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Fast Track Arbitration

Fast track arbitration – iPleaders

In this article, Pallavi Tiwari discusses Fast Track Arbitration Proceedings. It is further updated by Sakshi Kuthari. This article deals with a detailed explanation of Section 29B of the Arbitration and Conciliation Act, 1996, its essential features and procedure.

This article has been published by Shashwat Kaushik.

Fast Track Arbitration was introduced in India by the Arbitration and Conciliation Amendment Act 2015. Just like the Arbitration and Conciliation Act, 1996 was an improvement on the Arbitration Act of 1940, so is the Amendment of 2015. After 1996 there have been major changes to the kinds of business, manner of doing the business, overseas investment in India, etc. The legislative intent was to make the business environment simpler and expedite the process of arbitration for a quick and transparent dispute resolution system. Initially, the International Chambers of Commerce came up with this idea and has been using it in a number of cases, imbibing it in Article 30 and Annexure V of the Rules. In India, the concept of fast track arbitration is defined in Section 29B of the Arbitration and Conciliation (Amendment) Act, 2015 (for the sake of brevity hereinafter referred to as the Amendment Act, 2015. It is a procedure which allows the arbitration parties to enter into an agreement and agree in writing to resolve their disputes within a period of 6 months from the date the Arbitral Tribunal enters upon the reference and there is no provision for oral proceedings, instead written pleadings suffice the matter.

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  1. It is majorly governed by strict time limit policies which have to be complied with by both the arbitrators and the parties. Basically, it means to accelerate the arbitral proceedings and resolve the matter by the shortest deadline possible.  
  2. If the time limit is not followed then the mandate of the arbitrator shall terminate, unless the court has extended the time period. If while extending the period the Court finds out that the delay has been caused without any substantial reasons, then there is a reduction of fees of the arbitrator by not exceeding five -per cent for each month of the delay. This punishment procedure has been mentioned under Section 15 of the Arbitration and Conciliation Act, 1996.
  3. It does not provide a fixed set of elements or procedures to be followed as done in ordinary arbitral proceedings, mentioned in the following head,  any practice which helps in resolving the issue as soon as possible is accepted under fast track arbitration.
  4. Mostly in Fast Track Procedures for Arbitration, no oral proceedings are required and only written submissions are relied upon.
  5. The parties can appoint a sole arbitrator and the submissions majorly have to be written.
  6. It protects the cost, speed and time without infringing any law and sometimes procedures like the examination of a witness are also avoided.
  1. The first difference is about the presence of three arbitrators in ordinary arbitral proceedings. Under Section 11(3) of the Arbitration and Conciliation Act, 1996 each party appoints one arbitrator, and then these two appointed arbitrators appoint the third arbitrator, who acts as a presiding arbitrator. Whereas, the fast track arbitration provides for a sole arbitrator appointed by the parties for the arbitration tribunal under Section 29B(2) of the Act.
  2. For an ordinary arbitral award, Section 29A(1) of the Act provides that the award shall be made within a period of twelve months from the date the arbitral tribunal enters upon the reference. If the award is made within a period of six months from the date the arbitral tribunal enters upon the reference, the arbitral tribunal shall be entitled to receive such amount of additional fees as the parties may agree. The time period can be exceeded but not more than six months. Under Section 29B(4) for fast track arbitration, the award under this section shall be made within a period of six months from the date the arbitral tribunal enters upon the reference. If the award is not passed within the specified period then the provisions of Section 29A shall apply here also, i.e. ordinary arbitral proceedings.
  3. In a fast-track proceeding under section 29B(6), the fees payable to the arbitrator and the manner of payment of the fees shall be such as may be agreed between the arbitrator and the parties. Whereas in ordinary proceedings according to Section 11(14), the rules for the payment of costs to the arbitral tribunal, shall be determined by the High Court, as the rates are provided in the Fourth Schedule of the Act.
  4. For an ordinary arbitral proceeding, whether to hold an oral proceeding or have awards passed on the basis of documents shall be decided by the arbitral tribunal. Under Section 24 it is provided that an oral hearing can be allowed by the tribunal at a particular stage when the party requests it. Under section 29B for fast track procedures, written submissions are relied upon for proceedings and no oral proceeding is appreciated unless requested by the party.

