Now we have arrived to the most important part in the process of International Commercial Arbitration i.e., the Arbitration Proceedings.
Since we have come this far, I think it is safe to say that Arbitration proceedings are very flexible in respect to the place, time and procedure decided.
The arbitral tribunal should treat the parties equally and each party should be given full opportunity to present its case. The parties to the arbitration are free to agree on the procedure to be followed by the arbitral tribunal. If the parties do not agree to the procedure, the procedure will be as determined by the arbitral tribunal. The tribunal also has powers to determine the admissibility, relevance, materiality and weight of any evidence.
The Place of arbitration can be decided by mutual agreement. However, if the parties do not agree to the place, the same will be decided by the tribunal. Similarly, the language to be used in arbitral proceedings can be mutually agreed upon. Otherwise, the arbitral tribunal can decide on the same.
Now, we will discuss about another important part of the arbitration proceedings which is the submission of Statement of Claim and Defense. The Claimant should submit the statement of claims, points of issue and the relief or remedy sought. The Respondent should state his defence in respect of these particulars and all the relevant documents must also be submitted. Such claim or defence can be amended or supplemented at any time.
An application for counterclaim/set-off has to be adjudicated upon in the same arbitration proceeding without requiring a fresh one. The arbitral tribunal, under the amended Section 25 of the Act, can also exercise its discretion in treating the right of the defendant to file the statement of defence as forfeited under specified circumstances.
The 2019 Amendment Act has now introduced a six-month time frame for completion of a statement of claim and defence. However, this point was criticized as Mandating a fixed timeline for filing the statement of claim and defence would deprive parties of such flexibility and would effectively require them to file their complete pleadings at the very outset of the arbitration proceedings.
So, after submission of pleadings, unless the parties agree otherwise, the arbitral tribunal can decide whether there will be an oral hearing or whether proceedings can be conducted on the basis of documents and other materials. But, if one of the parties requests the arbitral tribunal for a hearing, sufficient advance notice of hearing should be given to both parties.
The 2019 Amendment Act has also provided that pleadings must be completed within 6 months from the appointment of arbitrator(s). However, this amendment exempted ICA from these time-limits. It introduced a non-binding proviso to this exemption stating that the award in an ICA may be made as expeditiously as possible and an endeavour may be made to dispose of the matter within 12 months from the date of completion of pleadings.
This now led us to another important part of arbitration proceedings i.e., the fast-track procedure to conduct these proceedings. The 2015 Amendment Act inserted new provisions to facilitate an expedited settlement of disputes based solely on documents subject to the agreement of the parties. The tribunal, for this purpose, consists only of a sole arbitrator, who shall be chosen by the parties. For the stated purpose the time limit for making an award under this section has been capped at 6 months from the date the arbitral tribunal enters upon the reference.
Parties can agree in writing to conduct arbitration under a fast-track procedure before the constitution of the arbitral tribunal. Under the fast-track procedure, unless the parties otherwise make a request for oral hearing, or the arbitral tribunal considers it necessary to have oral hearing, the arbitral tribunal shall decide the dispute on the basis of written pleadings, documents and submissions filed by the parties without any oral hearing.
Since, we have understood about the line of arbitration proceedings, we should also consider a fact that there are good number of chances that parties may settle during the Arbitration Proceedings. It is permissible for parties to arrive at a mutual settlement even when the arbitration proceedings are going on. In fact, even the tribunal can make efforts to encourage mutual settlement. If parties settle the dispute by mutual agreement, the arbitration shall be terminated. However, if both parties and the arbitral tribunal agree, the settlement can be recorded in the form of an arbitral award on agreed terms, which is called a consent award and it shall have the same force as any other arbitral award.
Question of the Week:
Will the Limitation Act be applicable on the ICA with its seat in India?
Yes, the Limitation Act, 1963 is applicable to arbitrations under Part I and for this, the date on which the aggrieved party requests the other party to refer the matter to arbitration shall be considered.
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