenced within a certain time or not at all, and going on to provide that if an arbitration is not so commenced, the claim concerned shall be barred... The contract may limit the time for arbitration without barring the claim depriving a party who is out of time of his right to claim arbitration, but leaving open a right of action in the courts.

An extension of time is not automatic and it is only granted if 'undue hardship' would otherwise be caused. Not all hardship, however, is 'undue hardship'; it may be proper that hardship caused to a party by his own default should be borne by him, and not transferred to the other party by allowing a claim to be reopened him, after it became barred. The mere fact that a claim was barred could not be held to be 'undue hardship."

The court also cited a passage from Bachawat's Law of Arbitration[3] to the effect that a cause of arbitration, therefore, arises when the claimant becomes entitled to raise the question, i.e., when the claimant acquires the right to require arbitration. The limitation would run from the date when the cause of action would have accrued, but for the agreement. Limitation commences from the date on which the cause of arbitration accrues.

Cause of arbitration arises, like cause of action in civil suits, as soon as dispute or difference arises on unequivocal denial of claim of one party by the other party as a result of which the claimant acquires the right to refer the dispute to arbitration. This will be so notwithstanding a provision in the arbitration clause that no cause of action shall accrue until the award is made.

Article 137 of the Limitation Act, 1963 applies and, therefore, a suit can be filed within three years from the date on which the party terminated or rescind the contract.

'In a case before the Supreme Court, under the 1940 Act, the petition was for challenging the validity and existence of the arbitration clause. The court said that the period of limitation would begin when the clause for arbitration was disclosed to the appellant and the same was invoked. The letter which was sent to the Registrar, Tribunal of Arbitration, asking for settlement of the disputes, disclosed the intention to invoke the arbitration clause. The reckoning period would be the date of receipt of the notice. The petition was filed after the expiry of three years from that date. Thus, it was timebarred.

An application to the court for an order of reference under Section 20 of the 1940 Act had to be made within three years from the date of dispute. Where the parties engaged themselves into negotiations for settlement, three years were to be taken from the date of failure of efforts, namely, when the last communication was made in that context.[4]

Exclusion Of Period Spent In A Wrong Court
The Supreme Court held in a case before it that the period lost in a bona fide pursuit of the cause of action or appeal in a wrong court should be excluded in computing the applicable period of limitation. The court was of the view that Section 14 of the Limitation Act was applicable. An application for setting aside an award under Section 34 can be filed within three months plus 30 days by way of condonation of delay and no more. The Supreme Court expressed the view that in computing such a period, the time, if any, lost in pursuing a proceeding in a court should be excluded.[5]

Period Prescribed By Contract
In a construction contract granted by the Electricity Board, a limitation period of 90 days for preferring claims before the arbitrator was prescribed. The starting point was to be the date on which a dispute arose. The claims filed by the con tractor were rejected by the Chief Engineer. The claim for arbitration submitted within 90 days from that date was held to be within the prescribed period. The date of signing of the contract was irrelevant.[6]

Where an award allowed a claim barred by the terms of the contract, it was held to be not immune from interference of the contract.[7]

In a matter under Section 20 of the Arbitration Act, 1940, the agreement provided that a petition could be filed only after making a bona fide attempt to resolve differences by mutual consultation. One party wrote to the other saying that they would take legal action. The other replied to the notice. The date of reply was taken to be the commencement of the cause of action. An application for order of reference filed after three years from that date was held to be barred by time.

A communication by the respondent to the applicant after the cause of action had arisen was found to be not either a mutual consultation or an acknowledgement for extending the period of limitation.[8]

Limitation Period For Filing Section 11 Petition
Although a different scheme has been evolved under the 1996 Act, however the same principles continue to apply with respect to the applicability of the law of limitation to an application under Section 11(6) of the 1996 Act as laid down in the decisions dealing with judicial appointment of an arbitrator under Sections 8 and 20 of the 1940 Act.

Further, Sections 43(1) and (3) of the 1996 Act are in perimetria with Sections 37(1) and (4) of the 1940 Act and by virtue of Article 137 of the Limitation Act, 1963, the limitation period for reference of a dispute to arbitration or for seeking appointment of an arbitrator before a court under the 1940 Act as well as the 1996 Act is three years from the date on which the cause of action or the claim which is sought to be arbitrated first arises.[9]

Legal Framework In Place:Section 29A, Time Limit for Arbitral Award.
The Arbitration and Conciliation (Amendment) Act, 2015 has inserted Section 29A with a purpose to fix the time limit for making of arbitral award.