In India, the concept of fast track arbitration came up with the recommendations of 246th Law Commission Report on 5th August 2014, which referred to a number of cases to provide the benefits of a speedy proceeding. Following this, came up the Amendment Act of 2015, where section 29B of the Arbitration and Conciliation Act, 1996 with the addition of amendments, talked about the procedure involved for fast track arbitration. Section 29B talks about the procedure involved and the rules to be followed for fast track arbitration. The Honble Supreme Court in Board of Control for Cricket in India V. Kochi Cricket Private Limited(2018) held that the provisions of Section 29B of the said Act could only be made applicable to the arbitration proceedings commenced after the Amendment of 2015, i.e. 23rd October, 2015.

Further, the Indian Council for Arbitration Rules of Domestic Commercial Arbitration under Rule 44 discuss the fast track procedure where the Parties may opt for Fast Track Arbitration and request the arbitral tribunal, before the commencement of the arbitration proceedings, to decide the issue in a fixed time frame of 3 to 6 months. Here the arbitral tribunal can decide the issue only on the basis of written pleading without any oral hearing and can also call for clarifications. An oral hearing may be held if both parties make a joint request or if the Arbitration tribunal considers an oral hearing necessary in any particular case, and the tribunal shall hear it with all measures to proceed with it expeditiously.

Under Section 29B of the Arbitration and Conciliation (Amendment) Act, 2015 people who are parties to an arbitration agreement can apply for fast-track arbitration in two ways :

  1. before the appointment of an arbitration tribunal by the parties,
  2. or at the time of the appointment of an arbitration tribunal by the parties.

This has to be submitted in writing by the parties that they want to be governed by the fast-track procedure.

      3. They shall also agree for the sole arbitrator to be chosen by them for the tribunal.

The cornerstone of fast track arbitration is giving the parties to the case the sole autonomy to decide for their arbitrators. This is done to prevent the parties from dilatory tactics, lack of caution and hindrances that may arise at the time of appointment of arbitrator and enforcement of award. 

The parties shall agree with each other to solve the issue through fast-track procedure by the following rules as laid down under Section 29B of the Act of 2015 –

  1. The dispute shall be decided on the basis of written pleading, with the use of documents, and submissions provided by the parties and there shall be a sole arbitrator depending on the interest of the parties and relying on his skill and efficiency.
  2. There shall be no oral hearing.
  3. The tribunal can ask the parties for any other information or any kind of clarification to be provided to help in the matter of resolving the issue.
  4. There is a provision for an oral hearing if the parties request the tribunal or if the tribunal considers it necessary to resolve the issues.
  5. With the use of technical formalities, the tribunal shall resolve such issues and do whatsoever is required for a speedy disposal of the case.
  6. The award shall be given within six months from the date the tribunal starts taking notice of the case and if such award is not passed within the time prescribed then the procedure for extension of time provided under 29A is followed.
  7. If the award could not be given in the prescribed time period for fast track arbitration which is six months, an extension period of six months is provided. This extension period is provided under Section 29A of the Act as ordinarily provided for normal arbitral proceedings. The authority of the arbitrator shall terminate if before the lapsing of the six month time period the Court has not extended the period.
  8. If the proceedings have been delayed due to the error of the arbitral tribunal and thereby an extension is required the Court can order for the reduction of fees to be given to the arbitrator.
  9. While extending the period, the Court can substitute the arbitrator and is such a thing happens the proceedings shall continue from the stage it has already reached, and the arbitrator shall be deemed to have the knowledge of the evidence and material already presented.
  10. The fees to be paid to the arbitrator shall be fixed between the parties and the arbitrator.

Arbitration proceedings allow the parties to the agreement to choose a procedure most suitable to their circumstances in order to achieve the quickest and most cost-effective resolution to their disputes. One such procedure is the Document-only Arbitration, which mostly applies to mid-to-low value disputes, such as domain-name disputes, intellectual property rights disputes, consumer disputes, etc. and also to large and complex arbitrations. Even though the arbitrators have the discretion to give directions relating to the procedure of a particular case, they may not have the authority to impose document-only arbitration procedures on the parties. It is because mostly the national laws of a country and their rules specifically provide that each party has a right to be heard unless the parties waive their right to be heard. If the arbitrators are of the opinion that a dispute could be resolved on the basis of documentation alone, rather than imposing it on the parties, it is advisable to invite the parties to agree to proceed on that basis. Thus, the document-only procedure connotes that the tribunals base their decisions solely on the written submissions and documentary evidence only and leave no opportunity to hear from the counsel or take evidence from witnesses at oral hearings.

The International Arbitration Practice Guidelines provide that the following steps should be followed by an arbitrator when considering whether to give directions for documents-only arbitration procedures.

