Section 29-B of the Arbitration and Conciliation Act, 1996 was inserted by way of Section 15 of the Arbitration and Conciliation (Amendment) Act, 2015. As its title/marginal note suggests, the section provides for a “fast track procedure” for conducting an arbitration with an agreement of parties to the arbitration.
Section 29-B (1), which starts with a non-obstante clause, states that “the parties to an arbitration agreement” may at any stage (i) “either before” or (ii) “at the time of appointment” of the arbitral tribunal, “agree in writing to have their dispute resolved by fast track procedure” specified in Section 29-B (2) i.e., based on documents only without an oral hearing, unless “all the parties to the dispute make a request” or “the arbitral tribunal considers it necessary” for clarifying some issues.
Section 29-B(4) mandates that the award shall be made within a period of six months from the date from which the arbitral tribunal enters upon the reference. The Section is in line with the rules of a number of arbitration institutions that provide for a “documents only” arbitration. However, the Section does not specify a monetary threshold mandating implementation of a fast track procedure.
The purpose of this column is not to comment on the procedure set out under Section 29-B (2) of the Arbitration Act. Rather, the focus of this column would be confined to suggesting certain amendments to Section 29-B (1) and (4) of the Arbitration Act.
As mentioned above, Section 29-B is one of the several amendments to the Arbitration Act by the 2015 Amendment. The Statement of Objects and Reasons of the Arbitration and Conciliation (Amendment) Bill, 2015 that introduced the 2015 Amendment noticed the difficulties in the applicability of the Arbitration Act “with the passage of time” and further noticed that court interference contributed to the delay in disposing proceedings.
Paragraph 4 of the Statement also noted that India had been ranked 178 out of 189 nations in the world in contract enforcement and, therefore, urgent steps were required to be taken for enforcement of contracts and awards. Reference was also made to the recommendations of the 246th Report by the Law Commission of India on Amendments to the Arbitration and Conciliation Act, 1996, and eventually, the 2015 Bill culminated into the 2015 Amendment.
Though Section 29-B is a laudable legislative attempt to facilitate speedy resolution of disputes, sub-section (1) of Section 29-B contemplates only two stages during which parties to the arbitration can opt for a fast track procedure. Namely, (a) before the appointment of the arbitral tribunal and (b) at the time of appointment of the arbitral tribunal. The sub-section does not contemplate a scenario where parties can opt for a fast track procedure after pleadings are completed i.e. after filing of a claim, defence, counter-claim or set-off. This is particularly relevant in India, where arbitration is predominantly “ad-hoc” and not “institutional”. While Paragraph 6 (vii) of the Statement of Objects and Reasons of the 2015 Bill states that it was introduced “to provide that the parties to dispute may at any stage agree in writing that their dispute be resolved through fast track procedure…..”, the 2015 Amendment has surprisingly restricted this option only up to the stage of constitution of the arbitral tribunal and not thereafter.
Under Section 19(2) of the Arbitration Act, parties to the arbitration can determine and agree upon the procedure to be followed while conducting the arbitral proceedings, failing which the arbitral tribunal may conduct the proceedings in the manner it considers appropriate [as stated in Section 19(3)]. Considering that Section 29-B(1) starts with the non-obstante clause (“notwithstanding anything contained in this Act”), it would be appropriate to amend Section 29-B(1) to clarify that parties to an arbitral agreement may “at any stage up to completion of pleadings and before commencement of oral evidence” be permitted to conduct the arbitration by following a fast track procedure sans oral evidence or hearing.
Section 23 (4) of the Arbitration Act mandates that the statement of claim and defence shall be completed within six months from the date on which the arbitrator or all the arbitrators receive a notice in writing for their appointment. Section 29-B(4) can be suitably amended to clarify that if parties to the arbitration agree to a fast track procedure after completion of pleadings, the award shall be passed three months from the date of completion of pleadings.
The aforesaid amendments to Section 29-B would go a long way in encouraging parties in India to adopt a fast track procedure for conducting arbitration, and ad-hoc arbitration in particular.
Dormaan Dalal is an arbitrator and a practicing Advocate at the Bombay High Court, Mumbai.
