12 Months Time Limit Under Section 29A Arbitration Act Not Applicable To International Commercial Arbitration : Supreme Court

The Supreme Court held that the time limit of twelve months as prescribed in Section 29A of Arbitration and Conciliation Act is not applicable for international commercial arbitration.

"In terms of the amended provisions of Section 29A, arbitral tribunals in international commercial arbitrations are only expected to make an endeavor to complete the proceedings within twelve months from the date of competition of pleadings and are not bound to abide by the time limit prescribed for domestic arbitrations.", the bench of CJI D Y Chandrachud and Justice P S Narasimha observed.

The court also added that Section 29A(1), as amended, is remedial in nature, and thus it is applicable to all pending arbitral proceedings as on the effective date i.e., 30 August 2019.

Section 29A 

After the 2019 amendment, Section 29A(1) stipulates 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 the completion of the pleadings under Section 23(4). Sub-section (3) of Section 29A empowers parties, by consent, to extend the period specified in sub-section (1) for making the award by a further period not exceeding six months. If the award is not made within the period which is specified in sub-section (1) or the extended period specified in sub-section (3), the mandate of the arbitrator shall terminate unless the court has extended the period either prior to or after the expiry of the period so specified. 

The issue raised in this case was whether this provision applies to international commercial arbitration. The applicant's contention was that as a result of the amendment of Section 29A, the arbitration proceedings before the sole arbitrator should be allowed to automatically continue in view of the amendment of the statute.

The bench made the following observations:

Twelve-month period is only directory in nature for an international commercial arbitration

The expression “in matters other than an international commercial arbitration” makes it abundantly clear that the timeline of twelve months which is stipulated in the substantive part of Section 29A(1), as amended, does not apply to international commercial arbitrations. This is further reaffirmed in the proviso to Section 29A(1) which stipulates that the award in the matter of an international commercial arbitration “may be made as expeditiously as possible” and that an “endeavour may be made to dispose of the matter within a period of 12 months” from the date of the completion of pleadings. The expression “as expeditiously as possible” coupled with the expression “endeavour may be made” demonstrate that the intent of Parliament is that the period of twelve months for making the award is not mandatory in the case of an international commercial arbitration. In an international commercial arbitration, the arbitral tribunal is required to endeavour, that is, make an effort to render the arbitral award within a period of twelve months or in a timely manner. In a domestic arbitration, Section 29A(1) stipulates a mandatory period of twelve months for the arbitrator to render the arbitral award. In contrast, the substantive part of Section 29A(1) clarifies that the period of twelve months would not be mandatory for an international commercial arbitration. Hence, post amendment, the time limit of twelve months as prescribed in Section 29A is applicable to only domestic arbitrations and the twelve-month period is only directory in nature for an international commercial arbitration."

Regarding the contention that the provisions of sub-section (3) and sub-section (4) must also apply to an international commercial arbitration. the bench said:

it must be noticed that the rationale underlying sub-section (3) is to ensure that despite the stipulation of twelve months for the making of an arbitral award in the domestic context, parties may by consent agree to an extension of time by a further period of six months. Such an extension of six months is envisaged in the case of a domestic arbitration since there is a mandate that the award shall be made within a period of twelve months. A further extension has, however, been entrusted to the court in terms of sub-section (4) of Section 29A. However, insofar as an international commercial arbitration is concerned, the statutory regime is clear by the substantive part of sub-section 1 of Section 29A in terms of which the timeline of twelve months for making an arbitral award is not applicable to it. In an international commercial arbitration, the legislature has only indicated that the award should be made as expeditiously as possible and that an endeavour may be made to dispose of the matter within a period of twelve months from the completion of pleadings.

Section 29A(1), as amended, is remedial in nature

On the issue whether the amended Section 29A would apply prospectively or retrospectively.

The amended provision has excepted international commercial arbitrations from the mandate of the twelvemonth timeline which governs domestic arbitrations. The amendment is intended to meet the criticism over the timeline in its application to international commercial arbitrations. The amendment is remedial in that it carves out international commercial arbitrations from the rigour of the timeline of six months. This lies within the domain of the arbitrator and is outside the purview of judicial intervention. The removal of the mandatory time limit for making an arbitral award in the case of an international commercial arbitration does not confer any rights or liabilities on any party. Since Section 29A(1), as amended, is remedial in nature, it should be applicable to all pending arbitral proceedings as on the effective date i.e., 30 August 2019.

Case details

TATA Sons Pvt Ltd vs Siva Industries and Holdings Ltd | 2023 LiveLaw (SC) 39 | MA 2680 of 2019 in Arbitration Case (Civil) No 38 of 2017 | 5 January 2023 | CJI D Y Chandrachud and Justice P S Narasimha

Appearances : Senior Advocate Jaideep Gupta for Tata Sons, Advocate Ankur Kashyap for respondent.

Headnotes

Arbitration and Conciliation Act, 1996; Section 29A - Post 2019 amendment, the time limit of twelve months as prescribed in Section 29A is applicable to only domestic arbitrations and the twelve-month period is only directory in nature for an international commercial arbitration - Arbitral tribunals in international commercial arbitrations are only expected to make an endeavor to complete the proceedings within twelve months from the date of competition of pleadings and are not bound to abide by the time limit prescribed for domestic arbitrations. (Para 25-29)

Arbitration and Conciliation Act, 1996; Section 29A - Section 29A(1), as amended, is remedial in nature, it should be applicable to all pending arbitral proceedings as on the effective date i.e., 30 August 2019 - The amendment is remedial in that it carves out international commercial arbitrations from the rigour of the timeline of six months. (Para 34)

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