  1. Arbitrators should proceed on the basis of taking into account all or some of the issues in the arbitration, subject to the applicable arbitration rules and the law of the place of arbitration.
  2. If a party to the arbitration requests for a document-only procedure, the arbitrators look into the issues involved, consult the other party and seek their consent before proceeding.
  3. During this procedure, the arbitrators direct the parties as to the steps involved to decide the issues involved, subject to that procedure on documents alone. 
  4. The just, fair and reasonable principles of equity should be followed by the arbitrators to give both parties an equal opportunity to present their case in relation to the issues involved, subject to the document-only procedure.
  5. The parties to the case have the discretion to choose the arbitration procedure until it is contrary to the mandatory laws and public policy. In the absence of the parties’ disagreement and the procedure not being inappropriate, the arbitrators are bound to respect the parties’ agreement. In this case, they have the discretion to organise the procedure they consider appropriate.
  6. In case the parties to the case agree to the arbitrator’s suggestion, the arbitrators record the parties agreement. If any party does not agree to the suggestion, they continue to proceed with the initial terms of the arbitration agreement. The arbitrators may opt to resign taking into account all surrounding circumstances of the case at any stage of the proceedings,  if the parties make them agree to unreasonable adjudicatory standards. The resignation of the arbitrators may raise their personal liability depending on the arbitration agreement involving their appointment and the law applicable in the place of arbitration.
  7. This procedure is effective for the speedy disposal of cases and for reducing the cost of arbitration procedures.
  8. The factors taken into account when determining whether some or all of the issues are suitable for resolution by a document-only procedure are the nature of the case, complexity of the issues, time and cost involved, nature of evidence and arguments adduced by the parties.
  9. For the purpose of deciding to adopt by document-only procedure, the arbitrators should give detailed directions to the parties which they need to take and by what dates. It enables the arbitrators to get the submissions and evidence (in the form of the draft) necessary to decide the issues by a specified date, subject to the document-only procedure.
  10. If the arbitrators are of the opinion that the document-only procedure is appropriate, they should include draft directions and seek the agreement of all parties. If the parties so agree, then the arbitrators record the agreement and the fact that the parties have waived their right to be heard in respect of some or all of the issues involved in the arbitration. The procedural order of the arbitrators should define the issues on which the parties have agreed to waive their right to be heard.
  11. If a party refuses to waive a right to be heard, the arbitrators focus in advance by means of procedural order on the scope of the hearing to identify the crucial issues to be addressed to save time and cost of the hearing.
  12. The arbitrators directions should deal with the matters of disclosure necessary, as to the scope and extent of documents to be produced, and the timing and manner in which they are to be produced at the time of the proceedings.
  13. If it has been agreed by the parties to the agreement that all or some of the issues would be conducted on the document-only procedure, it would be appropriate for the arbitrators to conduct an inspection of, for example, a site, a property, etc. They can give directions to this effect and indicate how it is to be organised, who is to be present and what will occur during the inspection.
  14. Subject to the mandatory rules and prevailing practice at the place of arbitration, it is the duty of the arbitrators to treat parties to the case equally and give them a reasonable opportunity to present their case, prepare their submissions and respond to the submissions made by the opposing parties.
  15. The submissions and evidence of the parties to the case are reviewed by the arbitrators to check the authenticity and enable them to decide the dispute or issues in the documents themselves. If the arbitrators are not satisfied with the submissions or the evidence submitted by the parties, they invite the party(s) to make further submissions and/or to submit further evidence in writing to address the specific issues within a reasonable time.
  16. If the parties had earlier agreed to waive off their right to be heard and during the document-only arbitration proceeding, one or more parties requests for hearing, the arbitrator should consider if there is a change in the nature of the issues in the disputes, the circumstances or the evidence that needs to be adduced that leads them to conclude that whether or not to have a hearing. If the arbitrators find the contentions of the party(s) to hear the proceeding reasonable, the arbitrators along with the consent of the other parties seek their agreement to the hearing.
  17. If none of the parties to the agreement have requested a hearing and consent only for the document-only procedure and the arbitrators find it necessary to have a hearing, the arbitrators should explain sufficient appropriate reasons to the parties and seek their agreement to the hearing. If the parties do not consent to it, the arbitrators shall continue to proceed on the basis of a document-only procedure as earlier agreed upon at the time of formation of the arbitration agreement.
  18. When the arbitrators draft an award relating to document-only procedure, they should record the parties’ agreement to that procedure and the procedural steps which were followed in order to avoid the risk of the award being challenged. 

