Arbitrator's Mandate Would Not Be Terminated When The Delays In Arbitral Proceedings Are Not Attributable To It: Bombay High Court

The bench of Justice Bharati Dangre held that generally, in an arbitration not governed by Section 29A, the arbitrator's mandate expires upon its failure to conclude the proceedings within the time period agreed by the parties, however, it would not hold true when the tribunal acted expeditiously and the delays in proceedings were on account of fault of the parties themselves.

Facts

The parties entered into an agreement dated 29.09.1996 for carrying out certain construction, operations and maintenance facilities. The agreement contained an arbitration clause.

A dispute arose between the parties in the year 1997 due to termination of the agreement by the petitioner. Resultantly, the respondent invoked arbitration and the three member tribunal was constituted. Proceedings were pending before the tribunal from 2000-2005, however, a member of the tribunal passed away.

The vacancy was filled by the High Court vide its order dated 20.02.2015 against which an SLP was preferred. The Apex Court substituted the tribunal with a sole arbitrator and directed it to conclude the proceedings within 1 year i.e. by 04.05.2023, in view of the long pendency of the proceedings.

The parties appeared before the tribunal and the respondent requested to file an amended SOC, followed by the request by the petitioner to amend its SOD. Thereafter, the parties moved a joint application on 23.11.2022, thereby, mutually extending the mandate of the tribunal till 31.01.2024. The parties also filed a schedule of progress and agreed to comply with those dates. It was agreed that the tribunal would have a year from the date of recording of oral evidence.

However, the petitioner filed its amended SOD with a delay of more than 6 months and also took almost 2 months to examine its witnesses which resulted in the failure of completion of the proceedings within agreed time. Pertinently, the tribunal vide a procedural order dated 23.11.2023 ruled that the proceedings cannot be completed within the previously agreed timelines, therefore, it extended its mandate till 31.12.2024.

On 01.02.2024, the petitioner moved an application before the tribunal contending that the mandate of the arbitrator has terminated on account of lapse of time agreed by the parties till which the tribunal's mandate was extended. The tribunal rejected this application on the ground that the delays in the completion of proceedings were majorly attributable to the petitioner itself. Aggrieved thereby, the petitioner approached the High Court.

Submissions by the Parties

The petitioner made the following submissions:

• That the Arbitrator's mandate terminated on 31/01/2024.
• That on 23/11/2022, the parties reached an understanding and submitted a Joint Application to regulate the arbitration process. The Tribunal agreed that its mandate would continue until 31/01/2024, as agreed by the parties.
• That the agreement did not permit further extension, and thus, the Arbitrator's mandate automatically terminated on 31/01/2024.
• That if an Arbitrator fails to conclude proceedings within the extended timeline agreed by the parties, his mandate terminates.

Respondent made the following counter-submissions:

• That Section 29-A of the A&C , is not applicable to their proceedings as the proceedings commenced prior to the coming into force of the amendment vide which the Section was inserted.
• That respondent waived its right to object to the continuation of proceedings by participating in them without any objection, moreover, the delays were attributable to it.

Analysis by the Court

The Court observed that on 23.11.2022, the parties mutually agreed to extend the mandate of the arbitrator till 31.01.2024. It observed that in that application, the parties had provided a timeline for the completion of the proceedings. Moreover, therein the parties had agreed that the tribunal would have a year to complete the proceedings from the date of recording of oral evidence.

The Court observed that the despite several reminders by the arbitral tribunal, the petitioner caused delays by filing its amended SOD with a delay of 6 months and 2 weeks, further, it provided its witnesses statement with a substantial delay. Moreover, it took almost two months to examine its witnesses.

The Court observed that in its procedural order dated 17.11.2023, the tribunal rightly observed that the petitioner had caused substantial delays and it would not be possible to complete proceedings as per previously agreed timelines.

The Court held that an arbitrator's mandate would not terminate when the proceedings are not completed within timelines agreed by the parties is the delay in the conduct of the proceedings are attributable to the applicant itself who is seeking termination of the mandate.

The Court held that generally, in an arbitration not governed by Section 29A, the arbitrator's mandate expires upon its failure to conclude the proceedings within the time period agreed by the parties, however, it would not hold true when the tribunal acted expeditiously and the delays in proceedings were on account of fault of the parties themselves.

Accordingly, the Court dismissed the petition and upheld the order of the tribunal extending its mandate till 31.12.2024.

Case Title: Glencore India Pvt Ltd v. Amma Lines Limited, Arbitration Petition No. 42 of 2024

Date: 05.04.2024

Counsel for the Petitioner: Mr. Navroz Seervai, Sr. Advocate, a/w Kartik Nayar, Aniesh Jadhav, Rishab Kumar, Nikhil Adkine, Advs.

Counsel for the Respondent: Mr. Naushad Engineer a/w Mr. Mangal Bhandari i/b Pranjali Bhandari, Advs.

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