[Arbitration Act] Supreme Court directs High Courts to decide within 6 months all Section 11(6) applications pending for 1+ years

The Supreme Court last week directed all High Courts to decide and dispose of within 6 months, all applications for appointment, substitution or change arbitrators which have been pending for over a year [Shree Vishnu Constructions v. Engineer in Chief, Military Engineering Service & Ors]. .A bench of Justices MR Shah and BV Nagarathna said that if arbitrators are not appointed at the earliest, it will defeat the object of the Arbitration Act and may ultimately affect commerce and business in the country. "If the arbitrators are not appointed at the earliest and the applications under Sections 11(5) and 11(6) of the Arbitration Act are kept pending for a number of years, it will defeat the object and purpose of the enactment of the Arbitration Act and it may lose the significance of an effective Alternative Dispute Resolution Mechanism. …The litigant may lose the faith in the justice delivery system, which may ultimately affect not only rule of law but commerce and business in the country," the Court said. .The Court also commented about the repercussions of having unresolved commercial disputes on the national economy.“If Commercial disputes are not resolved at the earliest, not only it would affect the commercial relations between the parties but it would also affect economy of the country. It may affect the ease of doing business in the country. If the country has to compete with the global business, a confidence has to fostered that in our country the commercial disputes are resolved at the earliest and it does not take a number of years in resolving such Commercial disputes,” the Bench emphasized.Earlier, the Court had on April 21, called upon all High Courts to submit before it details with respect to the applications pending before the concerned High Court under Section 11(6) of Arbitration and Conciliation Act, seeking appointment of arbitrator. Pursuant to that, the High Courts had sent the statements regarding pending applications under Section 11(6). .After examining the same, the Court noted,“In many High Courts, applications for appointment of the arbitrator(s) are pending for more than four to five years. Pendency of large number of applications under Section 11(5) and 11(6) of the Arbitration Act, shows a very sorry state of affairs.”Even in the statement of High Court Rajasthan at Jodhpur, many applications are pending, which are found to be defective. Some of the defective applications are pending since 2016 onwards, the Court further noted. .The Courts, therefore, directed High Courts to ensure that applications under Sections 11(5) and 11(6) of the Arbitration Act are disposed of preferably within a period of six months from the date of filing of such applications.The Court also ordered Registrar Generals of the respective High Courts to submit the compliance report after six months..[Read Order]