Section 29A (1) provides that the award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings under section 23(4). Proviso attached to section 29A (1) provides that the award in the matter of international commercial arbitration may be made as expeditiously as possible and endeavor may be made to dispose of the matter within a period of twelve months from the date of completion of pleadings under section 23 (4).

Section 29A (2) provides that the arbitral tribunal shall be entitled to receive such amount of additional fees as the parties may agree if the award is made within a period of six months from the date the arbitral tribunal enters upon the reference.

Section 29A (3) provides that the parties may, by consent, extend the period specified in Section 29A (1) for making award for a further period not exceeding six months.

Section 29A (4) provides that the mandate of the arbitrator(s) shall terminate if the award is not made within the period specified in Section 29A (1) or the extended period specified under Section 29A (3) unless the Court has, either prior to or after the expiry of the period so specified, extended the period:

Proviso to Section 29A (4) provides that while extending the period under this subsection, if the Court finds that the proceedings have been delayed for the reasons attributable to the arbitral tribunal, then, it may order reduction of fees of arbitrator(s) by not exceeding five per cent. for each month of such delay. Provided further that where an application under Section 29A (5) is pending, the mandate of the arbitrator shall continue till the disposal of the said application. Provided also that the arbitrator shall be given an opportunity of being heard before the fees is reduced.

Section 29A (5) provides that the extension of period referred to in Section 29A (4) may be on the application of any of the parties and may be granted only for sufficient cause and on such terms and conditions as may be imposed by the Court.

Section 29A (6) provides that while extending the period referred to Section 29A (4), it shall be open to the Court to substitute one or all of the arbitrators and if one or all of the arbitrators are substituted, the arbitral proceedings shall continue from the stage already reached, and on the basis of the evidence and material already on record, and the arbitrator(s) appointed under this section shall be deemed to have received the said evidence and material.

Section 29A (7) provides that in the event of arbitrator(s) being appointed under this section, the arbitral tribunal thus reconstituted shall be deemed to be in continuation of the previously appointed arbitral tribunal.

Section 29A (8) provides that it shall be open to the Court to impose actual or exemplary costs upon any of the parties under this section.

Section 29A (9) provides that an application filed under Section 29A (5) shall be disposed of by the Court as expeditiously as possible and endeavor shall be made to dispose of the matter within a period of sixty days from the date of service of notice on the opposite party.

Case Laws:
  1. Validity Of Award Passed A Year After The Period Fixed By The Court Lapsed
    In Suryadev Alloys Case[10] the High Court of Madras decided the validity of an arbitral award which was passed a year after the period fixed by the court had lapsed. The Court observed that Section 28(1) of the Arbitration Act, 1940 provided wide powers to the court to enlarge the time for making an award even after the expiry of the time for making the award or even after the award has been made. Section 29A of the 1996 Act has allowed extension only within the premises of the Sections 29A (3) and 29A (4). The court cannot ratify award ex post facto by extending the period in a petition filed under Section 34 of the 1996 Act. It is evident from the language of Section 29A (4) of the 1996 Act that if the award is not made within the stipulated period or the extended period then the mandate of the arbitrator stands terminated unless extended by court.
  2. Petition Seeking Extension Of Mandate Of The Arbitrator
    In DDA Case[11] the High Court of Delhi while interpreting the expression "Court" under Section 29A(4) of the Act observed that if a petition is filed for extension of the mandate under Section 29A(4) of the Act in the Principal Civil Court and the time for substitution comes, then, there may be conflict between the powers of the superior courts under Section 11 of the Act and the principal civil court to appoint the substitute arbitrators under Section 29A(4) of the Act. The High Court of Delhi held that a petition under Section 29A of the Act seeking extension of mandate of the arbitrator should be filed before the court which has power to appoint an arbitrator under Section 11 of the Act and not the civil courts.
  3. Whether Time Limit Of 12 Months Is Applicable To International Commercial Arbitrations?
    In ONGC Petro Additions Case[12] an application was filed by the petitioner with the contention that the time limit to pass an award by the arbitral tribunal under Section 29A of the Act is not applicable to international commercial arbitrations as defined under Section 2(1)(f) of the Act due to the retrospective operation of amendments introduced in Section 29A by the Arbitration and Conciliation (Amendment) Act, 2019 (w.e.f. 30/08/2019). The Court held that there is no time limit of twelve months for international commercial arbitration seated in India.

