Extension of Limitation Period in Arbitration

 INTRODUCTION – SECTION 29A OF THE ARBITRATION & CONCILIATION ACT, 1996

Section 29A of the Arbitration & Conciliation Act, 1996 was amended vide Arbitration & Conciliation (Amendment) Act, 2015 w.e.f. 23.10.2015 to set ‘Time Limit for arbitral award’ wherein it was stated that an award shall be rendered within twelve months from the date the arbitral tribunal enters upon reference i.e. when the arbitrator/s receives their notice of appointment.

The Section also allowed a period of extension for six months however, if the award was not rendered within such period, the parties can apply for further extension establishing sufficient cause of the mandate of the Tribunal shall be terminated.

Thereafter, the Arbitration & Conciliation (Amendment) Act, 2019 further amended Section 29A of the Arbitration & Conciliation Act, 1996. The same was enforced w.e.f. 30.08.2019.

The amended Section is reproduced as under:

“29A.Time limit for arbitral award.–2[(1) 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 completion of pleadings under sub-section (4) of section 23:

Provided that the award in the matter of international commercial arbitration may be made as expeditiously as possible and endeavor may be made to dispose of the matter within a period of twelve months from the date of completion of pleadings under sub-section (4) of section 23.]

…”

Thereby, the amendment left out applicability of the Section on the International Commercial Arbitrations in order to become a preferable seat of arbitration around the globe however, the same also raised several questions.

LIMITATION UNDER ARBITRATION & CONCILIATION ACT, 1996        

Section 43 of the Limitation Act, 1963 and Section 21 of the Arbitration & Conciliation Act, 1996 are to be read together for commencement of arbitration proceedings.

Further challenging an arbitral award under Section 34 of the Arbitration & Conciliation Act, 1996 specifically provides a limitation period of 3 months with a concession of 30 days’ delay on establishment of sufficient reasons and not thereafter, to challenge an arbitral award.

The Supreme Court in the case of M/s Simplex Infrastructure Ltd. v. Union of India (2019) 2 SCC 455:

“It is well to remember that Section 14 of the Limitation Act does not provide for a fresh period of limitation but only provides for the exclusion of a certain period. Having regard to the legislative intent, it will have to be held that the provisions of Section 14 of the Limitation Act, 1963 would be applicable to an application submitted under Section 34 of the Act of 1996 for setting aside an arbitral award.” The position of law is well settled with respect to the applicability of Section 14 of the Limitation Act to an application filed under Section 34 of the 1996 Act.”

The question arises what happens to such limitation periods and timelines in light of the pandemic and difficulties faced by parties to arbitration proceedings to carry forward the procedure.

IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION – SUPREME COURT OF INDIA

In furtherance to the current COVID – 19 times, the Supreme Court vide order dated 06.05.2020 under Suo Moto Writ (Civil) No. 3 of 2020 issued directions under I.A. No. 48411 of 2020 in lieu of the prayer made by the Applicant for arbitration proceedings in relation to Section 29A of the Arbitration & Conciliation Act, 1996 and Section 138 of the Negotiable Instruments Act, 1881.

In order to avoid lawyers/litigants from physically filing proceedings in respective Courts/Tribunal including the Supreme Court, the Court order that all periods of limitation prescribed under the Arbitration & Conciliation Act, 1996 under Section 138 of the Negotiable Instruments Act, 1881 to be extended with effect from 15.03.2020 till any further orders.

“In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown.”

CONCLUSION

The extension of stipulated time period for the purpose of Section 29A of the Arbitration & Conciliation Act, 1996 beyond 15^th March, 2020 till the lockdown opens and an additional buffer period of 15 days thereafter, will not only guide and safeguard the interest of the parties but will also avoid additional filing of applications at the end of the parties to the arbitration.