Arbitration serves as a swift alternative to traditional court litigation, aiming to settle commercial disputes expeditiously. The UNCITRAL Model Law on International Commercial Arbitration sets the stage for limited grounds to contest arbitration awards, thereby avoiding protracted appeals and ensuring timely dispute resolution. India's Arbitration and Conciliation Act, 1996, aligns with this model, mandating strict deadlines to expedite the arbitration process. The Act stipulates a 90-day period to challenge an arbitration award, extendable by 30 days under exceptional circumstances. The Supreme Court of India, in the case of State of Himachal Pradesh, clarified that "three months" refers to calendar months, not 90 days, as per the Limitation Act and the General Clauses Act. Furthermore, the date of award receipt is excluded from this calculation.
The Arbitration and Conciliation Act, 1996, specifically incorporates the Limitation Act, 1963, for arbitrations seated in India through Section 43. To ascertain the time limit for raising a dispute, one must read Section 43 in conjunction with Section 21, which marks the commencement of arbitration proceedings. A failure to initiate arbitration within the prescribed limitation period from the right to sue's accrual results in the claim being time-barred.
The clock for challenging an arbitration award starts ticking not from the award date but from when the party receives it. The Supreme Court, in cases such as State of Maharashtra and Tecco Trichy, emphasized that the limitation under Section 34(3) begins upon receipt of the signed award copy by the party, not their counsel or agent. The delivery of an arbitral award is a substantive matter, and arbitrators must send signed copies to all parties per Section 31(5). The Bombay High Court, in JSC Ispat Pvt Limited, scrutinized the arbitrator's records to verify the dispatch of signed award copies before condoning a delay in filing under Section 34.
The Supreme Court has ruled that Section 5 of the Limitation Act, which allows for delay condonation, does not apply to petitions under Section 34 due to the Act's special limitation provision. However, Section 14, which accounts for time spent in a wrong forum, is applicable as it does not extend the Act's prescribed limitation period. In Simplex Infrastructure Limited, the Court reiterated that a delay beyond the statutory three months, with a 30-day grace period for sufficient cause, cannot be condoned for challenging an award.
There are instances where Section 34 applications are timely filed but not promptly refiled after addressing registry objections. The Northern Railway case determined that such refiling does not constitute a new application for limitation purposes. However, this judgment did not consider the Delhi High Court Rules, which deem refiling after 30 days as a fresh application. This legal ambiguity awaits resolution.
In conclusion, the legal framework governing the challenge of arbitration awards is designed to uphold the efficiency and finality that arbitration promises. The strict timelines and limited grounds for contesting awards underscore the commitment to swift dispute resolution. However, the nuances of the law, particularly concerning the condonation of delays and refiling procedures, continue to evolve through judicial interpretation, ensuring that the arbitration process remains just and equitable.
Ineligible Arbitrator can be challenged even in Pre- 2015 cases and at any point of time
Supreme Court of India in its recent Judgment dated 04th January 2022 pronounced by the bench consisting of Hon’ble Justices Mr M.R.Shah and Mrs Nagarathna in the case of Ellora Paper Mills held that the mandate of the arbitrator can be challenged at any point of time during the proceedings, in view of Section 12(5) read with Seventh Schedule of the 1996 Act.
The Impact of Limitation Act on MSMED Act Recovery Proceedings
In the realm of commercial disputes, the intersection of the Limitation Act, 1963, and the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, has been a subject of legal scrutiny. A landmark judgment by India's Supreme Court in the case of M/s Silpi Industries vs. Kerala State Road Transport Corporation & Anr has shed light on whether the time constraints of the Limitation Act apply to arbitration proceedings under Section 18(3) of the MSMED Act. This decision has significant implications for businesses within the MSME sector, which is a powerhouse of economic growth and innovation in India.
SUPREME COURT OF INDIA RECOGNISES ENFORCEMENT OF EMERGENCY ARBITRATOR AWARD
Prior to 2010, if a party to an international arbitration requires to get an interim order, prior to formation of the arbitral tribunal, it was left with no other option other than approaching the appropriate National Court of the Respondent or the National Court having the jurisdiction over the subject matter covered under the application for interim order.