There was a contrast between the decisions of the Delhi High Court. In Shapoorji Case[13] the court observed that Section 29A (as amended) is a procedural law and hence would have retrospective operation. In MBL Infrastructures Case[14] the Court held that Section 29A (as amended) would not apply to the pending arbitrations as on the date of the amendment vide notification of 30/08/2019. The Court called orders in MBL Case' is per incuriam as the order in 'Shapoorji Case' was not brought to the kind attention of the court. The Court held that the provisions of Section 29A (1) of the Act is applicable to all pending arbitrations seated in India as on 30/08/2019 and commenced after 23/10/2015.

The legal feasibility of extending the mandate of an expired arbitral tribunal is a complex issue that intersects with principles of arbitration law, party autonomy, and judicial oversight. The application of the Limitation Act, 1963, and various arbitration statutes, including the Arbitration and Conciliation Act, 1996, provides a structured framework within which extensions can be considered. Courts have the discretion to extend the mandate in cases where undue hardship might result, but this power is exercised with caution to maintain the integrity and efficiency of the arbitration process.

In conclusion, while the extension of an arbitral tribunal's mandate is legally feasible, it is subject to stringent judicial scrutiny and procedural compliance. The evolving case law and statutory amendments reflect a balanced approach, aiming to safeguard the efficiency of arbitration while providing relief in exceptional circumstances. Arbitrators and parties must remain vigilant about time limits and proactively address potential delays to avoid jeopardizing the arbitration process. Future reforms may continue to refine these provisions, ensuring a fair and effective arbitration system that respects both legal boundaries and the practical realities of dispute resolution.

  1. Tradex International SA v Trade TAS, [1981] 3 All E.R. 344: [1981] 2 Lloyd's Rep 169. The requirements of the section were stated by Supreme Court in Nachiappa Chettiar v Subramaniam Chettiar, AIR 1960 SC 307 Chennai Port Trust v Hindustan Construction Co Ltd, 2002 SCC Online Mad 307: AIR 2003 NOC 162 (Mad), inaction by one party in providing information to the other, extension of time because otherwise prejudice would have been caused to the latter, costs of 10,000 were imposed to be recovered from officers responsible for the inaction.
  2. Panchu Gopal Bose v Port of Calcutta, (1993) 4 SCC 338. Extension of time was not granted under S. 14 of the Limitation Act, 1963 to cover the period which was lost in pursuing arbitration proceedings under a reference which was bad in itself. Proceedings were also commenced with notice to the other party. Jupiter Chit Fund (P) Ltd v Shiv Narain Mehta, (2000) 3 SCC 364: AIR 2000 SC 1295.
  3. (2nd Edn, 1987) Chap 37, p 549 citing Pegler v Railway Executive, 1948 AC 332 (HL).51.
  4. Hari Shankar Singhania v Gauri Hari Singhania, (2006) 4 SCC 658: AIR 2006 SC 2488.
  5. State of Goa v Western Builders, (2006) 6 SCC 239: AIR 2006 SC 2525.
  6. Hydel Hydel Construction Ltd v H.P. SEB, 1999 SCC Online HP 16: AIR 2000 HP 19;
  7. Continental Construction Co Ltd v Food Corporation of India, 2002 SCC Online Del 4: AIR 2003 Del 32, a clause in the contract provided that when the final bill would be prepared, the engineer would give 15 days' notice to the contractor to counter sign it. The bill was not finalized. There was part payment in between. This had the effect of extending limitation.
  8. Ch Ramalinga Reddy v Superintending Engineer, (1999) 9 SCC 610.
  9. Asia Resorts Ltd v Usha Breco Ltd, (2001) 8 SCC 710: AIR 2002 SC 55.
  10. Geo Miller & Co (P) Ltd v Rajasthan Vidyut Utpadan Nigam Ltd, (2020) 14 SCC 643.
  11. Suryadev Alloys and Power Private Limited v. Shri Govindraja Textiles Private Limited, O.P. Nos. 955 of 2019 and 15 of 2020 (Madras High Court). Decided on May 8, 2020.
  12. Delhi Tara Chand Sumit Construction Company, OMP (MISC. (COMM) 236 of 2019 High Court). Decided on May 12, 2020.
  13. ONGC Petro Additions Limited v. Ferns Constructions Company INC. OMP(MISC) (COMM) 256/2019 (Delhi High Court). Decided on July 21, 2020.
  14. Shapoorji Pallonji and Company Private Limited v. Jindal India Thermal Power Limited, O.M.P.(MISC.) (COMM.) 512/2019.
  15. MBL Infrastructures Limited v. Rites Limited, O.M.P.(MISC(COMM) 56/2000

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