Section 29B of the Arbitration and Conciliation Act, 1996 was inserted by way of Section 15 of the Arbitration and Conciliation (Amendment) Act, 2015. Sub-section (1) of Section 29B of the said Act provides that the parties to an arbitration agreement may resolve their dispute by fast-track procedure at any stage either before or at the time of appointment of the arbitral tribunal. Section 29B(2) of the said Act provides that without oral hearing the parties to the suit may resolve their disputes unless agreed to the contrary by the parties or the arbitral tribunal. The dispute needs to be resolved within a period of six months, i.e., the award should be granted from the date from which the tribunal enters upon the reference. Section 29B(4) provides for a document-only arbitration procedure. The loophole which this subsection holds is that it does not provide a monetary threshold which mandates the implementation of a fast-track procedure. With the passage of time, the Amendment of 2015 noticed the difficulties in the implementation of the said Act and Section 29B was amongst one of them. There was continuous interference of the court in the arbitration proceedings which contributed to the delay in disposing proceedings.

Even though Section 29B was inserted to facilitate speedy disposal of disputes, Section 29B (1) does not provide for opting for a fast-track procedure after pleadings are completed, i.e., after a claim, defence, counterclaim, or set-off. Paragraph 6(vii) of the Statement of Objects and Reasons of the 2015 Bill was introduced to provide parties to the dispute at any stage to resolve their dispute through fast track procedure. However, in the application, Section 29B is restricted only up to the stage of the constitution of the arbitral tribunal and not thereafter. Section 19(2) of the Act provides that while conducting the arbitral proceeding the parties to an arbitration agreement can determine and agree upon the procedure to be followed, failing which the arbitral tribunal can decide to conduct the proceedings as it may consider appropriate. On the contrary, considering the non-obstante clause of Section 29B(1), it would be appropriate to amend this provision to conclude that the parties to the arbitration agreement may at any stage up to the completion of the pleadings and before the commencement of oral evidence may conduct the arbitration by following a fast track procedure.

There is a mandate under Section 23(3) of the Arbitration Act to complete the statement of claim and defence within six months from the date on which the arbitrator(s) receives a written notice of their appointment. Section 29B(4) can be amended to clarify that if after the completion of pleadings, the parties to the arbitration agree to a fast-track procedure, the award shall be passed three months from the date of completion of pleadings.

What are the essentials of an Arbitration Agreement?

Section 7 of the Arbitration and Conciliation Act, 1996 provides that the parties must –

  • agree to the agreement in the same sense, i.e., consensus-ad-idem;
  • the agreement must be in writing;
  • the agreement must refer to a present or future difference to arbitration.

What is the limitation for filing a claim before an arbitrator?

Section 11(6) of the Arbitration Act, 1996 provides for the appointment of an arbitrator which prescribes no time period for filing for an application.

Who cannot be appointed as an arbitrator?

According to Section 12(5) of the Arbitration and Conciliation Act, 1996 read along with the Seventh Schedule, any person who has a relationship with the parties or counsel or the subject matter of the dispute is ineligible to be appointed as an arbitrator.

When and how can an arbitral award be enforced?

Section 36 of the Arbitration and Conciliation Act, 1996 provides that if the time of making an application has expired under Section 34 of the said Act, or the application having been made on time has been refused, then the award shall be enforced under Civil Procedure Code, 1908 in the same manner as if it were a decree of the Court.

When can an arbitral award be set aside by the court?

Section 34(2) (a) and (b) of the Arbitration and Conciliation Act, 1996 provides that the arbitral award can be set aside by the court, if the party proves any of the following –

  • Incapacity of the party;
  • Arbitration agreement is void, i.e., not in accordance with the law to which the parties to the agreement are subjected;
  • No proper notice of proceedings is given to any of the parties to the proceedings;
  • No proper notice of appointment of arbitrator is given to any party to the proceedings;
  • The award has been suspended or waived off by the competent authority in which it was made;
  • The issue cannot be resolved by arbitration under Indian law;
  • The composition of the arbitral tribunal is not in accordance with the agreement of the parties;
  • Enforcement of the award is against Indian public policy.

Section 13 of the said Act also provides that an arbitration award can be set aside when an arbitrator lacks independence or qualification or neutrality.

When can the jurisdiction of an arbitrator be challenged?

Section 12(3) of the Arbitration and Conciliation Act, 1996 provides that when the question of independence or impartiality comes into question then the jurisdiction of an arbitrator can be challenged.

What procedure is followed by an arbitral tribunal to decide a case?

Section 18 of the Arbitration and Conciliation Act, 1996 provides that the parties to the case shall be treated equally and should be given full opportunity to present the case. The arbitral tribunal is expected to observe the principles of natural justice and if they fail to do so the court may set aside the judgement. In this way, the tribunals perform their functions honestly and fairly.